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This guest post by Tom Rebbeck of Analysys Mason explores what operators can do to realize the potential of IoT. It is based on his recent report, “Rebalancing the Economics of IoT” that was sponsored by MATRIXX and is available here

In the first blog post, IoT Still Holds Plenty of Promise for Operators, I talked about how IoT had underperformed on some measures, but still holds great promise for operators. This post talks about how operators can realize that potential.

For IoT to succeed for operators, the economics need to reflect the revenue. Operators should look at IoT as a new opportunity and not an extension of the smartphone business. Almost all mobile operators still treat IoT as an adjunct to their central business, with processes to match. IoT is a different business, and should be managed as such.

Automating the Sales Process Is Overdue

Mobile operators may understand the potential of IoT to generate new revenue, but their response to the opportunity is framed by the core business of selling connectivity for smartphones. In particular, pricing and sales for IoT are based around models used for B2B sales.

As one operator told us “[Our sales process] is still very much an old-fashioned thing. We put on a suit and go out to someone’s office, have a chat about requirements, and then pull together a proposal. We probably generate more cost than the deal is worth.”

Operators need to think about IoT differently and apply fresh approaches, such as having a standard price list and allowing customers to buy connectivity direct from a website with no manual intervention. Operators are often aware of these different approaches and can see them being adopted by smaller, more agile competitors, such as MVNOs like 1NCE and Twilio. Automating the sales process will allow operators to turn their attention and resources to more valuable activities than selling connectivity.

eSIM and iSIM Should be Considered as Opportunities

Operators should also consider developments such as eSIM/iSIM as an opportunity to sell connectivity to other parts of the value chain, such as device manufacturers, as well as to end users.

eSIM and iSIM solutions will also help to eliminate some of the costs of delivering IoT solutions. At the very least, they will remove the logistical problems of managing and shipping physical SIM cards.

iSIM could help to resolve some of the hardware issues that affect IoT solutions which use cellular connectivity. Many of the problems that operators face in the onboarding phase are related to the device. Even if most devices are activated with no problems, given the thin margins of IoT, “the exceptions kill the economies of scale” as we heard from one operator. iSIM could help eliminate most, if not all, of these issues, again helping operators cut costs and focus on activities that add more value.

Developments in 5G Should Make Exposing Features Simpler

Operators should put development effort into using the Network Exposure Function (NEF) in the 5G core to expose more features relevant to IoT. NEF is a function within the 5G core that exposes services and resources over APIs, within and outside the 5G core. Operators should gain a better understanding of how these APIs could be used to automate processes relevant to IoT, including rating and billing.

The Opportunity Remains Huge

Despite a slow start, IoT remains a substantial opportunity for telecoms operators. Already, over 1 billion SIMs are connected to IoT devices. As a standalone business, the IoT division of major operators like AT&T and Vodafone would surely be worth over a billion dollars.

As I wrote in the previous blog, take-up will increase further as low-cost connections become more widely available, technology developments such as iSIM make it easier to incorporate and manage connectivity, and awareness of IoT among organizations increases. 5G will further add to the possibilities for IoT.

To take advantage of these opportunities, operators will need to refine their ways of working and move resources away from selling and supporting basic connectivity and on to higher-value activities, such as developing end-to-end solutions. Marginal changes are not enough. Operators need to make more fundamental changes to their systems and processes.

Woman looking at phone, 10 Ways to MonetizeB2B2X

Digital Playbook: 10 Ways to Monetize B2B2X

Converting B2B2X opportunities into revenue will require operators to move beyond legacy and choose better technology.

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