Does a fast connection matter if you can’t rely on the network? Does a fast connection matter if you can’t rely on the network?

Authors
Tom Loozen

EY Global Telecommunications Leader

Fascinated by the positive impact of telecoms. Passionate musician. Enjoys educating himself on psychology, wine, sports, technology, arts and much more. Husband and father of three daughters.

Adrian Baschnonga

EY Global Telecommunications Lead Analyst

Lead Analyst with deep sector knowledge in technology, media and telecom, gained in professional services and business intelligence environments.

8 minute read 16 Jun 2021

The latest Digital Home survey highlights providers need to deliver stronger connectivity foundations for the digital home.

In brief

  • One in four households has experienced a reduction in network reliability during the COVID-19 pandemic.
  • Forty-six percent of households don’t think upgrading to higher-speed broadband packages is worth the extra cost per month.
  • The benefits of bundling are unclear: 27% do not see clear advantages in buying connectivity and content from the same provider.

The COVID-19 pandemic has accelerated take-up of digital products and services across the home. For connectivity providers, the read-across has been positive: home internet needs have increased, and customers largely feel that broadband and mobile providers have coped well with the crisis.

Yet beyond these promising signals, challenges remain. Many households have experienced connectivity issues during the pandemic, and there’s a drive for a better reliability guarantee, not just headline speed promises. Meanwhile, convergence and disruption scenarios exist side by side. As operators look ahead, they must reinvigorate their customer relationships to minimize apathy and increase awareness around what connectivity can deliver. Only then can they maximize the role they can play in the post-pandemic household.

  • Methodology

    "Decoding the digital home" is based on an online survey conducted for EY of more than 18,000 households in Canada, France, Germany, Italy, the UK and the USA. The study is produced annually, and this year’s research was conducted in December 2020 and January 2021. The survey is designed to understand changing consumer attitudes toward technology, connectivity and content experienced in the home – and the companies that provide these products and services. In this and related articles we focus on issues such as the impact of the COVID-19 pandemic, network reliability, changing TV and video consumption, and customer support preferences. Additional insights and analysis are provided by EY’s global TMT team.

Lockdown connectivity issues: family and urban homes have been most exposed

Worldwide, fixed and mobile networks largely withstood increased usage during periods of national lockdown. About Fifty-nine percent of households in the survey believe operators have coped well with the crisis, with just 9% disagreeing, but this is only part of the story: one in four households believe they experienced an overall reduction in network reliability during lockdown periods.

Poorer reliability has been most keenly felt among urban households and families with children, reflecting the rapid shift from office to home working, alongside the increased network load in larger households. From a country perspective, urban distress is most pronounced in the UK and US. However, rural users in Italy were just as likely to report underperformance as urban users.

Network reliability experience during the pandemic by household structure and location

The digital divide is hurting rural households

Although rural users have been less likely to report a reduction in network quality, there is latent demand that service connectivity providers are failing to tap. One-half of rural users are frustrated that the fastest speeds are not available in their area, much higher than urban or suburban users. Crucially, they are also less likely to feel they are getting value for money from their current packages, and, ultimately, this means they have no greater appetite to pay “more for better” compared with urban households.

Rural household attitudes toward service availability and value

Broadband performance is front of mind when comparing packages

Given household experiences with broadband quality, it is no surprise that they focus on performance when evaluating packages. Fifty-nine percent cite speed guarantees as a leading consideration, with easy-to-understand pricing ranking second (43%). Router quality ranks third (40%), another sign that performance is top of mind. However, its importance varies significantly by market, underlining the fact that the router’s role in a reliable connection is not appreciated by all.

Key customer criteria for evaluating and comparing broadband connectivity providers

It is a telling finding that extra services do not lead as evaluation criteria – households ultimately want “the basics” to work well. Those that do consider additional features tend to favor privacy and security, reflecting wider anxieties and concerns around data protection experienced during the pandemic. Meanwhile, the availability of back-up connectivity is on a par with premium content – both are cited by 15% of households as a leading consideration when comparing providers.

Households need more than a speed guarantee

The survey reveals a disconnect between what connectivity providers offer and what customers actually need. Speed guarantees top-score when households evaluate packages, but maximum and minimum speeds are bottom of the list when households assess how well their service is performing. Consistent speeds and signal reach are significantly more important.

Household methods to assess broadband reliability

This disconnect emerges elsewhere in our study. Around 52% of households agree that broadband reliability is more important than speed, with just 10% disagreeing. Meanwhile, one in four don’t understand what broadband speed really means, so service providers that focus narrowly on speed credentials may be failing to address customers’ real-world demands.

Providers can do more to help deliver a reliable connection

There are steps every household can take to get the best from their connection, such as repositioning their routers or selecting specific Wi-Fi channels. However, awareness of these options is limited — and less than one-third of households feel that their provider offers effective tips and guidance.

Households want guidance on reliable broadband

Backup connectivity options have premium potential

Better messaging around reliability is vital, but households are also interested in packages that have greater resilience baked in. Around 3 in 10 are prepared to pay more for broadband if backup connectivity is on offer. While faster speeds and exclusive content have historically been premium levers, this kind of value add could prove lucrative for operators who get it right.

