The Connected Consumer of Tomorrow: navigating the post-5G world

The introduction of 5G will enable us to communicate with each other and the surrounding world in ways that we could not have envisaged decades ago. Unlike previous generations of cellular technology, 5G does not just signify greater speed, but a fundamentally different type of connectivity – ‘hyperconnectivity’.

5G has the potential to once again disrupt the world we live in, yet research shows that the majority of consumers do not fully understand its significance. Only four in ten smartphone users globally say that they are knowledgeable about the potential of 5G technology1. This suggests that mobile operators have, to date, struggled to articulate the benefits of 5G to consumers. These benefits include an array of innovations, from autonomous vehicles to remote robotic surgery. Getting consumers excited about 5G is vital for the industry. It represents the most significant opportunity for mobile operators to re-define their core proposition by becoming an end-to-end service provider, and to reassert their importance in a technological landscape that has been dominated by device manufacturers and content providers.

The transformative effect of 5G

The technology behind 5G - ultra-reliable low-latency communication2 - will enable the widespread adoption of services like multi-player AR gaming, which requires lightning-quick data transfer and vast throughputs of data. One of the most radical impacts of 5G roll-out could be the demise of home broadband. 5G Fixed Wireless Access can provide speeds equivalent to fixed-line broadband through a cellular network. Three UK launched their 5G service this month, promising to revolutionise home broadband: “no more paying for landline rental, no more waiting for engineers. This is plug and play”3. In this case, technological innovation could deliver a genuinely transformative customer experience, and a point of difference in a saturated market. It would also mean a return to converged services, since households can get all their connectivity and content services delivered through one provider. In an increasingly fragmented marketplace, this has obvious benefits to the consumer in terms of simplicity and quality of service.

However, all of this innovation comes at great cost to the industry. To deliver 5G, operators need to invest in all aspects of their network infrastructure: Spectrum, RAN and Transmission, and Core networks. Some forecasts suggest a 60 percent increase in network-related capital expenditure over the next five years4. In order to achieve return on investment, operators will need to successfully monetise their new asset, and more importantly, convince customers who are used to declining data costs to pay more for a service that has come to be seen as a commodity.

The data value paradox

The value of mobile data is falling – the average price per gigabyte in the UK is now £5.125 - which has contributed to a steady decline in ARPU over the past decade (from £17.40 to £15.19)6. Operators entering the 5G fray will need to have a carefully considered pricing strategy to ensure a return on investment and cost of acquisition.  

To the average consumer, 5G signals the era of unlimited data. After all, there’s little rationale in paying a premium for access to the latest technology which is then restricted by a download cap. Historically, mobile plans have been tiered according to maximum data consumption, but this is shifting to speed-based or zero-rated models. Three, Vodafone and EE have all launched with unlimited 5G data plans. The Vodafone packages have max download speeds that range from 2mbps to 10mbps7. This strategy allows operators to tier packages, charging more for those prepared to pay a premium for maximum speeds.  Whether this is an attractive pricing model remains to be seen.

In order to recoup costs quickly, operators will need to convince a majority of consumers to switch to 5G. Yet, seven years on from launch, 4G uptake in the UK is stalling at 72% of the population. Will the additional expense for 5G (in the form of 5G-enabled devices like Fixed Wireless Access hubs or an augmented reality headset) prove to be too large a barrier to entry for the average consumer?

Aligning to customer demands

The key question here, is whether the industry’s focus on 5G aligns with the needs of the customer. Within the UK Telecoms market, there seems to be a disconnect between industry priorities and consumer need, leading to understandable mistrust in an industry which has in the past promised innovation, but arguably failed to deliver. A Which? survey published this month reveals eight in ten UK areas still suffer from ‘patchy’ 4G signal8. Meanwhile the latest Consumer Satisfaction Index listed Telecoms companies third lowest for customer satisfaction, scoring particularly poorly for emotional connection9

To re-establish trust, the connected consumers of tomorrow will expect operators to deliver on their promise to create a world-class 5G service. But to create an emotional connection, operators need to sell the vision of a 5G-enabled world that goes far beyond unlimited data or faster download speeds. This will require a fundamental shift in the current perception of a mobile operator – no longer just a communications provider, but an end-to-end service provider, acting as the gateway to the ‘connected world’. 

Creating the storefront of tomorrow

In order to sell this vision, operators must be clear on their customer proposition, and how this will look in the storefront of tomorrow. Consumers increasingly expect personalised services, tailored to their specific needs. To meet these needs, operators will have to diversify their products and packages, expanding into ‘managed services’. To date, companies like Vodafone and Telenor have had success with their Enterprise service packages, offering cloud computing, data analytics and payment capabilities to support business delivery through the use of IoT devices. In the consumer space, the ‘V by Vodafone’ suite of products include V-Car, a smart driving sensor, and V-Pet, a GPS activity tracker. Though currently these products are small-scale, as IoT within the home becomes more widespread, there will be opportunity to create larger packages that give consumers the ability to control multiple connected devices, all enabled by the 5G network.

To conclude, 5G will fundamentally transform the world of the connected consumers of tomorrow. And for operators, 5G represents an opportunity not only to increase revenue and market share but, more importantly, redefine their relationship with customers by being at the heart of the most exciting technological innovation in a generation. 

Moorhouse has a proven track record of turning customer strategy into action for major private and public sector organisations. Whether it’s identifying emerging customer trends, optimising the customer journey, or developing business models that meet customer needs – we help our clients understand and serve the Customer of Tomorrow.

To discuss how your organisation can meet the needs of its Customer of Tomorrow, please contact: James Easterbrook

1. https://www.ericsson.com/en/trends-and-insights/consumerlab/consumer-insights/reports/six-calls-to-action#giveusmorewith5g 
2. The low latency of 5G means a significant reduction in lag time when transmitting large quantities of data 
3. http://www.three.co.uk/hub/5g-broadband-london/ 
4. https://www.mckinsey.com/industries/telecommunications/our-insights/the-road-to-5g-the-inevitable-growth-of-infrastructure-cost 
5.  https://www.cable.co.uk/mobiles/worldwide-data-pricing/ 
6. https://www.statista.com/statistics/273471/monthly-arpu-through-mobile-subscribers-in-the-united-kingdom-uk/ 
7.  https://www.knowyourmobile.com/news/vodafone-5g-unlimited-data-plans-everything-you-need-to-know/ 
8.  https://www.which.co.uk/news/2019/08/eight-in-10-areas-of-the-uk-lack-full-4g-coverage/ 
9.  https://marcommnews.com/wp-content/uploads/2019/03/2018-Report-UK-Customer-Satisfaction-Index.pdf 

See our previous piece, the Payment User of Tomorrow or
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