There is no fundamental reason why the value of a 5G subscription, though including 5G network access, must be based on touted 5G performance advantages. In fact, in the U.S. market, incremental 5G revenue is driven primarily by customers upgrading from usage-based service plans to flat-rate plans, where 5G is a feature of the unlimited plans.
5G performance features are important, but arguably less important than the customer assurance that no extra charges for overages will happen. That has been a powerful incentive for other products, including voice, long distance calling, VCR or DVD rentals or internet access time.
In fact, customers have shown a willingness to pay a price premium precisely because doing so offers price predictability for a recurring purchase item. That might prove to be important, as many consumers might still have good reasons for questioning the value of 5G performance.
Though the launch of a next-generation mobile or fixed network always takes some time--especially in large countries--the rollout of 5G services has happened at an odd time. Since the unique value of mobility is communications “outside the home,” the Covid-19 pandemic has, for many, diminished time spent “outside the home” and “travelling.”
Ironically, in some markets, the primary marketing pitches for 5G happen in context with use of “unlimited mobile data” plans that--also paradoxically--arguably have been less necessary when people were largely confined to their homes.
To be sure, the backdrop is changing in many countries as restrictions loosen. Still, in the absence of compelling new use cases and applications, and with some perhaps long-term changes in life circumstances requiring people to be out of the house as much (hybrid work patterns including routine work or schooling from home), the value proposition for mobile 5G remains a work in progress.
Though better coverage eventually will help, use cases must still prove themselves. Many of us have worked from home for decades, pandemic or not. But the pandemic largely ended business travel and sharply limited personal travel.
In some cases, this has meant a sharp drop in mobile data usage and consumption, as most connection time is to the Wi-Fi network. In fact, I frequently leave mobile data turned off when all I am doing is traveling locally on routine visits to grocery stores and other retail outlets. In such cases, I just use Wi-Fi in store to use my mobile device checkout and payment apps.
The 5G value proposition, in other words, is upside down. I don’t really need faster mobile data speeds, as most usage now is indoors or at home, and I am rarely doing anything that really provides lots of upside if data is delivered faster than what Wi-Fi can support, for the limited uses I encounter out of home.
Travel is the one setting where additional speed might be useful, though 4G normally works for my use cases, most places. And where 4G speeds are limited for reasons of coverage, I’m pretty sure 5G is going to be worse, in terms of coverage.
To be sure, tethering for reasons of work, when necessary, is the one clear case where 5G would offer advantages over 4G, when available. But that has been a relatively rare need, during the pandemic.
It is not that 5G has no value; it does. But 5G might not offer significant new value, most of the time, to warrant extra spending--either on devices or service plans--at the moment.
During the pandemic, the priority clearly has been any spending that optimizes my computing for support of video conferencing. Better mobility has not been an issue. I do not expect that will always be the case, but right now 5G does not offer enough new value to warrant more spending on it.
For my typical limited usage, 4G works okay. As has been the case for decades, a fast mobile connection adds the most value when I am working remotely and the local Wi-Fi is flaky or slow.
Until my business travel returns to normal levels, those known use cases will be few and far between. So will the perceived value of 5G. The new use cases, meanwhile, are not yet visible.
Other users will have different value drivers and use contexts. As has been the case since the days of dial-up internet access, consumers have shown a preference for fixed rate billing, rather than usage-based billing.
That might still be the biggest attraction for many users shifting mobility plans to 5G. The expectation of faster data might be nice, but the assurance of known recurring cost might still be the single most important value. And consumers have shown a preference for predictability of cost, even when that means higher recurring cost.
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