How Big a Slice of Enterprise IoT Revenue Can Telcos Expect to Gain?

A new wave of enterprise transformation is gathering pace around IoT with 5G only accelerating it. But will Telecoms get more than the connection share?

Between 2017 and 2025, the GSMA predicts that IoT connections will quadruple to around 25bn. Even just in terms of the device connectivity that will take place over licensed networks, this will be a significant business opportunity for operators.

But IoT is about much more than connection. It’s opening entirely new ways of doing business for many enterprises while allowing several others to radically optimize existing models, reduce costs, improve sustainability and very often give the customer a better experience in the process.

Meanwhile, as the rollout of 5G gathers momentum, Telcos are under pressure to secure meaningful returns on what will be a considerable technology investment. Enterprise initiatives based on IoT have emerged as perhaps the clearest opportunities, so we shouldn’t be surprised that IoT has been seized upon by the industry as a much-needed justification for, and driver of, 5G. IoT could put Telco at the center of a new wave of industrial and commercial transformation, from product-led to consumption-led business models.

New Demands on Enterprise. New Opportunities for Telcos.

Service revenue will depend on enterprise being constantly engaged with, and responsive to, remote devices. Monetization, in terms of charging and long-term customer value, will depend on how well and how quickly enterprises can respond to the information they collect.

Monetizing and managing complex and dynamic environments is likely to be outside the comfort zone of most enterprises. Telcos, however, are accustomed to monitoring a wide range of network activity and responding with, for example, a charge, a customer notification or an alarm. They’re comfortable dealing with very high volumes of data from multiple sources and providing instantaneous responses.

IoT offers Telcos space to build on their baseline connectivity proposition and add considerable value, through core capabilities such as real-time mediation, policy control, charging, analytics, notifications and reporting. Opportunities are emerging for them to mine a profitable seam of services value through what we might call “rich connectivity.”

Breaking Through the Limitations of Legacy BSS

Their ability to do this could be obstructed by the boundaries of traditional OSS and BSS, however. An effective monitoring platform for devices (things) and their activities will need to combine:

• The ability to monitor information being collected and created by a wide range of remote devices, often in real-time where applications are business or life-critical
• The ability to analyze that information, apply complex algorithms and calculations and take appropriate first-response actions, such as creating directions back to the device, or alarms or notifications to the customer
• Awareness of the distribution, location and status of specific devices to monitor their requirement for power or maintenance

Above all, the management platform will need to be intelligent, helping enterprises to optimize activity and taking costly human intervention out of the operational model. This will only be feasible, however, if backed up by a sophisticated platform that will automate much of the management of IoT deployments and which will provide transparent visibility of activity and usage.

A Significant Return on 5G Investment

Telcos undoubtedly have a vital role to play in the internet of things and their core capabilities should open more than connectivity revenues as a reward. Connectivity will commoditize fast and is unlikely to provide a substantial return on the investment needed to build out 5G.

As enterprises move into their second phase of digital transformation, Telcos need to step up their proposition and leverage their ability to apply intelligence to high-volume real-time data. Moving up the value chain from simple connectivity to a richer suite of capabilities that incorporates dynamically configurable pricing, device management, real-time insights and analytics will help them secure the bigger prizes.

Read more on how Telcos can seize the rewards of enterprise transformation.