5G Smartphone Users Willing to Shell Out Up to 45 Percent Premium for Upgrade: Study

Over 100 million users in India with 5G-ready smartphones want to upgrade to 5G network in 2023 and many of them are willing to pay up to 45 percent premium, a study by Ericsson said on Wednesday.

The survey assumes significance as the countdown for 5G services availability has begun in India, the world's second-biggest smartphone market after China. The study by Ericsson has indicated a lucrative monetisation and "extremely good" ARPU (average revenue per user) uplift potential for telcos in the country.

That said, 5G network performance will be a driver for loyalty, and among those who plan to upgrade to 5G, about 36 percent plan to churn to the best provider of the 5G network when it is available.

About 60 percent of early adopters who already have a 5G-capable phone expect new innovative applications, which are considered more appealing than better coverage.

"These users are even willing to pay a 45 per cent premium for plan bundled with novel experiences provided their expectations are met," the survey revealed.

The report 'Promise of 5G' in India by Ericsson ConsumerLab, was carried out in the second quarter this year and reflects the views of 300 million daily smartphone users in urban India. The report highlights key insights that will drive the uptake of 5G in India.

5G adoption is expected to start with consumers and then move to enterprises. The consumer 5G readiness is high in India, the report noted.

Notably, the intention to upgrade to 5G in urban India is two times higher than their counterparts in markets like the UK and US where 5G has already been launched.

"Over the past two years, India has witnessed three times increase in smartphone users who own a 5G handset. The study reveals that 100 million-plus users with 5G-ready smartphones wish to upgrade to a 5G subscription in 2023 while more than half of them are open to upgrading to a higher data tier plan in the next 12 months," the report by the Swedish telecom gear maker said.

Jasmeet Sethi, Head of Ericsson ConsumerLab, during a virtual briefing, said the transition to 5G provides an opportunity for service providers in India to strengthen their position in the consumer market, with a focus on 5G quality and availability.

"More innovative experiences need to be bundled to meet the expectations of early adopters to successfully monetise 5G," Sethi said.

Many consumers who were surveyed indicated willingness to pay about 10 percent premium for 5G connectivity, but a bigger uplift on the premium will come in when at least three different services are bundled on top of a 5G plan, according to Ericsson.

"That uplifts the premium by another 35 percent resulting in total premium of about 45 per cent, which is extremely good sort of an ARPU uplift, and we don't think this is impossible," Sethi said citing global average 5G premiums that tend to range between 20-40 percent.