![]() ![]() According to our survey, two-thirds of customers are unwilling to pay more than five euros per month for ten-times-higher speed. Still, there is a limit to how much customers will pay for increased bandwidth and speed alone. Eventually, these customer-satisfaction rates should allow for higher average billing. Elisa, a Finnish telco, reports that customer-satisfaction scores are around 50 percent higher for customers whose plans afford them speeds of greater than 300 Mbps, compared with those with plans offering less than 100 Mbps. ![]() ![]() Speed, we have found, correlates with higher customer satisfaction, even when a larger bill is attached. Our survey shows that 74 percent of customers have a positive or neutral feeling about their operators offering different speeds to mobile users with different needs. Speed tiering represents a fundamental shift away from the wireless industry’s standard gigabyte-based “data bucket.” While there is a perception throughout the industry that B2C customers will reject speed tiering on mobile devices, our research suggests otherwise. Network slicing allows telcos to introduce sophisticated “speed tiering,” which is a critical enabler and prerequisite for the three innovation models. This ability to charge customers more for parts, or slices, of a network that feature premium performance underpins all three of our innovation models. By enabling “network slicing,” it can allow telcos to shed the traditional one-size-fits-all model and differentiate among offerings that share physical infrastructure. This is partly because technological limitations have prevented operators from offering customers highly differentiated plans based on their divergent digital habits and needs.ĥG core has the potential to change that. Operators’ investments in 4G arguably paved the way for the entire app economy and the rise of software-as-a-service (SaaS) businesses, but meaningful monetization did not follow. Depending on the road that operators take, the technologies they invest in, and the partnerships they forge, we see a potential for operators to increase average revenue per user (ARPU) by between 16 and 20 percent-if not more.įor years, telcos have been unable to make incremental revenue from their services to a degree commensurate with recent capital-expenditure investments. There are three innovative models that telcos can pursue to monetize 5G in the B2C marketplace. Three innovative models-and one critical enabler-for monetizing 5G in B2C Companies that want to stay ahead of the competition should consider investing in 5G core now. Based on McKinsey’s experience working with telco operators across the globe, as well as on several recent surveys, including a survey of 2,400 customers in six countries that we conducted in April 2021, telcos have a clear path to monetize 5G in the B2C sector. But without knowing whether and when these apps will appear, telcos are struggling to put a price tag on 5G for consumers.ĭespite this backdrop of uncertainty, there is a suite of promising innovations-including, but not limited to, yield management-that could allow telcos to monetize 5G in the B2C marketplace in the near term. Potential “killer apps” may emerge, prompting large swaths of customers to pay extra for supercharged connectivity. While 5G boasts dramatic improvements in specific areas-the technology can vastly improve the gaming experience, for example, by reducing lag time, and it can allow people to stream high-quality video from just about anywhere-there is currently no 5G use case compelling enough to transform the everyday consumer’s life. In the B2C market, however, the value proposition of 5G remains murky. Operators have already identified the enormous value that 5G core can bring in the B2B arena, and on this basis the 5G revolution is already under way. As the telco industry confronts a surge in network traffic volume, a massive proliferation of connected devices, and a future built around widespread automation and augmented reality (AR), carriers are facing a new opportunity to charge customers for what 5G promises and delivers. The rise of 5G, however, has the potential to change that-paving the way for a significant shift in how telcos engage with customers. These empty seats and rooms may present as lost opportunities, but in fact they are inevitable by-products of yield management: an approach to price optimization that telcos have been largely unable to pursue during the 3G and 4G eras. Telco operators typically seek to pack their networks with as many customers as possible, while other sectors, such as airlines and hotels, occasionally leave space open.
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