Wednesday, September 20, 2017

What Happens to Typical Usage When 5G Replaces 4G?

What will happen to mobile network customer usage patterns when 5G becomes mainstream, boosting average mobile speeds per device up into the hundreds of megabits per second range?

Past experience suggests overall usage will grow, as there is a correlation between faster speeds and greater data consumption. In India, that was the case when 3G speeds were widely available. The same happened when 4G replaced 3G. The reason is simple enough.

When higher speeds are available, a single minute of usage transfers more data on a faster network than on a slower network. Also, with faster speeds comes better user experience, generally, which creates an incentive to spend more time interacting. Both those trends will lead to higher usage.



Even with network offload from mobile to Wi-Fi, it is likely that 5G will keep more traffic on the mobile network, for several reasons. If tariffs create no disincentive to offload, users will simply stay "on the mobile network" more than they have in the past.

Also, faster speeds historically mean more consumption per minute of use.

For telcos with a significant base of customers on unlimited plans, the shifting of traffic from Wi-Fi to cellular will continue to drive an unnecessarily higher cost-to-serve model—one that puts them at a disadvantage relative to telcos with capped data plans.

In the U.S. market, as all four of the largest U.S. mobile operators now offer, and are marketing, some form of “unlimited” usage plans (even if there are actual limits in place), we ought to be alert to potential changes in usage patterns.

It simply stands to reason that a customer moving from a fixed-usage plan of some sort to an “unlimited” plan might be inclined to consume more data, especially if that customer previously had purchased relatively smaller usage buckets.

It also stands to reason that this might not actually occur for at least some customer segments who previously had been on “big” usage plans. In other words, a customer on a data plan with lots of permitted usage (a “big bucket of usage”) might not necessarily increase usage in a material way, when converting to an unlimited plan.

Indeed, that is what analysts at BCG argue: “Unlimited plans do not increase usage; they shift usage to cellular,” BCG says.

Asking the question of whether subscribers on unlimited plans actually use more data than those on capped plans, BCG finds the  answer is “no.”

Perhaps surprisingly,  “overall usage is roughly the same.” So for at least some customer segments, mobile operators can benefit. They can offer plans that offer “more,” but might confidently predict that many consumers--though pleased that they now can buy plans that offer more usage--might not actually change their behavior.

In that case, the mobile operator is able to offer “more value,” arguably creating a happier customer, but without fear that at least some key customer segments will actually increase usage in any significant way. So the mobile operator can offer higher value, but without the cost of actual increases in usage that eventually drive up capital spending to supply additional network capacity.

Or maybe not. “What unlimited plans do appear to do, however, is steer more—significantly more—of that usage to the cellular network,” BCG also says.

The implication is that even if “unlimited plans” do not alter total data usage, they still affect ntwork load, because “customers on unlimited plans use twice as much cellular data as customers on limited plans.”


So, at least so far, widespread adoption of unlimited usage plans will change usage patterns, but not because actual usage increases.

Instead, there is a shift of usage from Wi-Fi to the mobile network, the opposite of the prior trend where consumers offloaded more of their usage to Wi-Fi, and off the mobile network.

No comments:

"Tokens" are the New "FLOPS," "MIPS" or "Gbps"

Modern computing has some virtually-universal reference metrics. For Gemini 1.5 and other large language models, tokens are a basic measure...