Generative AI Fuels Demand for Premium 5G Connectivity, Users Willing to Pay More

Generative AI Drives Demand for Premium 5G Connectivity

A recent global study by Ericsson ConsumerLab has revealed a growing demand for differentiated 5G connectivity, driven by the increasing adoption of generative AI (Gen AI) applications. The study, which surveyed over 23,000 smartphone users across 16 markets, highlights a significant shift in user expectations and willingness to pay for enhanced mobile connectivity 1

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Key Findings

The research uncovered several important trends:

1. 35% of 5G users are considering paying more for differentiated connectivity that guarantees better performance for essential tasks 1

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2. Gen AI users are willing to pay up to 35% more for guaranteed performance compared to other app categories 1

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3. The market potential for differentiated connectivity is estimated at about 35% of 5G users across the 16 global markets surveyed 1

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4. Demand for differentiated connectivity is 1.5 times higher in densely populated markets such as Thailand, India, and Brazil 1

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Impact on Network Traffic and User Expectations

The integration of Gen AI capabilities into popular apps like TikTok and Snapchat is expected to add substantial mobile traffic in the near future. Ericsson anticipates a 65% increase in weekly smartphone users engaging with Gen AI applications over the next five years 2

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This trend is likely to place new demands on 5G networks, particularly for:

1. Higher uplink speeds
2. Low latency
3. Improved capacity in mobile-first markets 1

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User Experience and Connectivity Issues

The study also highlighted current connectivity challenges:

• 30% of users have experienced inconsistent connectivity underground
• 26% report slower speeds at indoor locations
• 40% of users are no longer willing to accept best-effort 5G network performance due to frequent issues with app quality 1

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Revenue Opportunities for Service Providers

The findings point to significant revenue opportunities for Communications Service Providers (CSPs) as they shift toward performance-based business models:

• Potential to boost 5G Average Revenue Per User (ARPU) by 5-12% 2

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• 20% of users, termed "Assurance Seekers," are actively seeking elevated connectivity for critical applications and are willing to pay for it 2

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• One-in-three 5G smartphone users are willing to reallocate 10% of their current mobile app spend to purchase apps with in-built elevated connectivity 2

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Regional Differences and Market Potential

The study revealed notable regional variations in the demand for differentiated connectivity:

• Markets such as India, Thailand, and Saudi Arabia show double the share of smartphone users interested in differentiated connectivity compared to markets like France and Spain 2

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• 5G users in Singapore are willing to pay the highest premium for creating and uploading content
• US users will pay the most for games as well as AR and Gen AI apps 1

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As Jasmeet Sethi, Head of ConsumerLab at Ericsson, notes, "This signals an opportunity for CSPs globally to meet this demand through tailored connectivity experiences." 3

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The research suggests that service providers should focus on segmentation strategies to identify key consumer groups and offer tailored service offerings to capitalize on this growing market potential.