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Ericsson is attempting to disprove 5G skeptics by releasing a special Business Review edition of its twice-yearly Mobility Report, which shows that in the top 20 5G markets, including the United States, operators have seen a significant boost in network performance as a result of 5G deployment. Furthermore, Ericsson claims that as these operators’ 5G penetration increases, so will their wireless service revenue growth.
“The link between 5G uptake and revenue growth in the top 20 5G markets demonstrates that not only is 5G a game changer, but that early adopters benefit,” said Ericsson’s EVP and head of networks, Fredrik Jejdling.
The timing of Ericsson’s new report is not coincidental, as there has recently been a lot of criticism about 5G failing to live up to its promise and how some 5G use cases, such as edge computing and 5G private wireless networks, are taking much longer to develop than expected.
Nonetheless, Ericsson’s report maintains that 5G is delivering strong results, particularly in network performance, where the average downlink throughput in the top 20 5G markets has increased 4.3 times over the last five years, 32% more than other markets. Furthermore, the average wireless service revenue in the top 20 5G markets has increased 3.2% annually over the last two years, according to the report. This follows a period of stagnant or declining revenue in many of these markets.
Interestingly, according to the Ericsson report, mobile operators who price their 5G services in speed tiers are better able to monetize 5G’s increase in network performance than those who offer unlimited data plans for 5G. Wireless operators in the United States have abandoned speed tier pricing in favour of unlimited data plans.
Speed tiers equal revenue growth
“Incremental pricing models are critical for service providers, both for effectively addressing the individual needs of each customer and for driving long-term revenue growth,” according to the report.
Indeed, the report notes that operators who offer unlimited pricing allow data usage to grow indefinitely without increasing revenue. Furthermore, it stated that approximately 45% of service providers surveyed by the company offer “true” unlimited data packages to their smartphone users, with the majority of these unlimited packages considered “top tier” offerings. However, Ericsson adds that because this one-size-fits-all model lacks differentiation, operators must combine it with other elements, or perks, to upsell customers to higher priced plans. These plans also include “conditions” to prevent excessive usage.
Nonetheless, the report notes that shifting away from unlimited pricing may now be difficult, and that some operators are considering a return to long-term contracts to stabilize the market, especially as price increases become more common.