Posted: 01 Dec. 2021 15 min. read

Digital Consumer Trends – The great connectivity upgrade

Connectivity upgrades

In the last 18 months, the virtual world has been our lifeline. It’s almost been the only way for Australians to retain a semblance of normal interaction – with friends, family, and colleagues. This reliance has instigated several shifts in home connectivity, including upgrades to home internet connections. Meanwhile, Australia’s 5G rollout has continued at full steam over the past year, with more than double the number of consumers currently using a 5G service.

The connectivity landscape looks different for Australian consumers in 2021 compared to pre-pandemic. In this article we’ll explore the different attitudes and approaches to connectivity Australian consumers have taken during the pandemic, and we will look at the state of 5G adoption alongside the race to roll out the new network.

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Pandemic driven home connectivity changes

Since the start of the pandemic, 33% of respondents have made a change to their home internet service. Moving to a higher speed service was the most popular change, with 12% of consumers making the upgrade. This could be driven by a desire for better entertainment experiences due to the additional time spent at home, with speed related changes typically made by a younger demographic (19% of 18-24s and 16% of 25-34s made the switch to a faster plan). Similarly, the younger demographics (18-24s) are watching more videos on YouTube (38% of 18-24s), playing more online games (31% of 18-24s) and streaming more movies and TV series (27% of 18-24s) since the start of the pandemic, all of which rely on increased bandwidth. Of those making the upgrade, the majority (67%) stayed with their existing service provider, suggesting they were happy with the service they were receiving, but simply wanted to boost the speed due to new lockdown usage requirements. Over the coming months, it will be interesting to observe whether these consumers revert back to a lower speed plan now that restrictions are lifting and the demand for at-home entertainment is likely to fall. Alternatively, we may see service providers offering short-term incentives in an effort to retain these younger customers on higher speed plans.  

As to be expected, our survey found there was also a segment of consumers looking to save money during the pandemic. 8% of respondents moved to a lower-cost home internet service. Interestingly, it was the same younger age demographics who drove the bulk of the changes to a cheaper plan, with 14% of 18-24s and 13% of 25-34s making the switch. This suggests that younger consumers had contrasting relationships with their connectivity providers in the last year. 

Since the start of the COVID-19 pandemic, which if any, of the following changes have you made to your home internet service?

(Base: All adults 18-75 who have internet access at home)

5G 3.0 –The consumer adoption curve

We’re now into the third year of Australia’s 5G rollout with providers reporting that coverage has reached up to 75% of Australians.[i] Impressively, from an adoption perspective, 14% of respondents are now using a 5G service, more than double the 6% that were using the technology in 2020. Although 14% adoption demonstrates that there is a significant portion of the population who are yet to connect, Australia is still a front runner compared to many international markets, with the likes of Japan (10%), the UK (9%), Italy (5%) and Belgium (3%) further behind. However, Australia still sits behind global leaders such as South Korea who have approximately 38% of consumers connected to a 5G service.[ii]

Despite this progress, the major networks are still in the process of rolling out their 5G networks across Australia. Therefore, some consumers would not yet be covered by 5G while at home and would be unable to take advantage of the benefit provided, even if they have a 5G enabled phone and mobile plan.

For those consumers that do have consistent coverage, what might be hindering an even faster pace of adoption? There is no one reason, but a combination of many factors. Some are expected to naturally dissipate over time, whilst others may persist for years to come:

  1. Device compatibility – 47% of respondents purchased their mobile device in or before 2019, when 5G handset availability was limited or non-existent. As many of these consumers will refresh their devices over the coming 24 months, this barrier to adoption will disappear as most of the new handsets are 5G compatible.
  2. Perceptions of non-5G users – Even though mobile carriers and government have invested in 5G education campaigns, there is still a low level of understanding about 5G amongst Australian consumers. Fifty-six per cent of respondents agree they don’t know enough about 5G (only down slightly from 61% last year), hindering their likelihood to proactively make the switch.
  3. Feature relevance – 5G capability is not top of mind for consumers when purchasing a device. In fact, it ranked 11th on our list of features respondents consider to be most important when deciding which smartphone to buy next, with only 9% of respondents believing it to be a top consideration. As even low-end mobile phones will have 5G access as a standard feature, this will become less relevant as users refresh their devices over the coming years.
  4. MVNO (mobile virtual network operator) availability – Until recently, 5G connections were limited to the MNOs (Mobile Network Operators). Although the first 5G enabled MVNO (Mobile Virtual Network Operator) contracts have become available, if the previous 4G rollout serves as guidance, it will likely be several years before this becomes widespread, as MNOs keep 5G as a premium feature for their direct customers. Therefore, with one in five respondents (20%) currently using an MVNO, it will likely take some time for all this group to make the transition to a 5G connection (unless there are further changes to wholesale agreements from carriers).

If consumers are not concerned with the 5G rollout, should the major network operators proactively push people toward the new technology, or should they sit back and allow the transition to happen organically?

