Telcos see multiple paths to internet of things revenue

A report from Ericsson has revealed that telecoms operators are testing out multiple routes to monetising the IoT

More than two-thirds of telecoms service providers lack a well-defined internet of things (IoT) strategy, as operators test out multiple approaches in the hunt for IoT revenues, according to a report from Swedish network hardware supplier Ericsson.

The report, Exploring IoT strategies, drew input from 20 multinational telcos to find out how they were engaging with, and positioning themselves in, the IoT value chain.

All participants were fully on-board with the potential of the IoT, particularly in relation to emerging cellular IoT technologies such as narrowband IoT (NB-IoT), and 80% said they wanted to create value “beyond connectivity”.

“The report confirms the importance of IoT to the current and future business of leading service providers, no matter where they operate in the world,” said Ericsson’s head of IoT, Jeff Travers. “Regarding IoT as a new type of business, service providers are investing in new technologies and establishing new business models for revenue sharing and increased use of indirect channels.

“They are also creating new delivery models for as-a-service and online services and driving innovation with partners and customers.”

The report identified an IoT positioning framework with four main roles: network providers, providing underlying infrastructure to connect IoT services; connectivity providers, managing and provisioning IoT services; service enablers, providing service platforms for IoT developers; and service creators, becoming IoT service providers themselves.

Most interviewees saw both the network provider and connectivity provider roles as foundational roles that would ultimately drive most IoT revenues, but additional value could be created either by providing differentiating services through sub-roles within those four roles, or by progressively offering end-to-end IoT solutions to customers.

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The study showed that telcos could take multiple positions at any one time, depending on use cases and other factors.

The survey also found that operator IoT businesses tended to be run as dedicated startup units, measuring success by a number of KPIs [key performance indicators] such as device and app download numbers.

The operators felt the most relevant sectors for them were fleet management and logistics, connected cars, smart cities and industrial automation, with consumer applications less relevant because of “unclear value propositions” and “competition from over-the-top players”.

Most also believed that the advent of 5G would have a significant impact on the IoT, but few had a clear idea of what 5G use cases would eventually emerge.

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