Summary Bullets:
• NB-IoT and LTE-M deployments are proliferating. Proofs of concept abound, but neither technology appears to be generating significant momentum yet.
• Regardless of the technology, moving beyond connectivity is vital to mobile operator success in IoT.
In the past six months, cellular operators worldwide have been rapidly deploying narrowband (NB)-IoT and LTE-M. In June, the GSMA announced the success of its Mobile IoT Initiative, claiming nearly 75 operators deploying NB-IoT or Cat-M and 500 members in its Mobile IoT Innovators initiative designed to help operators add IoT value. The bulk of this focus has been on NB-IoT, which cellular operators are using to establish new use cases, including smart agriculture and a variety of smart cities applications involving lighting, parking meters, smart buildings and the like. For example, T-Mobile USA completed live NB-IoT smart city trials in July 2017 in advance of a planned national launch.
Meanwhile, LTE-M has also begun to roll out, with U.S. operators AT&T and Verizon its biggest proponents. LTE-M has advantages that NB-IoT doesn’t, including support for mobility (NB-IoT deployments are stationary), making it more suitable for connected cars and applications that involve a human. LTE-M also offers voice connectivity and supports higher bandwidth, meaning clever developers could potentially build more interesting applications that involve voice commands or video. The technology is now beginning to gain momentum with a number of European operators, including Orange, Telefónica and KPN.
The new technologies are welcomed by mobile operators, whose steady decline in revenue from traditional voice and data services has led to a search for the “next big thing.” For these operators, IoT looks like the answer, but for all the hype, these network operators are struggling to make much headway – or more to the point, much revenue – from IoT. For example, Vodafone reported €700 million in IoT revenue in 2016, reflecting strong year-to-year growth but still representing just 2.3% of Vodafone’s wireless service revenue. Similarly, Verizon’s $860 million in IoT revenue in 2016 was up $170 million from 2015; however, as a total, Verizon wireless service revenue fell by $3.8 billion during that period. Clearly, initiatives thus far have not been nearly enough to help staunch the decline in their traditional voice/data businesses.
Regardless of the chosen technology, the key to really moving that needle is ultimately about more than just technology; figuring out how to monetize their investments is equally as important. The challenge is to figure out how to sell based on the “value” of these services rather than the amount of data required. That value comes in the form of services: business and technical consulting, systems integration, application development, proof of concept testing, and ongoing management that many applications will require. In order for their IoT revenue to truly take off, mobile operators now need to expand their IoT investment focus to invest in the people, processes and partnerships required to occupy a larger part of the IoT value chain.