An essential element for revving up telco enthusiasm for 5G has been the promise of all those extra Internet of Things (IoT) revenue streams it’s supposed to bring in its wake. In particular, consumer IoT (especially when attached to the smart home concept), and industrial IoT where 5G is widely expected to transform industrial command and control with low-latency services enabling real-time (or near-time) control of industrial processes and robots.
If we were listening to the hype, we should be seeing communications service providers (CSPs) warming 5G up on the touchline while the opening 20 minutes are played by 4G and 3G (and 2G for that matter). But they aren’t.
Most IoT-oriented CSPs are continuing to play by the old 2/3G rules, especially when it comes to the business models and tariff structures.
IoT was supposed to be excitingly viable for telcos, because both the device and data costs were to be driven down to commodity levels, or even down to free because the lifetime cost of the IoT-enabled device and attached service (whatever it was) could often be recovered by its purchase price.
But today, cellular IoT tariffs are still high and charged by the kilobyte. Most of us thought the key to IoT – both mobile and sedentary – was to develop, new, forward-priced service offerings (ie. prices set at a level to encourage exponential growth). They’re not in evidence either – at least they’re not on offer by many (if any) telcos.
According to ABI Research, aspiring service providers should be playing a much more cunning game. The research firm points out that while the IoT is primarily associated with the industrial and enterprise markets, there is an adjacent opportunity emerging for Mobile Services Providers (MSPs) to spur the growth of a consumer IoT market.
“Consumer IoT is a nascent and fragmented market where connectivity is an essential enabler. For these reasons, MSPs can play a key role in driving the growth of the consumer IoT market from tracking applications to the connected car – direct to consumer (D2C),” said Pablo Tomasi, Senior Analyst at ABI Research. “MSPs must find the right balance between their traditional connectivity centered business model and the need to grow the market and develop new use cases.”
It claims MSPs should by now be launching consumer IoT products with flexible business models, possibly bundled with current smartphones and data plans. This way, MSPs will help to generate customer demand, which in turn will attract more OEMs to produce consumer IoT devices. Of course some telcos have been hatching new business IoT offerings, but given the long run-up these are few and far between.
MSPs must look at their consumer IoT and smart home offerings and create a comprehensive strategy that will drive synergies to connect devices inside and outside of the home,” claims ABI. (see –Consumer IoT is a US$6.6 billion opportunity that telcos must shape).
Things aren’t looking too positive for telcos on the industrial side either.
It’s easy to overlook that what telecoms is calling ‘Industrial IoT’ already has a long history and its own ecosystem of suppliers. In fact, far from surrendering IoT to the telecoms industry, companies like GE [General Electric] are doubling down to absorb IoT as Industrial IoT (IIoT) and, as GE puts it, “expand [the] company’s leadership in [the] IIoT market and better serve industrial customers.”
The original version of the article first appeared on Telecom TV. Find the original here. Views expressed in this article do not necessarily reflect those of ITU.
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