Thursday, October 18, 2018

5G Will be the Lead Mobile Offer, Even When Most Use 4G

Mobile service provider marketing quickly is going to pivot to “5G,” even if most consumers are going to continue buying 4G services. That is not unusual, for several reasons.

Since 5G is the new network, that is the network whose value, features and services have to be sold to consumers who will be unfamiliar with the value proposition, at first. But at a broader level, mobile service marketing often focuses on elements of the experience that arguably are tangential or almost trivial.

Mobile marketing focuses on geographic coverage, even when most usage happens indoors. Mobile offers focus on price, when the differences are rather limited, or on usage buckets, even when virtually every service provider offers similar usage for broadly-similar prices.

But 5G also will get the marketing attention because it will offer dramatically better performance attributes, compared to anything consumers have seen to date. That is similar to the marketing on "gigabit" services in markets where that is available.

Generally, consumers tend to buy services that offer reasonable value for reasonable price, and that is rarely the fastest speed tier or the most-basic level of service.  

That is not unusual. Looking even at the ways people use internet access services, the “headline” offers often do not match the actual consumption or buying pattern very closely.

Back in the days when cable TV operators first were rolling out consumer Internet access at speeds of 100 Mbps, it was virtually impossible to get subscriber numbers from any of the providers, largely because take rates were low.

In the United Kingdom, then planning on upgrading consumer Internet access speeds to “superfast” 30 Mbps, officials complained about low demand. In fact, demand for 40 Mbps was less than expected.

So “gigabit” internet access remains mostly a marketing platform, not an indicator of what services people actually buy, when they have access to gigabit services. Retail price almost always is an issue for such buying patterns.

In the fixed network internet access business, most consumers do not buy gigabit connections, even if service provider marketing, in markets where gigabit services is available, often focuses on that high-end offer.

AT&T executives have said that, where it is available, about 30 percent of customers buy a gigabit per second service, even when other tiers of service are available. In part, that relatively high take rate reflects the fact that AT&T builds gigabit networks first in neighborhoods where propensity to buy is highest.

That same principle is likely to apply in the 5G market, if speed tiers are introduced.

Most consumers in the U.S. and other markets use their mobile devices “mostly” indoors, yet service provider marketing always focuses on the “outdoor” signal coverage.


But the marketing context does shift over time. In the 3G era, Wi-Fi access was valued by consumers because access speeds on Wi-Fi tended to be faster than the mobile network. These days, on most 4G networks, Wi-Fi is slower than staying on the mobile network.

In the 5G era, the mobile network might be the fastest connection by an even greater margin.
source: Dell'Oro Group

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