The evolution of the Internet of Things (IoT) generates revenue opportunities for carriers, yet it also presents significant technological challenges due to the growing traffic it entails.
Although this is a huge market — according to analysts at the firm IDC, the IoT market in Latin America will grow from US$7.7 billion in 2014 to US$15.6 billion by 2020, and the number of IoT devices or things will increase from 295 million to 827 million — carriers must be prepared to meet this growing demand, since IoT fully depends on secure, highly available connectivity.
In that sense, new opportunities are emerging for telecommunications companies that provide connectivity and for the segment of suppliers that provides carriers with hardware, software, and services; however, these opportunities entail challenges as well, since IoT traffic has features that differ from traditional network traffic.
Consumers are demanding more and more IoT devices, such as wearables, Internet-connected thermostats, cloud music players and connected vehicles, among others. That is why mobile network carriers are taking the lead when it comes to driving IoT, providing connectivity for a wide range of smart devices and connected solutions in homes, hospitals, factories, cars and other means of transportation. The economic and social benefits of these connected solutions have given rise to a rapid expansion of IoT, so much so that capacity has been exceeded by the ecosystem’s spectrum requirements. As governments allocate more spectrum licenses to stimulate IoT growth, the role of carriers is becoming increasingly important in terms of shaping IoT.
In that regard, market analysis firm ABI Research recently reported that the large number of connections generated by IoT and smartphones in the enterprise segment will translate into significant revenue sources for mobile carriers, particularly considering that employees use high-value services.
ABI notes that, as the price of smartphones continues to fall, the number of units sold to enterprise employees grows. This trend represents an advantage for mobile carriers, whose revenue for enterprise segment data plans could exceed US$200 million by 2020.
According to ABI analysts, the importance of enterprise smartphones for employees must not be underestimated. Carrier services must focus on offering added value for these kinds of users through terminals, helping them choose the devices and applications that best fit their needs, as well as services to manage device content and functionalities. Furthermore, they should help businesses make the most of smartphones and their connectivity, data, and voice services as key components of their IoT solutions.
Nevertheless, IoT could turn into a nightmare for mobile carriers, whose networks could be overloaded with all sorts of sensor and device traffic. In light of this concern, several carriers are backing a series of guidelines to lead the way for application manufacturers and developers. Many of them are offering secure, comprehensive IoT platforms that enable customers to scale and manage their business needs. Additionally, there is unparalleled global network coverage, as well as technical and enterprise support to respond to customers’ changing needs.
“Enterprises are increasingly connected, both at the individual and machine level.” For this reason, carriers’ strategies need to evolve toward supporting the vast number of apps and opportunities that will be created from billions of IoT connections.
