By 2025, Analysys Mason predicts, global telecom operator revenue will reach about $888 billion.
Connectivity revenues earned by ISPs to support IoT might amount to about $28 billion. With the caveat that the forecasts might be too pessimistic, if correct, that prediction suggests there is not as much internet of things connections revenue as many might believe.
If correct, that reinforces the argument that most of the potential revenue upside from IoT for ISPs will come from participation in other segments of the ecosystem.
It always is important to differentiate between robust growth of broad IoT revenue streams and the portion that specifically will accrue to mobile and other ISPs in the form of connectivity revenue.
It is the same issue we faced early in the development of either internet retailing, mobile payments and smartphone markets. Total transaction value (the value of merchandise purchased through online channels) is not revenue for telecom providers. Nor is transaction value the same as profit, for any ecosystem participants.
Analysys Mason estimates total revenue from IoT solutions enabled by mobile operators (devices, applications, connectivity) of something greater than US$200 billion in 2025, with revenue growing at a compound annual growth rate of 18 percent.
But telecom access revenues, though growing, might still represent just about three percent of total telecom industry revenue by 2025. Machina Research research suggests “connectivity” might be the absolute smallest revenue opportunity within the ecosystem.
Moving up the stack in the internet of things ecosystem will not be easy for mobile operators, if necessary.
The most-logical approach for many tier-one service providers is to create an application enablement platforms for IoT connections. Essentially, using the frameworks mean IoT devices will be “plug and play” on a specific network.
Such platforms generally supply a set of tools that simplify the process of building IoT solutions. Most solutions support analytics, data integration tools and run-time environments and are “horizontal” in focus, rather than aimed at specific industry verticals.
Several roles seem now to make sense. Mobile operators can offer a horizontal enablement platform, supplying device management for developers. That might represent a global market worth about US$20 billion in 2025.
Some mobile operators might try to create solutions for industry verticals. Such platforms might make sense in the healthcare area, as that overlaps with the “health and fitness” category where personal monitors already are routine.
That might represent a US$10 billion opportunity. A few mobile operators might develop end-to-end solutions for verticals such as fleet management. That might be worth US$19 billion, Analysys Mason predicts.
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