Telecom
Why Network Quality is More Important Than Ever
By Borje Ekholm
Today, network quality is under the spotlight in every household and enterprise worldwide as more and more work from home. However, as our new research indicates, network performance has always been a mainstay of market demand.
Today, more than ever, we see the value which mobile connectivity brings to our societies. In times of crises, the world’s mobile networks are proving yet again that they can deliver the performance and reliability to support both consumers and enterprises in their hour of need. In fact, quality of the network has been an important driver of market dynamics for a long time.
However, today’s demands for network quality and capacity are not a new development. In fact, they have been driving market demand for a lot longer and to a much greater extent than most would probably expect.
For almost a decade now, we have analyzed why some service providers grow and drive higher revenues than others. We call these leaders Frontrunners. While Frontrunners share common traits, they often deploy a variety of strategies to enable profitable, sustainable growth. The real key to their success is that they seek differentiation to create better return.
In a new analysis, based on 4G life cycle data from more than thirty countries, we have drilled deeper into how much good network performance benefits Frontrunners. And our research shows that investing in network quality is a powerful way for service providers to drive lower churn and/or higher average revenue per user (ARPU).
In all countries we analyzed, the service provider with the highest network quality has either higher ARPU and/or lower churn compared with the service provider with the lowest network quality.
In the top half of cases, where network quality is highest, we found that the lead service provider enjoys a higher average ARPU (+31 percent) and lower average churn (-27 percent). In the bottom half, where network quality is generally lower, we found that some service providers still enjoy higher ARPU (+61 percent) but with higher churn (+39 percent), whiles others have both lower ARPU (-14 percent) and lower churn (-32 percent).
When we looked across all service providers, not just leaders and quality laggards, network quality correlated with increased ARPU and reduced churn.
After macro-economic factors, network quality is one of the biggest influences on churn according to a multivariate analysis. Put simply, investing in network quality keeps subscribers happy. Or, as one executive at a service provider told me: “It is easy to attract customers. The problem is that when they see our poor network performance they leave.”
In aggregate, ARPU fluctuations seem to be driven primarily by macroeconomic factors. However, our analysis of Frontrunners shows significant revenue upsides for those investing first in high performance. The Frontrunner group achieved a 9.9 percent ARPU compound annual growth rate (CAGR) with 4G, while the rest of the market was at -0.8 percent CAGR. With 5G we already see Frontrunners charging price premiums averaging 15 percent.
It is clear that network quality already matters to consumers. This is hardly surprising as the service providers product is their network. We also see that network performance features more prominently in the marketing initiatives from successful service providers.
One of our most successful customers – who have generated a strong market share gain and growth over many years – allocate more than 50% of advertising spend to network performance.
Important for consumers, but we are convinced that the quality of connectivity will mean even more for enterprise users, as enterprises will depend on connectivity for their business survival.
Case studies on the importance of network quality
Let’s look at three examples:
- European market leader defending position
Network quality is a way for a market leader to maintain its leadership over the competition.Between 2010 and 2015, a market leader lost four percentage points market share to a new low price competitor, who surpassed the leader in networking benchmarks from P3, a leading international consulting, engineering and testing services company. The leader then launched a new strategy focusing on increasing capex to offer the best network experience. They regained their lead in P3 benchmarks, and these actions reversed market share losses by gaining 2 percentage points market share. More importantly, they also increased their ARPU lead.
- Challenger surpasses closest competitor in emerging market
Improved network quality can also be a way to build market share. For example, in 2016, a challenger was third in market share and experienced an erosion in ARPU. The company shifted capital expenditures from fixed to mobile, including doubling its 4G footprint in cities.
This gave it the best network in the country, resulting in market share gains and a reversal of the ARPU trend; the provider now shows a stronger ARPU increase than its peers. These gains allowed the challenger to overtake the number two player in the market. Its investment also paid off with more post-paid subscriptions and earnings (EBIDTA) up five percent.
- Market leader in Middle East invests in network quality to stem losses and regain performance lead
From 2010 to 2014, the second player in the market invested heavily in network performance, and the leader lost 10 percentage points of market share. The leader increased capex for 4G, stemming market share losses. Additionally, the leader was able to significantly improve network performance which resulted in faster ARPU growth, churn reduction and an improved Net Promoter Score compared to the competition.
Key insights from our analysis
Successful service providers use a variety of strategies to create differentiation that fit their local market and their position in that market.
In the three examples above, we saw operators defending and regaining market leadership by increasing their investments in network performance.
Although network quality isn’t the only way to create differentiation and drive value for customers, it’s clear that it is a cornerstone of successful strategies and improved commercial KPIs. This has been historically true through the deployment of 4G and as our society and daily lives will depend even more on advanced digital services, we expect quality mobile connectivity to be of even greater importance in the 5G era.
Borje Ekholm is President & CEO of Ericsson.
African women remain among the most digitally excluded globally, with smartphone affordability and digital literacy among the key barriers. New data from the 2025 GSMA Mobile Gender Gap Report, launched recently, reveals a persistent global gender gap in mobile internet use across low- and middle-income countries (LMICs).
