Bundles may drive consumer switch to 5G

5G is featuring more prominently in consumer wireless purchasing decisions. In the third edition of the Deloitte Connectivity and Mobile Trends Survey,¹ we found that of the 20% of survey respondents who changed their mobile provider in the past two years, 5G service ranked fourth as the reason for switching. But when looking forward to subscribers thinking about switching their providers next year, 5G service rises in importance, second only to better value for money.

The survey also revealed a slightly higher number of consumers considering switching providers in the next year. In 2022, 24% of respondents expressed a desire to change mobile providers, compared to 16% in 2021.

The adoption of 5G phones is also clearly on the rise. 5G device shipments surpassed 615 million units worldwide, more than doubling from 2020 to 2021.² Indeed, our survey found that the percentage of consumers³ with a 5G device rose from 56% in 2021 to 68% in 2022.

Positively, consumers report that they are happy with their 5G service. More than nine in 10 respondents said 5G meets or exceeds their expectations. Moreover, one-quarter of respondents said they’re watching more streaming video thanks to 5G, and one-quarter of Gen Z respondents said they’re gaming more on their 5G phones than in the past. Consequently, the average monthly data usage per smartphone globally is expected to surpass 15 GB in 2022, up from 12 GB at the end of 2021.⁴

Even so, approximately two-thirds of all respondents (those with and without 5G service) said they want a better understanding of the new capabilities 5G offers. Indeed, most users are doing what they already did with 4G, just faster and with better performance. They do not yet see any new revolutionary applications enabled by the technology. Yet, two-thirds of 5G phone users said they would value premium bundles with innovative digital services and apps designed to leverage 5G service.

To this end, 45% of service providers worldwide are using the promise of rich media and cloud gaming to drive 5G subscriptions and device sales, and nearly 40% include an unlimited option at the premium end of their tiered data plans.⁵ Because 5G provides more bandwidth and speed to more devices, service providers can increasingly offer unlimited data plans,⁶ often with a subscription to a premium third-party streaming service (e.g., video, music, gaming). These unlimited premium bundles can help distinguish 5G from older 4G wireless plans.⁷

Key takeaways

• 5G is rising in importance in consumer purchasing decisions of mobile services. With almost a quarter of respondents looking to switch providers in the next year, mobile services have a compelling opportunity to attract new customers.
• Initiatives by service providers to differentiate 5G from 4G using premium unlimited bundles appear to be working. More importantly, these bundles appear to be driving growth in average revenue per account or user (ARPA or ARPU). In its second-quarter results, for example, Verizon reported that 57% of new accounts selected premium unlimited plans, resulting in a 2.4% increase in ARPA.⁸ AT&T also noted an ARPU uplift due to more customers upgrading to premium unlimited plans.⁹
• There is still ample opportunity for MNOs to benefit from educating consumers on 5G’s benefits and developing new premium bundles that leverage 5G service. One clear opportunity is to bundle 5G mobile phones with 5G Fixed Wireless Access (FWA), which may offer similar performance to cable broadband connections. Our CMT survey revealed that only 22% of respondents obtain mobile and home internet from the same provider. When pushed to pick the top three factors that would convince them to bundle these services, lower combined cost, confidence in service quality, and ease of billing and payment ranked highest.