IoT survey: Uncertainty about operators’ role and new business models persists

Features

Analysis of our annual IoT survey by Annie Turner found diverse opinions on a number of key areas.

Our survey received 102 responses, 40% of which were from network operators (an almost identical proportion to last year). The rest were made of up hardware and software vendors, systems integrators, consultants and trade associations or standards bodies.

Most, 87%, were from Europe with 7% from Asia and 6% from the Americas. Please note that all percentages are rounded throughout. The survey was carried out in November 2020 by Mobile Europe/European Communications.

Where is the growth?

We asked respondents what they see as the biggest growth opportunities in IoT and to choose their top three. The top three chosen by respondents were eHealth, smart cities and Industry 4.0/manufacturing, which have pulled away from the pack.

Perhaps it’s not surprising that eHealth was identified as the sector with the most room for growth in a year that has been defined by the pandemic. It was joint top with 49% (tied with smart cities, last year’s leader), up from fourth place in 2019.


Industry 4.0/manufacturing had the second highest score this year with 47%, a much closer second to smart cities than it was last year when there was a 9% gap between the two.

A study published in November by Juniper Research found that the global number of Industrial IoT (IIoT) connections will increase from 17.7 billion in 2020 to 36.8 billion in 2025 – an overall growth rate of 207%.

The research identified smart manufacturing as a key growth sector of the Industrial IoT market over the next five years, accounting for 22 billion connections by 2025.

Challenges facing operators

When we asked about the single biggest challenge facing operators in IoT today, new business models were overwhelmingly cited as the biggest stumbling block (as they were last year), with cybersecurity the second biggest with 21% of the vote, almost identical to last year.

If you add the vote for new business models being hard to validate (28%) to the vote for inability to justify the business case (11%), it catapults business issues to being
way out in front as the main inhibitor to operators’ IoT businesses.

There is clearly awareness of this in the telecoms industry, with, for example, Vodafone UK partnering with IoT.nxt, part of the Vodafone Group, in November an announcing a new range of IoT services. In particular, it is looking to help medium-sized British businesses digitalise and gain a return on investment. Vodafone will offer customers every part of an IoT solution, with a single data management platform, and the capability to integrate old and new devices in one system.

How big a priority is IoT?

The year of the pandemic seems to have shifted priorities – the bulk of survey respondents either thought IoT was important, but not critical, or a focus, but not a major one, making it feel like IoT is seen as nice to have rather than essential – maybe a lack of clarity around the business case yet again?

Specifically, last year 29% thought that IoT was critical to the future of their companies, but this year that more than halved to 14%. Last year 44% thought it important, but that rose to 51%, absorbing only some of the shift from ‘critical’ to ‘important’.

Both last year and this, 10-11% of respondents decided it was neither important nor unimportant. In 2019, almost 5% thought it wasn’t a priority, this year that rose to almost 9%. In other words, about a fifth of our respondents have no clear view of the potential role of IoT in their businesses or think there is no role.

Technology in Europe

NB-IoT was the clear leader among respondents(graph below) when we asked them to name the technology they saw as the most prominent IoT technology in Europe as 2020 comes to a close. This wasn’t altogether surprising although there has been a lot of complaint about the lack of coverage and reports of would-be customers deferring investment because of it.

At an online roundtable in November, run by the international carrier, BICS, the panel was asked if poor coverage is because operators lack confidence in the business model and ROI; or it’s proved to be more expensive to upgrade the networks as they can’t do it by software (as was first assumed); or because they need new sites to get sufficient coverage for IoT use cases?

Talia Goldstein, Head of Roaming Business at BICS, agreed that operators have found it hard to monetise so far. However, her colleague, Fernando Llobregat, Head of Enterprise Sales and Go To Market for IoT, thinks this is changing, with the market moving on from the initial hype and dazzle of billions of connected devices.

He said, “Now we are plotting actual numbers of nodes; we are getting into something more concrete. We talk money with them [as in], ‘We are going to pay you this amount of money per device,’ so they can start coming up some numbers, which was not the case before. “When we discuss [an implementation] with them, they have a clear idea of what the business implications will be for them and they are also scaling up their capabilities. Mobile operators really want to move up the value chain and provide solutions. It’s not just about the connectivity.”

Most important tech?

By the end of 2025, our respondents expect NB-IoT to have pulled a little further ahead of LTE-M. However, non-cellular connectivity’s market presence is expected to fade somewhat, with LoRaWAN winning 22% of our respondents’ votes for market presence now, down to 17% by the end of 2025. Likewise Sigfox’s share of respondents’ vote is 3% now, falling to 1% in five years’ time. They might endure better and longer than expected, given NB-IoT's slower than expected progress.

Unsurprisingly, 5G remains the technology expected to have the most impact on IoT in the coming year at 45% (respondents were asked to choose just one option). eSIM was a very distant second at 17%, but has gained about 5% since last year.

The relative lack of interest in eSIM’s potential is surprising. As Tom Rebbeck, Partner, Research at Analysys Mason, noted in a briefing in December, operators have so far failed to counter the terrific success of mobile virtual network operators like 1NCE, EMnify and Twilio. Deutsche Telekom has a small stake in 1NCE, which since launching has introduced more than 5 million eSIMs into the market, thanks largely to a very simple price plan – connectivity costs €10 for up to ten years – and the ease of buying online.

