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

Mobile IoT Case Study: How Asia Pacific Intelligently Connects to IoT This report shows how LTE-M and NB-IoT are being deployed in the Asia Pacific region. Drawing on interviews with mobile operators and their partners, the report describes six ver...

Read more | See all Resources

The IoT Guide to MWC19 The comprehensive guide to the Internet of Things at MWC19 Barcelona...

Read more | See all Resources

Mobile IoT Journey Through MWC Barcelona 2019 This self-guided Mobile IoT Journey through MWC19 Barcelona gives attendees the opportunity to explore innovative demonstrations and to see key information at a glance. Discover ...

Read more | See all Resources

On-Demand Webinar: SIM-ply Secure – Leveraging the SIM to Create a Truste The SIM is the only common component across all types of cellular IoT devices, providing a trusted and standardised foundation for the Internet of Things. Being hardware security...

Read more | See all Resources

Infographic: a Look into the Future of Mobile-Enabled Drones The drones market is an area of the IoT forecast for huge growth. This infographic acts as a useful guide to the most essential facts and figures on this burgeoning vertical mark...

Read more | See all Resources

Mobile IoT Toolkit The Mobile IoT Toolkit is designed for mobile network operators and IoT developers to quickly get started with IoT solutions development and deployment. For further information o...

Read more | See all Resources

Mobile IoT Case Study: How Asia Pacific Intelligently Connects to IoT This report shows how LTE-M and NB-IoT are being deployed in the Asia Pacific region. Drawing on interviews with mobile operators and their partners, the report describes six ver...

Read more | See all Industry News

Mobile IoT Toolkit The Mobile IoT Toolkit is designed for mobile network operators and IoT developers to quickly get started with IoT solutions development and deployment. For further information o...

Read more | See all Industry News

IoT Takes Centre Stage as Mobile World Congress Rolls into View Mobile World Congress is approaching again – running from 25 February to 28 February in Barcelona – and IoT is naturally remaining centre stage. The 8th Mobile IoT Summit is ...

Read more | See all Industry News

Top 5 IoT Innovations at CES 2019 that Caught our Eye As operators expand their commercial horizons ever more broadly with the rise of IoT – becoming not only the providers of connectivity, but connected services themselves – th...

Read more | See all Industry News

5G and Mobile IoT Prove Natural Partners for the Year Ahead Svetlana Grant, IoT Programme Director, GSMA There are times when some in the industry quietly wish 5G had been given another name.  The capability leap is simply not comparable...

Read more | See all Industry News

LTE-M Commercialisation Case Study: How AT&T and Telstra Connect Milli This paper outlines how two of the world’s leading mobile operators – AT&T and Telstra – are using LTE-M technology to roll out innovative new services. In...

Read more | See all Industry News

8th Mobile IoT Summit February 24, 2019     *please note that online registration will close at 9am GMT on Friday, 22 February 2019 Join the 8th Mobile IoT Summit to hear the latest industry updates...

Read more | See all Connected Living Events

MWC Barcelona 2019 February 24, 2019 Join the GSMA’s Internet of Things programme at MWC Barcelona 2019 to discover and shape the future of the IoT. Through a series of seminars, exhibitions and tech...

Read more | See all Connected Living Events

MWC19 Barcelona Seminar: The Internet of the Skies – Conne February 26, 2019 Tuesday, 26 February 2019, 11:00 – 12:30 Seminar Theatre 1, Hall 1, South Entrance (Level 1), Fira Gran Via – Download Directions – This GSMA seminar explores rea...

Read more | See all Connected Living Events

MWC19 Barcelona Seminar: Future Proofing the Internet of Thi February 26, 2019 Seminar Theatre 1, CC1.5, Hall 1, South Entrance (Level 1), Fira Gran Via – Download Directions – Without security, today’s vision for the Internet of Thi...

Read more | See all Connected Living Events

MWC19 Barcelona Seminar: Operator Capability – Unlocki February 26, 2019 Seminar Theatre 1, CC1.5, Hall 1, South Entrance (Level 1), Fira Gran Via – Download Directions – Learn about pioneering IoT industry achievements in China....

Read more | See all Connected Living Events

MWC19 Barcelona Seminar: Beyond Connectivity – Operato February 27, 2019 Wednesday, 27 February 2019,  13:30 – 15:30  Seminar Theatre 1, Hall 1, South Entrance (Level 1), Fira Gran Via – Download Directions – This GSMA seminar explor...

Read more | See all Connected Living Events