Future of 5G: Consumers have rapidly adopted 5G but are waiting for killer apps
Respondents are largely satisfied with their 5G smartphone service but wonder when they’ll see innovative experiences.
Jana Arbanas
Paul H. Silverglate
Susanne Hupfer
Jeff Loucks
Prashant Raman
Michael Steinhart
Smartphones are the MVP (most valuable player) device for many consumers: most owned, most used, and most relied on to foster connections with others (see “Digital life often delivers daily benefits but can also fuel tech fatigue and well-being worries”). Even so, smartphone users are holding onto their phones slightly longer before considering an upgrade or replacement. Currently, 30% of smartphone users say their phone is under a year old—a decrease of five percentage points compared with the previous year. And their future purchase plans suggest that they’re in less of a hurry to replace their old phones: Twenty-seven percent of smartphone users plan to purchase a new phone in the next year, a decline from 32% in 2022. The slowing pace may well be due to unease about the economy and personal finances.1
The rollout of 5G networks has been widespread, bringing new possibilities and behaviors to smartphone users.2 Among consumers whose smartphones are less than a year old, the percentage of devices equipped with 5G capability rose from 56% in 2021 to 77% in 2023 (figure 9.1). Moreover, 62% of smartphone consumers we surveyed now report their devices having 5G capability, indicating a notable increase from 50% in 2022. The integration of 5G technology in smartphones is influencing consumer habits, prompting some smartphone users (especially Gen Zs) to spend more time streaming video, playing video games, and using their phone as a hotspot (figure 9.1).
As familiarity with 5G smartphones grows, consumers are developing more realistic expectations regarding the capabilities and performance of 5G networks. In 2022, 48% of 5G smartphone users we surveyed reported that the service exceeded their expectations; in 2023, this percentage has declined to 38%. As 5G networks expand and mature, users’ expectations will likely align more closely with the capabilities of the technology.
Despite the widespread availability of 5G, most 5G smartphone users feel like their devices haven’t tapped the full potential of the technology. A majority (53%) of 5G smartphone users are seeking apps and experiences that take advantage of advanced network capabilities. Moreover, 26% expressed disappointment with the lack of innovative apps and services tailored for the 5G environment. Mobile service providers may be able to tap into this opportunity, as 50% of 5G smartphone users said that they would value premium bundles with innovative digital services and apps designed to make the best use of 5G.
Overall, consumers are satisfied with their current mobile service and see no need for immediate change. Sixty-seven percent of the mobile users we surveyed made no changes to their mobile provider or plan in the past year, and only 18% expressed a likelihood to switch providers in the next year.
5G gains a foothold in home internet
Seven in 10 home internet users made no changes to their internet service in the past year, and most are satisfied with various aspects—just as they were in 2022 (figure 9.2). What’s more, 77% of our survey respondents said they use separate providers for their home internet and mobile services—primarily because they perceive no cost advantage from bundling and also because they believe that the best services in their area are provided by different companies.
It’s worth noting that customer satisfaction with bundles—whether for connectivity, entertainment, or smart home services—has dropped by several percentage points since 2022. This may reflect recent price hikes levied by many streaming services, but this also represents an opportunity for internet providers to appeal to value-conscious consumers through attractively priced bundles—whether it’s providing mobile access, offering connectivity options such as fiber and 5G fixed wireless access (FWA), or partnering with entertainment services to include subsidized or free subscriptions.3
In 2023 and beyond, there may be ample room to grow FWA-mobile convergence bundles: Twelve percent of home internet users surveyed reported having a fixed wireless connection, up 50% from our 2022 survey.4 What could be even more significant is that the majority of these FWA users (52%) indicated that their fixed wireless connection is powered by 5G technology. This represents a considerable increase over 2022, when only 32% of the FWA users in our survey reported having 5G connections. Indeed, 5G FWA has been rapidly capturing broadband share, accounting for 90% of net additional broadband Internet subscribers in 2022.5 More consumers seem willing to embrace the capabilities of 5G fixed wireless connections for their home internet: Twenty-seven percent of home internet users said they would be interested in switching to 5G home internet service, and 14% said they would be interested in switching to a 5G FWA-mobile bundle.
As 5G becomes the standard, for both mobile devices and home internet, an ongoing question is, what kinds of new digital experiences will it enable or augment?6 While that story is still being written, one of the top contenders may be immersive, virtual reality 3D experiences, which can be improved by higher bandwidth and lower latency (see “Immersive 3D and generative AI are shaping the digital future”). Indeed, there are already signs that 5G users spend more hours each week engaging in new experiences such as cloud gaming and augmented reality compared to 4G LTE users.7 We could expect to see Gen Z and millennial consumers leading the uptake of 5G-enabled immersive experiences.