It has only been three years since the first 5G mobile plans were launched in Australia. During that time telcos have been on a learning curve, where customer perceptions of 5G and its benefits have changed. Global research shows that the more informed consumers are, the more likely they are to demand 5G from their service provider.

Eighty percent of consumers in the US, UK and South Korea who understand 5G want it, and 50% said they are likely to switch providers to get 5G if their current provider doesn’t offer it in the next 12 months. Closer to home, around one-third of Australian consumers are already willing to pay more for 5G.

Here, consumer interest in 5G is driven by speed, performance and because it’s a reason for a device upgrade. Nearly 60% of Australian consumers see 5G delivering ‘much faster speed’, over a third believe it offers a way to get better coverage, and a fifth see 5G as a good reason to get a top tier smartphone1. 

Telstra Wholesale 5G reaches 75% of Australians. And it will continue to grow: any new 5G sites added within the Telstra Wholesale Mobile footprint will automatically be added to our coverage.

Nicole McCormick, Senior Principal Analyst, 5G & Broadband, Pricing & Strategy at telecom consultancy Omdia, has been monitoring global and domestic trends and operator behaviour over the past few years. She identifies several ways in which MNOs and MVNOs are turning the promise of 5G into higher revenues and happier customers.

Selling the dream: capacity, speed and experiences

“As of today, operators with 5G strategies have coalesced around three approaches” says Nicole. “The first approach focuses on data. 5G offers enormous capacity and many operators are seeking to upsell to 5G by offering tiered plans with much larger data inclusions.” According to Nicole, this is the easiest and most common approach, particularly among MVNOs.

The second approach sees operators again using tiered plans, this time with different speeds. The faster the mobile speed, the higher priced the plan. As we have seen, the speed of 5G is the key benefit for many consumers and studies show people are willing to pay a premium for it. McKinsey reports that 74% of customers in its research had a positive or neutral feeling about their operators offering different speeds to mobile users with different needs. Speed, McKinsey says, “correlates with higher customer satisfaction, even when a larger bill is attached”. 

Telstra Wholesale 5G Mobile is our fastest ever mobile product, offering typical download speeds of 10-250Mbps and helping to enhance customers’ streaming, business and social media experiences.

There are also other creative ways operators could monetise speed in the future. McKinsey notes there are opportunities for service providers to offer ‘impulse speed boosts’ or ‘business class’ speed plans. For example, “if a customer needs stronger connectivity to stream a video, play an interactive game, or make an important phone call, they can simply press a button, pay $1 to $2, and receive a temporary performance boost. This pay-per-use 5G will be especially valuable to customers when networks are in high demand.”

The third approach Nicole McCormick identified is the most sophisticated. She calls it ‘differentiation’: MVNOs stand out through bundling 5G rich apps, content partnerships or hardware discounts with 5G plans. The key is the experience 5G offers: while cloud gaming for example is possible on 4G, the experience on 5G is streets ahead and far more likely to appeal to keen mobile gamers. Currently, Nicole estimates only 20% of the 120 global operators she monitors differentiate by bundling 5G rich experiences, such as cloud gaming, enhanced video, augmented or virtual reality with plans.

The third approach Nicole McCormick identified is the most sophisticated. She calls it ‘differentiation’: MVNOs stand out through bundling 5G rich apps, content partnerships or hardware discounts with 5G plans. The key is the experience 5G offers: while cloud gaming for example is possible on 4G, the experience on 5G is streets ahead and far more likely to appeal to keen mobile gamers. Currently, Nicole estimates only 20% of the 120 global operators she monitors differentiate by bundling 5G rich experiences, such as cloud gaming, enhanced video, augmented or virtual reality with plans.

The 5G price premium

Omdia’s research shows 5G offers an incremental revenue source for service providers. Globally, the average price premium on 5G services, including those outliers with unlimited data allowances, is 40%, while one-third of operators charge a 20% premium. Some UK MVNOs for example charge a 30% premium on data amounts for 5G compared to their 4G equivalent plans.

The opportunity for MVNOs

The exciting part of this analysis, Nicole explains, is there is massive scope for MVNOs to lead the way in differentiating through 5G. “Most MVNOs globally are either using the data tier approach or doing nothing additional to sell 5G services. The opportunity is there for MVNOs to offer differentiated experiences with 5G rich apps. While consumers see 5G as much faster than 4G, belief that it offers access to new apps and services is going up each year (currently 21%). Consumers recognise there is value here for them.

While 5G will help MVNOs boost revenues, the traditional ingredients of MVNO success remain critical. 

“The importance of your core assets, finding the niche you want play in, how well you understand your customers’ needs; all these remain important,” says Nicole. “But with 5G you now have new levers to pull, whether that’s around popular features such as data gifting or data sharing, or innovating through partnerships or the next generation of hardware built to make the most of 5G.”

Your customers' favourite features from our 4G services, such as data banking, data rollover and data sharing, are also available on Telstra Wholesale 5G.

With consumer interest growing everyday and generating clear revenue growth opportunities, and Telstra Wholesale 5G soon to launch, now is a great time to start planning your 5G strategy.

In coming weeks we will publish more insights about how operators and service providers around the world are creating growth opportunities from rich apps, gaming, bundled content services and more. Look out for these articles in your inbox soon.