Ericsson is attempting to prove 5G naysayers wrong by releasing a special Business Review edition of its twice-yearly Mobility Report showing that in the top 20 5G markets, including the U.S., operators have seen a significant boost to their network performance thanks to the introduction of 5G. In addition, Ericsson claims that as 5G penetration increases for these operators, there is also a rise in wireless service revenue growth.
"The link between 5G uptake and revenue growth in the top 20 5G markets underlines that not only is 5G a game changer, but that early adopters benefit,” said Fredrik Jejdling, Ericsson’s EVP and head of networks.
The timing of Ericsson’s new report is no coincidence as there has recently been a lot of criticism about 5G not living up to its promise and how some 5G use cases, such as edge computing and 5G private wireless networks, are taking much longer to develop than anticipated.
Nevertheless, Ericsson’s report maintains that 5G is delivering strong results, particularly in network performance where in the top 20 5G markets the average downlink throughput has increased 4.3 times over the past five years, which is 32% more than other markets. In addition, the report said that the average wireless service revenue in the top 20 5G markets has increased 3.2% annually for the past two years. This comes after a period of flat or even declining revenue in many of these markets.
Speed tiers equal revenue growth
Interestingly, the Ericsson report highlights that mobile operators that price their 5G services in speed tiers are able to monetize 5G's increase in network performance better than those that offer unlimited data plans for 5G. In the U.S., wireless operators have shunned speed tier pricing and have embraced unlimited data plans.
“Incremental pricing models are key for service providers, both for effectively addressing the individual needs of each customer and for continuing to drive long-term revenue growth,” the report said.
In fact, the report notes that operators that offer unlimited pricing are allowing data usage to grow indefinitely without revenue increases. In addition, it said that around 45% of service providers surveyed by the company offer “true” unlimited data packages to their smartphone users, and the majority of these unlimited packages are considered the “top tier” offerings. However, Ericsson adds that this one-size-fits-all model doesn’t offer a lot of differentiation, so operators then have to combine it with other elements, or perks, to upsell customers to higher priced plans. These types of plans also end up with “conditions” to thwart extreme usage.
Nevertheless, the report notes that moving away from unlimited pricing may now be a challenge and that some operators are instead considering a return of long-term contracts to stabilize the market, particularly as price increases become more common.