One of the biggest debates that has not yet happened surrounds the internet of things revenue potential for mobile and other service providers.
While most observers seem to believe IoT will be the key new revenue source for 5G networks, others think the upside is going to be “bleak.” That matters for two major reasons. If the IoT revenue streams do not emerge, the payback from 5G networks might be minimal to negative.
Also, if IoT does not emerge as a major new revenue stream, mobile operator business models are going to be quite stressed, as IoT revenue is needed to balance lost voice and messaging revenues.
IoT services can contribute up to 15 percent to 20 percent of total revenue for Indian mobile operators, according to Rishi Mohan Bhatnagar, President, Aeris Communications.
Siddharth Thakkar, Analysys Mason consultant, believes IoT could contribute as little as five percent of revenues, up to perhaps 10 percent for a very successful operator. “Currently, most telecoms operators earn less than one percent of revenues from IoT. Vodafone is an exception in that it earns around 1.4 percent of revenues from IoT,” he said.
Which forecast proves correct will be crucial. At about five percent new revenues from IoT, most mobile operators will find the 5G business case quite challenging. At 20 percent, 5G will likely have proven to be a successful gamble.
Worth thinking how telecoms operators would get to that 20% figure. From 1% of revenues today, an operator would need to grow its IoT revenues by 35% each year for a decade to get to 20% of revenues by 2027. 35% is roughly double current rates of growth of IoT revenues.
ReplyDeleteYou are quite right. That is a huge rate of growth. What mobile operators must hope for is that the market essentially has not begun to scale, yet. If so, then the present rate of growth would not reflect future growth rates. Also, some would argue that most of the revenue (perhaps 70 percent to 80 percent) will come from application or platform services, not "access." It is a huge challenge, to be sure.
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