Will 5G prompt more consumers to cut the cord for in-home internet connectivity?
Mobile-enabled internet access is increasingly perceived to be just as good as wired home internet, and 5G promises to make it even better
Younger consumers in particular see their mobile data service as comparable to their wired home internet service. And 5G may inspire more people to cut the cord.
From the early days of the pandemic, internet service providers scored high points for effectively delivering broadband service to homes despite surging demand and unusual traffic patterns. Many providers went as far as offering more bandwidth and higher speeds at no or low cost.1 These efforts paid off: Remarkably, in Deloitte’s Connectivity and Mobile Trends Survey, which polled just over 2,000 US consumers, 70% of respondents were mostly or completely satisfied with their home internet experience during the lockdown.2
For the majority of people we polled, reaching that level of satisfaction took some work. With more people working or schooling from home, households pushed the limits of their home internet and Wi-Fi networks, resulting in connectivity issues ranging from dead spots to dropped internet connections to unstable videoconferencing. Accordingly, many consumers undertook initiatives to enhance their in-home internet coverage by adding Wi-Fi extenders, mesh Wi-Fi networks, or mobile hot spots. Of those survey respondents taking action, 50% purchased such devices since the pandemic. And for the most part, these efforts paid off. Positively, 62% said they saw at least some enhancement—with 19% experiencing significant gains in performance—while 38% experienced no improvement. Overall, 8% of surveyed internet subscribers switched service providers during the pandemic.
When connecting to the internet at home, most consumers prefer to use Wi-Fi—enabled by a wired cable or fiber connection—instead of mobile data. However, many young consumers are turning to their mobile data plans for internet access: Millennials and younger consumers are roughly twice as likely to rely on their mobile data plans, either through their smartphones or a mobile hotspot, than their older cohorts for internet access.
This usage pattern held up during the pandemic, when these young smartphone users remained tethered to their homes. In fact, according to the survey results, the more people in a household who were forced either to work or learn from home, the more likely someone in the home was to turn to their mobile phone to augment their connectivity needs.
And most consumers have noticed no material difference between the performance of their mobile phone and home Wi-Fi internet connections. For two studies running, Deloitte has found that more than half of respondents feel that their smartphone delivers the same or faster speeds than their home Wi-Fi connection.
This may explain the gradual but discernable shift, particularly among younger users, toward wireless and mobile-only households. Approximately 15% of all US internet users rely solely on their smartphone for internet access, and this percentage spikes to 28% for those in the youngest (18–29) age bracket.3 If consumers believe that they experience the same performance from their smartphone with 4G LTE and their home internet, how will they feel—and, more importantly, react—when wireless networks are fully upgraded to faster 5G technology?
While only 10% of US mobile users currently have a 5G phone and plan,4 adoption of 5G wireless technologies is already changing consumer behavior: A recent study found that one in five users decreased their Wi-Fi usage after upgrading to 5G, while 10% stopped using Wi-Fi on their smartphone altogether.5 Presumably, this is due to a superior 5G experience, but greater adoption of unlimited data plans by 5G subscribers can also explain the shift.6 5G penetration, expected to rise to 50% by 2025,7 could accelerate the trend toward mobile-only households.
As younger generations mature and settle down in their own homes and families, it’s possible that their usage will shift to wired internet options. But those expectations could be upended by the emergence of 5G fixed wireless access (FWA), which delivers internet service between two fixed locations such as a mobile tower and a customer’s home or office. Until recently, FWA (based on 4G LTE) typically offered inferior service to wired broadband options, but 5G FWA promises speeds and throughput that have the potential to match and even surpass today’s wired broadband connections. Thus, 5G positions FWA as a viable alternative to existing wired options. And several service providers have announced significant plans to expand 5G FWA coverage and services as part of their consumer strategy.8
Although it’s still early and consumer awareness and understanding of 5G FWA are low, 39% of survey respondents said they would be willing to give up their current home internet service to try 5G FWA when it becomes available in their area. Younger respondents are more inclined to switch to 5G FWA than older ones.
Moreover, among those who say they’d switch to 5G home internet service, 60% say they’d be likely to change their internet provider to get 5G FWA if their current provider didn’t offer it. However, the cost of service and the need to purchase new equipment remain impediments to 5G FWA adoption, although they appear less of an issue for younger consumers.
While these responses may be prospective, our research findings suggest that there’s a market for 5G-based fixed wireless access as an alternative to wired internet—potentially encouraging more consumers to cut the cord altogether.
Considerations for internet service providers
- Improve customer satisfaction and reduce churn by taking more responsibility for improving the in-home internet user experience. Consider upgrading older routers, educating users on ways to optimize Wi-Fi performance, or offering low-cost compatible devices to boost or extend Wi-Fi signals.
- Understand trends in internet usage patterns to develop tailored service offerings. Recognize that more people, particularly younger users, are favoring internet access using their smartphones even when at home.
- Determine the impact of faster 5G service on user trends. Develop scenarios on how 5G might affect future internet usage patterns and fixed and wireless network utilization.
- Consider targeting emerging 5G FWA offerings to younger consumers who appear most interested in 5G FWA and less concerned with the cost or need for new equipment to obtain service.
Technology, Media & Telecommunications
Deloitte’s Technology, Media & Telecommunications (TMT) industry practice brings together one of the world’s largest group of specialists respected for helping shape many of the world’s most recognized TMT brands—and helping those brands thrive in a digital world.
