Mobile Operators Neglecting IoT Is A Paramount Mistake

Mobile Operators

Within the past year, mobile operators have been working hard to build relationships with major information and communications technology (ICT) vendors to gain more relevance in the enterprise ecosystem, particularly in regards to IoT value-added services. Recent notable partnerships include AT&T and IBM, Verizon and Cognizant, Tele2 and HCL Technologies, and Vodafone and Huawei. These partnerships are critical to operator growth in IoT to add more connections on the networks, build new enterprise relationships, and add new revenues from applications and data/analytics services. But less understood is the impact IT firm relationships have on mobile operator’s smartphone businesses; mobile operators gain a majority of their wireless revenues from smartphone connections. Image dicovered via statista.com

Market share of wireless subscriptions held by carriers in the U.S

Mobile Operators

For IoT services, IT-centric firms, such as HCL Technologies, Cognizant, and IBM understand that their greatest value is in managing machine data and providing insights based on analysis of that data. However, they are not as adept at extracting the machine data, which can require expertise in embedded software/hardware engineering, communications devices, and networking.

Communications devices and networking are mobile operator core competencies. And some mobile operators are starting to excel in other areas. AT&T, for instance, is offering through its innovation centers embedded software/hardware engineering services designing and building sensors.

Learning To Adapt

The bigger prize for mobile operators from these relationships is the benefits to smartphone services revenues. Smartphones are an important if not primary hub for many IoT applications within the connected car, smart home, healthcare, and connected machine field services sectors. It is these IoT applications that drive up the value of the smartphone and therefore help operators maintain their smartphone data plan fees.

The numbers paint a clear picture. Worldwide handset data plan revenues, which are dominated by smartphones, across business and consumer segments, were approximately $350 billion in 2015 and will grow to about $475 billion in 2020. In the enterprise segment alone, handset data plan revenues were $153 billion in 2015 and will grow to more than $200 billion in 2020.

In contrast, IoT services revenues for data and analytics, as well as professional services that include applications/development, systems integration, and consulting, will grow from $44 billion in 2015 to $128 billion in 2020. If only considering cellular connections, these same revenues value in at $20 billion and $72 billion, respectively.

Neglecting IoT Could be Costly

While IoT services revenues are significant, smartphone data plans are still the backbone of mobile operators’ business. For a mobile operator to neglect IoT is a paramount mistake, as IoT applications help maintain a data plan’s value, regardless of whether or not they pursue IoT services. Moving forward, operator smartphone strategies need to evolve to support the myriad of applications and opportunities that will stem from the billions of connections in the IoT. This can be something as simple as shared data plans across IoT and smartphone assets, to full IoT solution services.

Mobile operators that are serious about IoT are transforming their business models to offer more value-added services and the ICT partnership is an important first step in this journey. A critical side benefit for operators is the positive impact of these relationships on its smartphone businesses. Interestingly a future benefit for operators is they become bonafide IT services firms themselves. Whether this becomes a reality is up for grabs. As for today, the mobile operator-IT services firm relationship is very complementary. Both are benefitting from a growing IoT market expected to grow to over 22 billion connections by 2020.

By Dan Shey

Thomas Franklin

Future of Stock Markets : Raising Capital Through ICO is 10x cheaper and 20x easier

Future of Stock Markets: Raising Capital Through ICO How blockchain will replace the stock markets as we know them today. Welcome to the future. It’s a beautiful Monday morning of 5th June, 2023. Jane wants ...
David Discenza

Four Ways to Improve Cybersecurity and Ensure Business Continuity

Four Ways to Improve Cybersecurity Cyber-attacks on businesses have become common place. In fact, it’s estimated that a cyber-attack occurs every 39 seconds. Who are the targets of these attacks? You might think that it’s ...
Ramanan GV

Establishing a Unified Governance Model for the Digital Workforce

Increase visual control and reduce OPEX by 30% The Digital Service Providers (DSPs) are riding an automation wave. Painful manual tasks, which burdened staffs for ages, can now be easily handled by the software bots ...
Al Castle E911

Businesses Need E911 for Remote Employees

E911 for Remote Employees Remote working is no longer a luxury or a distant possibility – it’s the norm for enterprises around the world. The “trend” of telecommuting is not new; for example, the number ...
Fig 2

Leveraging machine learning models for predictive maintenance of network services

Leveraging machine learning models As per lightreading's service assurance and analytics research study conducted with 100+ network operators and service providers, nearly 40% reported that issues around service assurance as a massive challenge. Service assurance ...
Garry Connolly

What’s Behind Smart Devices? A Data Centre, Of Course

Smart TV's, Smart Phones, What’s Behind Smart Devices? It’s not difficult to be “smart” these days. We wake up in the morning and check our social media feeds on our smart phone while turning on ...