Rebbeck said, “The main telecoms operators have been a bit slow to react to this… I’m slightly surprised that they haven’t countered it yet and I think probably we’ll see one of the big operators counter it during next year [2021], quite possibly through an acquisition: they could buy out one of these smaller, smaller MVNOs.”

Introducing the edge

This year we introduced edge computing/processing into the survey as an entity in its own right and it immediately gained 13% of the votes, while cloud’s share fell to 2% from 11% last year (see the separate article on page 24). Data analytics and machine learning/AI just traded percentages, reflecting the early days for them in IoT.

One respondent suggested that Wi-Fi 6 would have the greatest impact on IoT, another that data analytics and AI are the province of over-the-top players “as they are closest to end users” while “5G, other network, edge, blockchain etc are enablers.” This is illuminating in that it suggests the primary use of analyticand AI is for customer experience and doesn’t envisage a role for AI and analytics in carriers’ operations, and network automation and orchestration.

It was interesting that this year blockchain had no takers as the technology with the most potential to impact IoT, and it topped the ranking for the most overhyped tech as well, with almost a third of the vote, way ahead of 5G in second place for being overhyped with 16%.

We’d expect this to change in the next year or two. José Antonio López-Jamar, CEO, Telefónica Global Roaming, told Mobile Europe/European Communications that when it comes to blockchain’s telco potential, the time is now, and Europe’s biggest telco groups, including Orange and Deutsche Telekom, Vodafone and Telefónica, are carrying out various roaming trials with blockchain to improve accuracy for billing, to lower cost and improve end-to-end services – all parts of the puzzle that need to come together.

Vodafone UK’s Scott Petty noted that some medium-sized businesses, as well as multi-nationals, are interested in cross-border IoT and BICS’ Goldstein too thinks it’s taken a while, but a sea change is coming regarding IoT and roaming.

However, one respondent stated, “I don’t believe eSIM is the way to go for IoT. Access-agnostic core with standard-compliant authentication and security is a better solution.”

What does 5G bring to the party?

We asked respondents what they thought 5G would have brought to the IoT party by the end of 2021 and what they expect it will bring by the end of 2025. In both instances, they were asked to choose all that applied.

Low latency was the winner for 2021 (46%), although by the slightest of leads over new operator business models (45%). New use cases, which in many instances will involve new business models, came a very close third with 44%.

This underlines the telecoms industry’s high hopes that 5G – and its low latency attributes in particular – will give IoT a huge boost (see article on IoT at the edge).

Even so, almost 16% of respondents thought 5G’s role in IoT to the end of 2021 is overhyped, which falls to a still significant minority of 10% by the end of 2025.

It’s interesting that low latency dropped to fourth in importance by the end of 2025 in our respondents’ expectations, perhaps being seen more as an element of solutions rather than a breakthrough tech by then.

The ability to better manage and secure IoT networks, which languished at second bottom in the 2021 predictions with 20%, rose to joint second place for the end of 2025 with more than double its original score of 46%. No doubt this was a reflection of the increasing prevalence of 5G’s non-standalone mode in core networks, as opposed to its standalone mode in the RAN now.

Effects of the pandemic

The main effect of the pandemic on the IoT market, according to 44% of respondents, has been to accelerate its deployment in the longer term. Some 23% thought it had slowed IoTin the short term only, hence two-thirds of our respondents were bullish about IoT in the longer term.

Perhaps not surprisingly given the many uncertainties at the moment, 21% of respondents said they didn’t know – an echo of the response to how important is IoT to your business (see above), about a fifth of our respondents either had no clear view of the potential role of IoT in their businesses or thought it had no role.


We asked which European operator was leading in IoT – in previous years Vodafone was the clear winner (see Gartner Magic Quadrant on page 30 the article on IoT infraststurcture and ecosystems), but this year it was pipped at the post by respondents choosing Deutsche Telekom (DT) as the leader, with 38% of the vote. Vodafone was on 34% and the two had a long lead on the rest of the field: Orange came third with 11% and Telenor got a special mention from some of our respondents who answered “Other”.

We think this sudden and significant change in the perception of DT in the IoT market could be due to it announcing plans to spinoff its IoT business in June to strengthen its presence in the growing IoT market. Deutsche Telekom IoT began operations on 1 July and has end-to-end responsibility for the entire IoT business at DT.

Rami Avidan, CEO of Deutsche Telekom IoT, said, “The amalgamation of all IoT solutions into one framework provides a business environment that is unique to date. With this, Deutsche Telekom is establishing the world’s first open IoT network and expanding its role from IoT player to IoT orchestrator.”

Operators’ role in IoT

There was a huge difference of opinion between our respondents regarding what they thought an operator’s role should be in IoT, with 43% arguing for connectivity and 40% for an end-to-end solutions provider. About 14% thought operators should provide data platforms.

Vendors and others often have a different view of operators’ potential roles and capabilities than that of operators themselves, so we investigated further. Of the operator respondents, 48% thought they should provide end-to-end IoT solutions and 38% connectivity, reversing the order of the overall vote and with a higher proportion of operators going for the end-to-end option.

Still, there was clearly no single approach to ecosystems and roles within them (as Nick Wood confirms and explores in the article on page 28).

As one respondent put it, “Operators try hard to be end-to-end providers, but in reality, they are better in [their] core business of providing connectivity… for IoT to boom operators should create open platforms for applications developers to create an IoT app ecosystem.”

That’s certainly interesting in the light of Vodafone’s approach through its subsidiary with IoT.nxt and Deutsche Telekom’s global hub set up this year.