5G Might Feature New Marketing Platform

Though 5G represents many things, it also is destined to become the key marketing emphasis for major U.S. mobile service providers, in the same way that "gigabit" has become a marketing emphasis for fixed network internet access providers.

That is not unusual. Looking even at the ways people use internet access services, the “headline” offers often do not match the actual consumption or buying patterns especially closely. In other words, the main impact of gigabit speed marketing is to drive uptake of the tiers of service slower than a gigabit, but faster than what consumers were buying before gigabit marketing began.

The big wild card right now is whether 5G will feature the introduction of speed tiers in the mobile business, as is the standard case for fixed network access. If so, headline speeds likely will assume a role similar to what happens in the fixed network business: "speed" will become a key driver of advertising and messaging.

That is the case now, but in a more-restricted sense of "our network is faster" being the attempted claim. It is conceivable that in the 5G era, that might be supplanted by a broader "pick the plan that works for you" focus, if and when it is possible to buy mobile packages based not only on usage allowances, but also access speed and possibly other attributes.

Even so, most consumers are unlikely to choose neither the fastest nor the slowest tier of service, opting instead for one of the tiers in the middle of the speed/price/value range.

Past experience suggests that will be the case.

There is likely a reason service providers do not release statistics about take rates for their headline "fastest" tiers of service. The reason is likely that take rates are not all that high.

AT&T executives have said that, where it is available, about 30 percent of customers buy a gigabit per second service, even when other tiers of service are available. In part, that relatively high take rate reflects the fact that AT&T builds gigabit networks first in neighborhoods where propensity to buy is highest.

In the fixed network internet access business, most consumers do not buy gigabit connections, even if service provider marketing, in markets where gigabit services is available, often focuses on that high-end offer.

Generally, consumers tend to buy services that offer reasonable value for reasonable price, and that is rarely the fastest speed tier or the most-basic level of service.  

Back in the days when cable TV operators first were rolling out consumer Internet access at speeds of 100 Mbps, it was virtually impossible to get subscriber numbers from any of the providers, largely because take rates were low.

In the United Kingdom, then planning on upgrading consumer Internet access speeds to “superfast” 30 Mbps, officials complained about low demand. In fact, demand for 40 Mbps was less than expected.

So “gigabit” internet access remains mostly a marketing platform, not an indicator of what services people actually buy, when they have access to gigabit services. Retail price almost always is an issue for such buying patterns.

The point is that marketing efforts often are focused on elements of experience that arguably are somewhat tangential, even somewhat trivial.

Most consumers in the U.S. and other markets use their mobile devices “mostly” indoors, yet service provider marketing always focuses on the “outdoor” signal coverage.

source: Dell'Oro Group

But the marketing context does shift over time. In the 3G era, Wi-Fi access was valued by consumers because access speeds on Wi-Fi tended to be faster than the mobile network. These days, on most 4G networks, Wi-Fi is slower than staying on the mobile network.

In the 5G era, the mobile network might be the fastest connection by an even greater margin.

source: Dell'Oro Group