PARTNER CONTENT: Ericsson’s Marko Jovanovic, Head of Marketing, Strategy and Insights for Europe and Latin America, explains why innovative bundling strategies and speed tiers could help redefine the value of 5G data.

Unlimited data has been a dominant feature in many operators’ 5G mobile packages for years. Yet, as 5G brings new network functionalities, and consumer needs and expectations increase, is it time to re-think the way mobile services are packaged and sold?

While mobile operators may not relish unlimited plans, competitive pressures often push them in this direction. We understand the challenges European mobile operators face in navigating this landscape and believe that, while adopted out of necessity, unlimited plans may inadvertently be preventing them from unlocking the full potential of 5G.  An alternative route involves embracing a more bespoke approach to package bundling, centred on the needs and desires of consumers.

Quantity over quality has lost its shine
In principle,‘all you can eat’ rates give users a simple way to compare data packages, which they can enjoy without usage restrictions or budget constraints. In a saturated market, however, this approach can make it challenging for operators to stand out.

There’s growing evidence that sheer quantity is no longer a key selling point for data. Our latest ConsumerLab report on 5G value revealed that as many as two-thirds of users without unlimited plans have data left over at the end of each month, and 14 per cent have more than 15 GB left, after using all the services they want. This suggests many people simply don’t need ‘bottomless’ packages. [1]

In any case, mobile users have probably never been completely clear on the value of the data in their monthly package and how it reflects their needs. After all, how many people know how much data is required to stream a 4K video or use an immersive gaming app on the move?

At best, unlimited tariffs are undervalued by customers. At worst, they could be restricting operators from being able to generate more revenue from packages that actually reflect how data is being consumed.

According to our study, there’s been a 47 percent increase in time spent by 5G users on enhanced formats, such as 4K and multi-view videos, over the past two years, and daily use of augmented reality (AR) apps has doubled since 2020. We believe that this surge in advanced formats offers operators exciting potential to re-establish revenue growth.

Let’s put the value back into mobile data
Our report reveals that one in five smartphone users expect differentiated 5G connectivity or quality of service (QoS)-led offerings. These are bespoke offerings elevating the experience with prioritised, consistent network performance in key locations, and delivered for demanding applications like 4K video streaming, gaming and augmented. And consumers are willing to pay a premium for it.

So, how could mobile operators capitalise on this trend? One approach we’re seeing from some leading operators is a shift in pricing strategies towards quality over quantity and customisation over commoditisation. In the face of current market dynamics, relying on a flat rate offers limited potential for differentiation and new revenue streams. Bespoke packages, however, tap into consumer usage patterns, encouraging greater data use. For example, Singtel offered their customers an exclusive Formula 1 experience during the 2022 Grand prix in Singapore, launched via an app and dedicated slice of the network for a guaranteed uninterrupted experience enabled by 5G. By re-shaping service packages, operators have an opportunity to boost data value through QoS bundles tailored to individuals’ needs – from prolific gamers to users of advanced fintech apps. High quality, immersive experiences in 5G bundles are likely to encourage increased data use, allowing operators to recalibrate pricing and upsell. Our research shows that 56% of users with innovative service bundles spent more than half of their total video streaming time on enhanced video content or AR.

This approach not only gives consumers personalised packages, but also diversifies revenue streams for operators, moving beyond the confines of unlimited plans to cater to a broad range of active, experience-hungry users.

Could speed be the differentiator?
Another 5G packaging model gaining traction is the adoption of speed tiers. Between April and October last year, the proportion of operators following this model grew from 18 to 24 per cent, signalling a shift towards a quality-first pricing strategy.  

Our ConsumerLab report on 5G value highlights speed tiers as something that 5G users would be prepared to pay a premium for. Consumers are making a mental connection between speed and quality, with some operators seeing requests to upgrade to higher speeds when experiencing challenges with everyday video calling applications.

As emerging use cases, such as cloud gaming and extended reality, generate substantial traffic, the constraints of unlimited models are clear. Speed tiers, meanwhile, allow diverse bundling options and can help prompt consumers to recognise tangible value in their chosen data packages.

In this evolving landscape, unlimited plans may continue to have a role as the baseline tier, with higher-value packages featuring new services and applications (e.g., video streaming, music, gaming, and indoor usage). For instance, consumers could choose the highest 5G speed with a limited data allotment or opt for unlimited data at a lower speed tier.

Ready to make your move?
Today, as we all come to expect a seamless mobile network connectivity experience, offering a one-size-fits-all model isn’t sustainable in the long run. Having drawn insights and key learnings from the ecosystem, we believe 5G standalone connectivity, differentiated performance and technologies, such as network slicing and network APIs (application programming interfaces), can establish new business models and revenue streams. This exciting potential can be achieved while the best effort basic service of 5G is still protected so that affordable connectivity can be made available to everyone. We’re collaborating with operators to explore new possibilities and greater value, all focused on placing the customer experience front and centre.

Visit Capture the value of 5G from your consumer segments – Ericsson for further insights, as consumers’ needs shape the future of 5G connectivity.

[1] Ericsson ConsumerLab, 5G value, 2023