Generative AI fuels demand for better mobile connectivity – and users ready to pay for it

Issues with app quality have resulted in mobile users’ unwillingness to settle for “best effort” 5G network connectivity, with some generative artificial intelligence (Gen AI) users willing to pay a premium for guaranteed performance. 

About 35% of 5G users will consider paying more for differentiated connectivity that guarantees better performance for essential tasks, revealed a study released by Ericsson. This number is 1.5 times more in densely populated markets such as Thailand, India, and Brazil, compared to the global average, according to the online survey, which polled more than 23,000 smartphone users, of whom 17,000 were 5G smartphone users from 16 markets, including Australia, France, Singapore, South Korea, Thailand, China, the UK, and the US.

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“These are mobile-first markets, where reliance on mobile connectivity is particularly strong,” Ericsson said. “In these markets, elevated demand for differentiated connectivity could be attributed to the need for improved capacity, rather than general network inadequacy.”

The telecom equipment manufacturer estimates that the market potential for differentiated connectivity is about 35% of 5G users across the 16 global markets. However, tapping this market will require service providers to offer segmentation strategies that identify key consumer groups, such as those who are more willing to pay for differentiated connectivity and require tailored service offerings.

The study suggests that 5G users are willing to dig into their pockets to get differentiated connectivity for core services, such as video calls for work or personal reasons and streaming various media formats. They will pay the highest premium for niche services like multiplayer mobile and cloud games and dedicated augmented reality (AR) apps. 

For instance, 5G users in Singapore will pay the highest premium for creating and uploading content, while their peers in the US will pay the most for games as well as AR and Gen AI apps.

In fact, a quarter of Gen AI users already expect guaranteed performance, such as real-time response, and will pay up to 35% more compared to other app categories. 

“Gen AI capabilities are increasingly integrated into popular apps such as TikTok and Snapchat, while new AI-driven apps for image and video upscaling or generation are set to add substantial mobile traffic in the near future,” Ericsson said. 

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“We anticipate a substantial increase in Gen AI usage over the next five years, with an expected 65% of weekly [smartphone] users engaging with these applications,” it said, citing its own research. “This trend will likely place new demands on 5G networks, as Gen AI apps are expected to drive an increased need for higher uplink speeds and low latency to meet user expectations for responsive and seamless experiences.”

Further integration of Gen AI capabilities in XR devices, such as futuristic AR glasses, will drive new demands on mobile networks, in particular, for uplink traffic. 

Demand for fast, reliable uplink also will climb with more AI-powered features on smartphones and products, such as Meta’s Ray-Ban smart glasses, which run on multimodal AI. 

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“Service providers must prepare for shifts in both expectations on 5G performance and network traffic with rising demands on uplink, downlink, and low latency as Gen AI usage grows,” Ericsson added.  

It is unsurprising then that frequent issues with app quality, including at crowded and high-traffic locations, have resulted in four in 10 users no longer willing to accept best-effort 5G network performance. 

As it is, 30% have experienced inconsistent connectivity underground, while 26% report slower speeds at indoor locations.