New Roles in the Market for Operators as they Look Beyond Traditional Revenue Streams

July 23, 2018

Andrew Parker, IoT Marketing Director, GSMA

Project Marketing Director, Connected Living programme, GSMA The role of network operators in the market is changing.  As the global infrastructure they support becomes more sophisticated – most importantly, as the Internet of Things develops – operators are shifting their commercial focus, from simply providing connectivity to offering end-to-end services and platforms themselves. As they look beyond traditional sources of revenue such as voice calls, operators join players from across the ecosystem – manufacturers, IT firms, systems integrators and others – to compete for what are now vast business opportunities.  According to forecasts by GSMA Intelligence, total revenues from IoT are set to exceed $1 trillion globally by 2025. The fastest growth will be seen in the Asia-Pacific region, which will make up more than a third of this total; North America is projected to account for $337 billion, and Europe $242 billion.

Operators are poised to make good on this commercial potential by making creative use of the technology, data and consumer trust which form the core of their businesses – for example by leveraging user attributes and handsets to provide digital identity services.  Also highly lucrative for operators will be the proliferation of smart cities, and with them smart cars, smart utilities and smart lighting – all of them requiring IoT SIM provision, and many needing interactive platforms and customer-facing services as well. The prospects for operators to act as more holistic providers of IoT solutions going forward are difficult to overstate.

Promising case studies of these developing profit sources are now coming in on a regular basis. Vodafone for instance are a market leader in IoT provision, having connected 74 million devices to their IoT platform last year; the recent challenging landscape for operators with respect to traditional income streams has prompted Vodafone to expand their business model, with some profoundly encouraging signs of success. Vodafone’s SuperIoT comprises solutions like vehicle tracking, asset tracking and people tracking; it enables end-to-end management of device, application, connectivity, service platform, support and security. The business case for this intensified and holistic focus on IoT has now been proven – in 2017 IoT was already Vodafone’s fastest-growing revenue stream, bringing in €747m revenues of that year. This represented a 12.7% growth in IoT revenues, primarily driven by a 36% increase in IoT SIM connections. Revenues from Vodafone’s IoT segment are now growing at 16% year-on-year, as compared to 1.5% growth in their traditional SIM card enterprise.

The positive news from Vodafone can be seen as part of a wider pattern among operators looking strategically to the future. Telefonica’s IoT revenues grew by a remarkable 30.4% last year over 2016 – when M2M qauretly revenues had already reached $74 million – through accelerated deployment of IoT technologies in the automotive and retail sectors. Verizon’s new IoT subsidiary Verizon Connect posted first quarter revenues of $234 million this year, contributing to an overall value of IoT revenues at Verizon of more than $1 billion – this indicates an increase of around 13% year over year from 2017.

What is the major source of such growth?

Acquisitions are proving a major source of this growth. Verizon’s IoT revenues, taking into account acquisitions, increased more than 60% in Q4 2016; Telstra’s acquisition of MTData last November promises to fast-track its enterprise in connected vehicles and related services. “Our IoT business continues to be a source of new growth as it nears $200 million in revenue,” announced Telstra CEO Andy Penn in January. Deutsche Telekom too are clear in their 2017 Annual Report that IoT represents “the biggest growth driver in the business customer environment”.

Growth in Asia, and in particular China, will of course surpass all others; the world’s largest operator China Mobile is currently investing around $300 million in IoT innovation, as it creates the world’s largest NB-IoT network, covering 346 cities by the end of next year. This could see IoT revenues across China reach an astonishing $230 billion by 2020, almost as much as is expected in Europe by 2025. Asia’s ‘mobile-first’ preference is driving the world’s most dramatic departure from the role of operators as providers simply of connectivity, but the pattern is clear worldwide – operators are increasingly alive to the more expansive role they can play across this now highly complex web of services and platforms, and to their uniquely strong position to deliver what consumers demand.

Back

Development Guide: NB-IoT for Agriculture The GSMA Internet of Things programme is an initiative to help mobile operators add value and accelerate the delivery of new connected devices and services in the IoT. This is to...

