NEW DELHI: Recently, telecom equipment maker Ericsson suggested in one of its reports that Indian telecom service providers invest in differentiated connectivity as consumers are willing to pay extra for it. In simple terms, Indian telcos such as Reliance Jio, Bharti Airtel, and Vodafone Idea Limited (VIL) need to improve coverage at high-traffic locations such as stadiums, railway stations, airports, and concert venues, as consumers are willing to pay an additional 20% for better services. According to Ericsson, one in six 5G users is willing to pay an extra 20% on their monthly mobile bill for guaranteed connectivity at event venues. The report also mentioned that this move would give service providers a significant opportunity to increase 5G average revenue per user (ARPU) by 5-12%.
Jasmeet Sethi, head of ConsumerLab at Ericsson, emphasised that telecom companies globally have already begun adopting this strategy and are seeing a return on investment. These companies are not targeting the mass market, which tends to prioritize affordability over quality. Instead, they are focusing on high-ARPU and postpaid subscribers, who are willing to pay more for a superior experience. “We need to adopt a similar approach in India,” Sethi said. hi said.
In this article, we will explore what differentiated connectivity is and how it works.
What is differentiated connectivity?
Differentiated connectivity uses advanced technologies like network slicing and APIs to enable telecom providers to offer more reliable and customized services. Instead of just providing standard internet, telecom companies can deliver faster, more stable connections tailored to the specific needs of users. This can significantly improve experiences for activities such as streaming, gaming, or staying connected in crowded environments like stadiums or airports. Essentially, it ensures a more dependable service in situations where regular networks might struggle. For instance, at a sports event in a stadium, network slicing can guarantee that fans streaming the game or using mobile apps enjoy a fast, uninterrupted connection, even when thousands of people are using the network simultaneously.
Growing demand for differentiated connectivity
According to Ericsson, around 60% of the 5G users surveyed reported experiencing connectivity issues in crowded areas. These issues are particularly common at outdoor event venues, stadiums, and indoor locations like shopping malls and retail centers. The primary cause of these problems is insufficient indoor coverage and limited network capacity, which result in gaps in 5G availability and inconsistent connections. The report also notes that across 16 markets, 35% of 5G users have shown growing interest in connectivity that exceeds standard 5G performance. These users are especially looking for enhanced connectivity for essential services like video calls and streaming. Additionally, users of generative artificial intelligence (GenAI) are willing to pay 35% more for guaranteed performance, signaling a shift in expectations for connectivity.
The scenario in India
In densely populated countries like India, Thailand, and Brazil, 1.5 times more users are interested in paying for differentiated connectivity compared to the global average. These are mobile-first markets, where there is a particularly strong reliance on mobile connectivity. In these markets, the growing demand for differentiated connectivity can be attributed more to the need for improved network capacity than general network inadequacy.
Global trends
According to the survey, 5G users worldwide are willing to pay a moderate premium for differentiated connectivity, especially for core services such as video calls (for both work and personal reasons) and media streaming. In Singapore, 52% of users are interested in real-time communications and collaboration, as well as payment and banking services, with the highest premium set for creating and uploading content. In the US, 50% of 5G users are interested in performance assurance for streaming media, and 48% are interested in real-time communications and collaboration services. However, the highest premium in the US is set for categories such as gaming, augmented reality, and GenAI apps.