Household willingness to pay a premium for backup connectivity

Receptivity to 5G is muted but its role in reliable connectivity is in focus

5G is commercially available in all the markets we surveyed, but consumer interest is low. Though 9% of households already have it, only 22% declare themselves interested in upgrading, while 42% are not interested and a further 22% unmoved either way. This resistance underlines the fact that mobile operators must work harder to highlight the benefits 5G can bring.

Yet, if consumers were to upgrade to 5G, ubiquitous and reliable connectivity, alongside home internet use, are the leading rationales. Better quality video experiences, whether relating to streaming, gaming or virtual reality, rank further back. As operators consider how best to unlock greater demand for 5G mobile, they must recognize this focus on the fundamental quality of the connection.

Consumer perception of 5G attributes

There’s appetite to add more to the broadband bundle

As operators invest in network upgrades, increasing share of wallet and boosting loyalty are more important than ever. Our research suggests that some customers want more than just connectivity. Privacy and security features top-score, reflecting a key theme emerging across our survey, but other services are also in play. Some, such as home working and home education, have clear linkages to the COVID-19 pandemic.

Household propensity to take additional services within a broadband bundle

Yet fixed-to-mobile substitution is also in play

The relationship between fixed and mobile connectivity is complex, with 32% of households already taking a combination of broadband and mobile, and a further 26% are likely to take this type of bundle in the future. However, 32% are open to dropping fixed-line broadband in favor of a mobile broadband connection, especially in Italian households who top-score (39%), followed by the US (35%). Across all markets, receptivity is higher among younger age groups and families with children.

Household receptivity to swapping fixed broadband for mobile broadband

Broadband and TV: the heart of the bundle is under pressure

Alongside this potential for disruption, traditional bundle linkages are under pressure. Some households don’t see the advantages of buying broadband and TV from the same supplier, especially younger households. Value considerations are another pressure point, as 54% of households feel they get value from their broadband package, but only 39% feel they get value for money from TV and content they purchase from their broadband provider.

Consumer attitudes toward taking broadband and TV from a single supplier

Perceived savings drive both convergence and substitution

Whether adding products to fixed broadband bundles or swapping fixed broadband for mobile, perceived price savings are the top trigger. In this light, service providers should carefully consider the role played by introductory discounts – and whether they undermine premium propositions in the long term. 

Perceived savings drive both convergence and substitution

Apathy in focus: households are disengaged from the world of connectivity

While households are more reliant on home internet, surprising levels of apathy are apparent. About 4 in 10 households don’t know the advertised speed of their connection, while awareness of fiber broadband terminology is low. Many households struggle to equate higher speeds with paying more, while the perceived hassle of switching limits engagement with packages on offer elsewhere. Nearly half of households believe introductory offers make it harder to assess value, underlining that discounts can just as easily be a source of confusion as much as a reason to purchase.

Household disengagement with broadband packages

What does this all mean for connectivity providers?

1. Put reliability at the heart of your customer promise

Home internet needs have increased during the pandemic, but one in four households have experienced a performance downtick. Broadband propositions built around headline speed simply aren’t enough, as customers want better reliability, whether for home broadband or 5G mobile services. Backup connectivity options are also on their radar and could unlock new forms of premium offering.  

2.Demystify connectivity and provide practical guidance

Many users are detached from the world of connectivity, and clear articulation of the benefits of gigabit fiber and 5G is essential, otherwise limited awareness will constrain future adoption. At the same time, practical guidance on how to improve signal strength and performance will go a long way to reducing frustration at a time Prioritize new business models that can extend infrastructure reach, and carefully consider your performance promise and price plan, since rural users underscore other households on perceived value for money. However, the rapid increase in home working has put greater pressure on home connectivity in urban areas: network densification and upgrade strategies should also accommodate this.when home connectivity has never been more important.

3.Sensitize your approach to the specific needs of urban and rural households

Prioritize new business models that can extend infrastructure reach, and carefully consider your performance promise and price plan, since rural users underscore other households on perceived value for money. However, the rapid increase in home working has put greater pressure on home connectivity in urban areas: network densification and upgrade strategies should also accommodate this.

4.Avoid a race to the bottom – ensure your bundles merit a premium

The relationship between fixed and mobile is complex, as willingness to converge and substitute services coexist. However, price savings are top of mind for those looking to bundle or swap. Exploring new routes to differentiation, through new pricing models or innovative security features, can help sustain a premium and build long-term value.

Summary

The COVID-19 pandemic has accelerated the take-up of digital services in the home. For connectivity providers the read-across has been positive: home internet needs have risen, and customers largely feel operators have coped well with the crisis. Yet there are pain points beyond these promising signs, as some households have experienced connectivity problems and the need for reliability is front of mind. Meanwhile, convergence and disruption scenarios exist side by side, and operators must reinvigorate their customer relationships to reduce apathy and boost awareness around what connectivity can deliver. Only then can they maximize their role in the post-pandemic household.

About this article

Authors
Tom Loozen

EY Global Telecommunications Leader

Fascinated by the positive impact of telecoms. Passionate musician. Enjoys educating himself on psychology, wine, sports, technology, arts and much more. Husband and father of three daughters.

Adrian Baschnonga

EY Global Telecommunications Lead Analyst

Lead Analyst with deep sector knowledge in technology, media and telecom, gained in professional services and business intelligence environments.