Read more | See all Resources

Case Study: Leveraging the SIM to Secure IoT Services Mobile network operators use SIM Cards (UICC cards as defined by 3GPP/ETSI) to authenticate devices accessing their networks and services. SIM cards can also support additional s...

Read more | See all Resources

Opportunities in the IoT: Evolving roles for mobile operators This report, co-authored by International Data Corporation (IDC), outlines the opportunity for operators, the routes to market, the essential technology enablers required and exa...

Read more | See all Resources

Opportunities and Use Cases for Distributed Ledger Technologies in IoT Since the launch of Bitcoin there has been widespread interest and activity in extending the application of distributed ledgers to other application areas. This has resulted in d...

Read more | See all Resources

Industrial IoT Feasibility Study: How Mobile IoT is Changing the Industrial Industry is embracing the Internet of Things (IoT). Large numbers of connected sensors are now being used to monitor the performance of complex physical machinery in real-time. A...

Read more | See all Resources

GSMA IoT Webinar Series 2018-19 The GSMA Webinar Series returns this year covering the subjects of industrial IoT, drones, operator capability and the role of the SIM in the wider Internet of Things. Our webina...

Read more | See all Resources

Collaboration and Innovation to pave the way for AI in the IoT: an Intervi Sierra Wireless is one of the leading technology providers in the industry and an important enabler for the IoT. In the wake of Mobile World Congress Americas, we interviewed Dan...

Read more | See all Industry News

Intelligent Connectivity Top of the Agenda in Bangkok as Asia Pacific Leads Asia Pacific is now the world’s foremost growth region for IoT, representing 40% of the world’s total spend in 2018: mass installation of sensors, cameras and other connected...

Read more | See all Industry News

Development Guide: NB-IoT for Agriculture The GSMA Internet of Things programme is an initiative to help mobile operators add value and accelerate the delivery of new connected devices and services in the IoT. This is to...

Read more | See all Industry News

Case Study: Leveraging the SIM to Secure IoT Services Mobile network operators use SIM Cards (UICC cards as defined by 3GPP/ETSI) to authenticate devices accessing their networks and services. SIM cards can also support additional s...

Read more | See all Industry News

NetraDyne Discuss their AI Platform, 5G and their vision of the IoT At MWC Los Angeles, NetraDyne demonstrated their innovative artificial intelligence product, Driveri. Sandeep Pandya, President of NetraDyne, was interviewed by the GSMA for his ...

Read more | See all Industry News

Opportunities in the IoT: Evolving roles for mobile operators This report, co-authored by International Data Corporation (IDC), outlines the opportunity for operators, the routes to market, the essential technology enablers required and exa...

Read more | See all Industry News

GSMA IoT at Europol-ENISA IoT Security Conference October 24, 2018 The 2nd Europol-ENISA IoT Security Conference focuses on the cybersecurity of the entire IoT ecosystem, enabling a broad discussion by bringing together experts from cy...

Read more | See all Connected Living Events

GSMA IoT Webinar Series: Industry 4.0 – Optimising Ind October 24, 2018 A total of 66 Mobile IoT networks, including LTE-M and NB-IoT, have been launched, enabling a fraction of the 25.2 billion IoT connections by 2025 per forecast by GSMA ...

Read more | See all Connected Living Events

DJI AirWorks 2018 October 30, 2018 DJI brings together the full commercial drone industry for its annual AirWorks conference. The event highlights companies that are at the forefront of enterprise drone ...

Read more | See all Connected Living Events

GSMA IoT Webinar Series: Cellular – the missing link for d November 07, 2018 Join leading industry experts as they discuss the latest developments in how cellular communications enables BVLOS operation of commercial drones. This Webinar will be ...

Read more | See all Connected Living Events

GSMA at IoT World Forum 2018 November 08, 2018 Sylwia Kechiche, Principal IoT Analyst, GSMA Intelligence is joining British Telecom, Cisco, Deutsche Telekom, Orange and SAP in the panel “Exploring New Vertical...

Read more | See all Connected Living Events

The Commercial UAV Show November 14, 2018 The Commercial UAV Show is Europe’s largest exhibition and sponsored conference for commercial UAV professionals. Celebrating its 5th year in 2018, the Commercial UAV...

Read more | See all Connected Living Events