Survey data suggests there is still a window for the major networks to convert a segment of current MVNO customers who are looking for a higher performing mobile experience. These consumers are part of the 31% of respondents who would switch network operator based on 5G coverage. By targeting them with a clear value proposition linked with tangible benefits, there’s an opportunity to convert them before broader MVNO 5G availability. 

It will be important to get the value proposition correct, revolving around 5G use cases displaying noticeable impact to consumers. Those of our respondents already using a 5G service have seen a noticeable improvement in experience when streaming videos/tv/movies (46% better experience), downloading large files (45% better experience) and browsing the web (44% better experience). Such use cases can demonstrate the significant difference in speed between 4G and 5G.

Compared to your 4G connection, have you noticed any change in your experience while doing the following activities on your 5G connection?

(Base: All adults 18-75 who use 5G)

Catching the post-pandemic connectivity wave

For connectivity providers, we believe the transition to a post pandemic environment will create opportunities over the coming 12 months:

  1. As an increasing number of companies continue full-time or part-time work from home arrangements, providers should monitor how they enable employees to do so from a connectivity standpoint. Will business funded home internet plans become increasingly popular? If so, will employees be locked into pre-negotiated corporate plans? In some cases, this may mean the direct-to-consumer home broadband market dynamics and relationships will change.
  2. As the 5G network roll-out continues, Fixed Wireless Access will become a reality for many and is expected to become an increasingly viable alternative to in-home fixed internet connections, especially in areas with poor nbn performance. Mobile carriers could be expected to nudge consumers onto 5G home internet plans as an alternative to fixed line services. This could be an opportunity for mobile carriers to expand their reach into in-home connectivity market with products/services including self-install home broadband kits, unique bundles, simpler pricing and even smart home offerings like home-WiFi coverage extenders.
  3. The rollout and adoption of mmWave 5G will provide a significant upgrade in connectivity that bandwidth conscious consumers are looking for. The additional speed and device capacity in high density areas, such as sporting venues, campuses, and community settings, should provide a significant leap forward. However, this is reliant on another wave of device upgrades, as almost all currently available 5G phones do not have the antennas required to support mmWave 5G. Regardless of whether this use case alone is significant enough to encourage faster uptake of 5G, it will still be a key factor during this phase of 5G technology lifecycle.
  4. 5G slicing is expected to create a range of new business model possibilities and provide a unique way to sell the benefits of 5G. 5G slicing can give consumers the ability to pay a premium for a higher quality of service for a specific period. For example, 5G could be provided to the consumer while they use their mobile to game, provide remote medical assistance or run a high-definition video conference.

The bottom line

Australians are relying on digital connectivity more than ever before. The pandemic has seen some consumers make multiple changes to their home connectivity, with younger consumers being split between improving at-home entertainment experiences and saving money. 5G rollout has continued, with more than double the number of users compared with last year. While this progress is strong, there are several known barriers that must be overcome to continue Australia’s 5G adoption trajectory.

There are various technological improvements, as well as societal shifts towards ongoing flexible working that are providing opportunities for new products and business models in the connectivity space. Being first to market with innovative product offerings, will likely be a source of growth for many organisations over the coming year. 

Unless otherwise referenced, the statistics in our 2021 Digital Consumer Trends articles are based on a survey commissioned by Deloitte Australia. It involved a representative sample of 2,000 Australians aged between 18-75 and was conducted in late July 2021, at a time when Australia's second wave of Delta cases was on the rise and restrictions were being introduced and changed every few days across NSW, VIC, QLD & SA. Numbers have been rounded for ease of comparison.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organisation”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.

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[i] Our 5G network now reaches 75% of Australians (telstra.com.au)

[ii] Estimate of consumers aged 15+ based on South Korean Ministry of Science and ICT 5G adoption statistics - (17,081,846 connections as of July 2021).

More about the authors

Peter Corbett

Peter Corbett

Partner, Consulting

Peter is the National Telecommunications leader and the Sydney leader of Monitor Deloitte in Deloitte’s Consulting practice. Peter has over 10 years’ experience in the development and execution of corporate/business unit strategy, digital strategy and transformation, channel strategy, strategic due diligence, customer experience/service design and operating model design for leading multinationals. Peter works at the links between strategy, operations, technology, creative design and innovation. His career experiences include successfully implementing complex transformations following a new strategy, as well as developing new businesses that disrupt traditional industries through business model innovation. He has delivered this type of work in US/Canada, Europe, Asia and Australia/New Zealand.

Jacob Herman

Jacob Herman

Consultant, Monitor Deloitte

Jacob is a Consultant in Deloitte’s strategy practice, Monitor Deloitte. He is passionate about helping clients navigate disruption by translating ambiguity into practical insight and identifying pragmatic growth opportunities. Jacob combines an interest in emerging technology and new business models with a commercial mindset to develop unique solutions to complex business problems. He has advised clients across a variety of industries in the development of corporate and business unit strategy, ventures and innovation, market entry strategy, new product development and operating model design. Prior to joining Deloitte, Jacob worked in analytics and marketing roles at Adobe and Dell.