It further notes that literacy, digital skills, safety, and affordability of data also remain critical barriers. The report highlights that 885 million women across these regions still do not use mobile internet, with nearly 60% of them living in Sub-Saharan Africa and South Asia.
While mobile internet is the primary way women in LMICs access the internet, offering critical lifelines to health, education, and financial services, the pace of female adoption has stalled, leaving 235 million fewer women than men connected.
Claire Sibthorpe, head of digital inclusion at GSMA, highlighted that the gender gap had narrowed significantly between 2017 and 2020, but progress flatlined in recent years.
Although 2023 brought a slight improvement, restoring the gap to 15%, 2024 saw minimal change, with the gap settling at 14%.
The disparity is most severe in Sub-Saharan Africa, where women are 29% less likely than men to use mobile internet.
“It’s disheartening that progress in reducing the mobile internet gender gap has stalled. The digital divide is driven by deep-rooted socio-economic and cultural factors that disproportionately impact women,” said Sibthorpe.
GSMA projects that closing the gender gap by 2030 could add $1.3 trillion to GDP across LMICs and deliver $230 billion in revenue to the mobile industry.
The report, funded by the UK FCDO, Sida, and the Gates Foundation, stresses the urgent need for targeted investment and policy action to bridge the digital divide and ensure that no woman is left offline.
“The mobile internet gender gap is not going to close on its own. It is driven by deep-rooted social, economic, and cultural factors that disproportionately impact women,” said Sibthorpe.
Nigeria may bring back a 5per cent excise tax on telecom services, according to the 2024 Finance Bill passed by the Senate last week.
Gbenga Adebayo, chairman, ALTON
The tax would apply to data transmission and voice calls.
First introduced in 2020 under the Mohammadu Buhari administration to widen the tax base, the measure was suspended in 2023 by President Bola Tinubu due to rising inflation.
With the budget under pressure, the government is now considering reinstating it.
Telecom operators warn that the tax would raise service costs and make it harder to close Nigeria’s digital divide, which still leaves more than 40% of the population without internet access.
Gbenga Adebayo, chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), said the proposal lacks detail and would increase the financial burden on users.
“We’ve had no clarity on how the 5% tax would be implemented, but the burden will fall on the consumer. Telecoms should be treated as a social good, not taxed like luxury items. No one taxes telecoms like this in countries where infrastructure is taken seriously,” he said.
ALTON also noted that operators are already subject to 54 different taxes nationwide.
The Nigerian Communications Commission (NCC) has not yet received the official version of the bill for review.
Telecom
GSMA Urges Governments to Prioritise Affordable Spectrum Costs to Support Global Digital Growth
The GSMA released its latest ‘Global Spectrum Pricing Report’, highlighting that average spectrum prices have not reduced in line with operator revenues over the last decade — putting significant pressure on their ability to invest in essential network infrastructure.
The report shows that, whilst both consumer prices for mobile services and the average cost of spectrum have fallen, the overall cost burden on mobile network operators (MNOs) has actually risen sharply. Global cumulative spectrum costs now account for 7% of operator revenues, a 63% increase over the past ten years.
Meanwhile, the average revenue generated per megahertz (MHz) of spectrum has declined by 60% over the same period. Although costs per MHz have fallen by up to 75% in some bands since 2014, operators have increased spectrum holdings by 80% over the same period to cope with bandwidth demand, driving up the overall cost.
A gigabyte of data is far more affordable today than ten years ago, with operators experiencing a staggering 96% fall in revenue per GB between 2014 and 2024. However, these falling revenues, when combined with the proportionately high cost of acquiring spectrum, restrict operators’ ability to invest in expanding and improving mobile networks, particularly 4G and 5G. The report shows that higher spectrum costs correlate directly with lower network coverage and reduced mobile speeds, impacting consumers and slowing the development of digital economies worldwide.
Vivek Badrinath, Director General of the GSMA, said: “The mobile industry sits at the heart of the digital economy, enabling services and opportunities that transform lives. But a dollar can only be spent once, and high spectrum costs can choke investment at a time when the need for affordable, reliable connectivity has never been greater. Governments and regulators must prioritise spectrum pricing that reflects market realities and fosters long-term digital growth. By ensuring spectrum is affordable, they can unlock faster network expansion, better service quality, and greater digital inclusion for all of their citizens.”
The Global Spectrum Pricing Report also highlights that public policy choices — such as setting artificially high reserve prices, creating artificial scarcity, and attaching onerous licence obligations — have often contributed to inflated spectrum costs. In some countries, spectrum costs can reach as high as 25% of operator revenues.
The GSMA urges policymakers to adjust spectrum prices in line with current market conditions and the economic realities faced by operators. With nearly 1,000 spectrum licences set to expire worldwide by 2030, upcoming renewals present a critical opportunity to reset pricing policies to drive investment in the next generation of mobile networks.
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