As operators weight up new revenue opportunities, they should consider the value they can add, and market share they can capture as part of the IoT solution tack.
As the Internet of Things (IoT) ecosystem continues to evolve and grow with 5G and edge computing expansions, forecasts see the IoT market size reach $2,465bn by 2029, representing a compound annual growth rate of 26% from its 2022 estimate of $478bn. Meanwhile, IoT connections are projected to grow from 15.1bn in 2021 to 23.3bn in 2025.
With demand for field-based sensors and equipment growing, agriculture will be the sector with the fastest market size growth forecasted. With both sustainability and a European energy crisis at the forefront of many minds, the use of IoT and smart solutions also have become the key in utility and energy sectors. Other sectors have also gained popularity over the past few years, with healthcare for instance making up the largest share among all IoT sectors currently.
Regionally, Asia Pacific is expected to grow fast together with China which already holding a largest number of IoT connections. On the end-user side, Europe is undergoing a growing demand for the technology, especially in conjunction with big data and analytics solutions.
While connectivity provision is core to the telecom business, IoT solutions including application platforms can create an opportunity for operators to go beyond core services and provide value to their customers.
IoT value chain and its relevance
Engaging in the IoT value chain can vary depending on which layer or element of the chain an organisation is involved in.
The first layer is formed by IoT devices and is forecast to hold 26% of total IoT revenues by 2028, according to Analysis Mason. Here, objects are often already integrated with connectivity into the product design. Further embedded into the device are also sensors which capture data from the surroundings and feed into actuators (mechanical or electrical) to trigger instructions, for instance changing irrigation levels.
At the network connectivity level, operators can deploy both mobile, fixed or satellite for data transfer to the end users. Compatible wireless networks include Wi-Fi and Bluetooth connections, licensed cellular such as 5G, NB-IoT, LTE-M, as well as proprietary solutions such as LoRa.
But drilling further into where the real commercial value sits in the IoT chain, with a staggering 66% of revenues projected for 2028, is the applications, platforms, or also sometimes referred to as the service enablement level. Within the applications layer there are multiple sub-levels, including the backend system which collects, stores and analyses data while the software level provides device management and software application development.
It is also at this level where services and applications will offer intelligent solutions. Solutions can vary from identifying cost reduction opportunities to sending warning alerts based on error predictions etc. This part of the value chain is also responsible for producing billing and providing customer support and integrating key network components.
Source: Analysis Mason
Operator approaches and opportunities in IoT
Based on their core traditional services, operators have predominantly engaged at the connectivity layer, both nationally and internationally. Yet there are several opportunities for operators to play a role in the integrated platforms layer, adding value to the ecosystem and to transform the market by offering tailored vertical solutions and engaging in higher value activities beyond core connectivity.
With a growing number of operators building private cloud and hosting capabilities for new and existing networks, they are well-placed to capitalise on this capability, offering cloud hosting to enterprises combined with service level agreements (SLAs) and security. This is a key part of the service enablement level with backend servers collecting and analysing data for added value.
With the advent of 5G standalone core, operators are also at the forefront and can prepare to offer end-to-end SLAs and improved network slicing to customers for different traffic types. This means they can play a key role in data analytics. This is especially relevant when critical data such as in emergency information is needed.
Further, on device management, operators can provide security, authentication, and remote troubleshooting services as they already are providing some of the communication hardware. As the connectivity partner to enterprises with established relationships, operators also have a real opportunity to act as the trusted IoT services partner.
iConnect and vertical use cases
For a successful participation in the IoT market, aside from engaging in high value layers of the chain and capturing the lion share in revenues, it is also important to remove silos and forge partnerships that help deliver solutions, as well as to have a greater understanding of where peers are already engaged in.
As such, China Mobile International has created iConnect services, to enable both large- and small-scale operators. Understanding that rolling out and managing IoT can be costly or complex, iConnect acts as a trusted partner to support both faster deployment and easier implementation processes which enables connectivity management at a global scale while offering a suit of customised services.
Offering several applications, in agriculture for instance, smart and precision farming can detect crop stress and send alerts using real-time environment monitoring. These can help lower costs and increase productivity as they can assist farmers with more efficient decision-making capabilities using precise data. Meanwhile, in smart metering processes can be optimised, aging and defect machinery easily identified, and carbon emissions monitored.
In conclusion, there is certainly value for operators to engage in the IoT chain beyond supplying pure connectivity. In a fostering and collaborative market ecosystem, operators further have a role to play in accelerating the development and success of the IoT market, the wider value chain, and enabling peers to take a piece of platforms’ forecasted lion share.