5G Could Boost AR, VR Usage, but Consumers Wary of Higher Fees, Privacy Risks, Says Deloitte

The challenge for carriers and device vendors is to convert consumer awareness into adoption, said Deloitte, citing an existing appetite for the speed and reliability that 5G promises. Nearly half of respondents -- and 62 percent of Gen Z -- said a wireless connection as fast as fiber broadband is “very” or “extremely” valuable.

As 5G coverage expands, demand for such smartphones will grow, with 28 percent of consumers (and about 40 percent of Gen Z and millennials) saying they would be “very likely” to buy a 5G smartphone when service is available in their area. Some 90 percent of U.S. consumers use a smartphone and 52 percent spend more than 2 hours a day on it, Deloitte said. Thirty-eight percent of U.S. consumers plan to buy a smartphone in the next 12 months.

Factors important in a smartphone upgrade are display quality, brand, 5G capability and data storage, said the report. With 5G coverage just rolling out, consumers listed compatibility as one of their top three capabilities in a new smartphone; 76 percent would be more likely to buy a 5G-compatible smartphone when the technology becomes available.

5G’s ability to improve display quality -- by facilitating 8K streams, for instance -- could prompt some consumers to upgrade to a 5G phone. With the smartphone refresh cycle stretching out, 5G could help generate sales during a flat period that followed a decade of innovation and development, it said.

Fewer than 60 percent of consumers plan to buy a new smartphone in the next two years, said Deloitte. Incremental technology advances “may not be enough to convince consumers to pay for a new phone, especially if their current phones are sufficient for most apps and tasks,” it said.

Twenty percent said new phones are too expensive; 12 percent said they can’t afford to buy a new phone, and 11 percent said they're paying off their current phone. The decline of device subsidies and the higher prices of newly launched smartphones contribute to financial stress: The average selling price of top-end smartphone models rose from around $600 in 2015 to more than $1,000 in 2018, said the company.

In the home, consumers are ready for better home internet to manage the growing number of connected devices competing for bandwidth. The average household has 11 connected devices, including seven different smart screens for viewing content; 28 percent of consumers use smart home devices such as connected thermostats, cameras, and lighting and want more control over the data they create when using devices and online services.

But as consumers bring more connected devices and online services into their homes, they’re more aware of how their personal data is being collected and sold: Over 90 percent say they should be able to see and delete data that companies collect about them. They also want compensation: 84 percent of consumers feel they should be paid by companies that profit from their data.

Fifty-eight percent of consumers are “very” or “extremely” concerned about their smartphone data; 59 percent about its security, said Deloitte. That goes up with risks from smart speakers and home automation devices, with 73 percent “very” or “extremely” concerned about the privacy and security of smart speakers, 72 percent about the privacy of home automation devices, it said.

Consumers feel they should have more control over how their personal data is used, and who gets to monetize it. “If data is the new oil, consumers are awakening to the fact that each of them is an oil well: They want to regulate what is pumped out, and they want royalty checks,” said the report.

Most important to mobile consumers are a good connection and value, said the report. Though consumers are satisfied with their mobile service, 43 percent have had issues watching videos on their smartphones, and 41 percent feel their mobile data speeds are too slow.

Nearly 20 percent of consumers plan to switch carriers next year, said the report. Those sticking with their carrier want stronger network performance, while most Gen Z and millennial consumers said getting the fastest wired broadband speeds on their mobile would be “extremely or very valuable.”

5G’s impact on digital entertainment could be significant with Gen Z and millennial respondents saying once they have 5G, they plan to consume augmented and virtual reality content that requires high-speed, low-latency connections. Some 49 percent of 5G-familiar Gen Z consumers said they would play more mobile video games using 5G, and nearly 40 percent of Gen Z and millennial respondents said access to 5G will change how they use AR and VR.

The emergence of 5G could open the way for telecom carriers to gain more household subscribers, said Deloitte. It noted that consistent across generations, fewer than half (43-49 percent) of consumers are “very satisfied” with their home internet provider.

With the number of connected devices on the rise, over a third of consumers report using supplemental network equipment to boost Wi-Fi coverage. Some 62 percent of consumers who have home internet say they will likely replace their service with 5G Wi-Fi service if it delivers speeds similar to fiber. The percentage grows to 75 for people who say their mobile data is faster than their home Wi-Fi. Sixty-three percent of 5G-familiar consumers rank its potential to offer better in-home connectivity as one of the top three capabilities likely to drive their 5G usage.

Despite the appeal of 5G, consumers may be reluctant to pay extra for it, said the report. Sixty-one percent of consumers said they can live with their existing service, 49 percent said they’re very satisfied with their Wi-Fi service and 36 percent “somewhat.” For 5G in-home connectivity to justify a service plan upgrade, “it will have to live up to its promise of game-changing speeds and bandwidth in the home, at a cost that consumers find reasonable,” it said.