The operator who succeeds in becoming the market leader will not only be the most efficient with current technologies but also the most innovative with new technologies such as AI or Blockchain.
Clément Eberhardt, Wholesale consultant
The IoT market is set to be the growth driver for Western wholesalers. Despite commercial competition over offerings and business models, the real battle between operators will be over cutting-edge technologies.
In this marketplace, it is essential to offer a certain number of standard services in order to have any chance of being chosen as the main partner. This is because, by definition, customers compete with suppliers not for global connectivity but for a particular type of use or geographical area in order to optimize costs as much as possible. Here and there, customers will choose the operator offering the best coverage, the best monitoring and the best services for their target retail market. It is not uncommon for a customer to take out a contract with an operator solely to respond to a call for tenders because his main partner has failed to support him.
In this more volatile context than with operator customers targeting the retail market, wholesalers have to keep up with the technological innovations introduced by competitors, but also innovate and offer the differentiating technology of tomorrow.
Technological Developments
Operators also need to combine their offerings with the latest technological developments, such as 5G (Non-Standalone) and eSIM. It is essential to be able to offer these technologies in the catalog in order to keep up with the competition and a market that is forced to evolve very rapidly. Thanks to eSIM, a customer can now buy connectivity from an operator on the other side of the world and integrate it into dematerialized SIM cards that can be sent anywhere in the world. When the terminal seeks to connect to the Internet, all it has to do is register on the network, download the relevant operator's profile and operate locally. Combined with one or more Roaming Sponsor contracts, an operator customer who buys connectivity from another operator will be able to cover the whole world, shipping terminals with greater flexibility.
Some operators are offering bootstrapping via eSIM, providing a small bucket of data (equivalent to the data needed to download an operator profile) to enable customers to sell eSIM-equipped handsets anywhere in the world and on networks with even greater flexibility.
Obviously, for IoT applications, 5G as currently marketed (Non-Standalone) only enables higher data rates than 4G, which represents an extremely limited advantage. It is indeed 5G Standalone that will be an essential lever for IoT development, using the three fundamental components:
- Increased throughput (already possible with 5G NSA)
- Reduced latency (low latency)
- The ability to manage a large number of simultaneous IoT connections (massive IoT)
While the former will enable connected cars or surgical tools to operate with very low latency, the latter will enable an explosion in the number of terminals connected to the network at the same time, managing large numbers of simultaneous connections with low bandwidth consumption.
The micro-segmentation of IoT markets will make it possible to separate market verticals so that an incident in the automotive sector does not impact the industrial market. Then, the ability offered by new virtualized networks to segment the network into slices (network slicing) is an opportunity that consists of virtually slicing a network to better meet the different needs of network users for a defined type of use; thus, by virtually slicing the network (via SDN-NFV), operators will be able to address differentiated uses and prioritize the uses that need to be addressed.
Tomorrow's Challenges
In reality, many other challenges await operators in a market that is constantly innovating and changing.
Certain technologies already exist, but these will have to be widely deployed to be able to address the market; connectivity is becoming commonplace, but so are the associated services. Monitoring is one of them, with operators already enabling real-time monitoring and incident management of IoT fleets. Monitoring platforms enable operators to collect and develop data analysis models, diagnostics and predictive AI capable of forecasting traffic peaks or risks of network disruption and guaranteeing QoS. Operators can extract value from this operational data and share the information with their customers in the form of a value-added service. Thanks to Data AI (with machine learning, for example), the data accumulated on each customer can benefit the entire ecosystem once the market has been organized.
Some operators will then be tempted to resell this data to companies in related markets in order to monetize this Big Data in addition to the services provided to customers and thus tap new levers of profitability.
The fight against fraud is also a major issue for operators, but with the number of IoT terminals on the rise, this will quickly become one of the most impactful challenges as the possibilities for malicious use will be so extensive. What's more, operators will need to increase their cybersecurity skills. IoT terminals are among the electronic tools most likely to be attacked due to their design and the lack of precautions taken by manufacturers and some customers. Security must therefore become the founding pillar of IoT development and deployment, applying the Security by Design model to prevent espionage, the leakage of personal data or even the takeover of a fleet, which would have dramatic impacts.
Blockchain could thus become a reference tool for security issues in the IoT ecosystem, thanks to its ability to trace all interactions. Market players will therefore be able to access data from connected objects without needing privileged access to the network. Each interaction is then traced, enabling whoever is entitled to it to ensure the reliability of the device. Customers can therefore select the data they wish to share with the relevant players and guarantee the integrity of exchanges. Markets that could directly benefit from this would be connected freight transport or industry with the tracking of aircraft components, for example.
Furthermore, IoT is intrinsically linked to international roaming, which makes it possible for connected objects to use connectivity anywhere in the world. This type of roaming is new to some operators, who may apply more or less specific restrictions depending on the market. As a result, it is essential for operators targeting the IoT market to obtain suitable agreements, which implies not only stronger negotiation but also stronger monitoring of traffic flows. According to the GSMA, Blockchain could greatly facilitate the work of clearing houses in roaming between operators to ensure a better and fairer distribution of financial flows between operators concerning roaming connectivity. With its promise of efficient contract management and dispute handling, blockchain’s industrialization could deliver real gains for operators. This development would also apply to both old and new agreements, regardless of the technologies used (IoT, 5G, etc.). The GSMA believes it is "essential for the industry to adopt blockchain technology in a standardized way, through a privately authorized consortium: secure, scalable, multi-stakeholder, multi-vendor and independent."
Conclusion
The IoT market represents a colossal share of addressable volume in the telecoms market. Its intrinsic value is declining, and each device brings down the unit cost. Operators have to juggle between adapting the network, setting up platforms and adding value, and making these same uses commonplace.
With high network maintenance costs, interoperability that can sometimes be complex, and the transition to market scale, operators face a number of challenges. Finally, fraud and cybersecurity risks, although already highly visible to operators, are accelerating on terminals that are often not sufficiently secure at the design stage.
The operator who succeeds in becoming the market leader will not only be the most efficient with current technologies but also the most innovative with new technologies such as AI or Blockchain.
Glossaire
IoT: Internet of Things
5G NSA: The majority of early 5G network deployments are non-standalone or NSA deployments. They focus on enhanced mobile broadband. The aim is to deliver higher data bandwidth and more reliable connectivity. More concretely, this means that 5G networks leverage existing 4G infrastructure to benefit from 4G low-band coverage, as well as the connection to an advanced 4G core network, to which is added the functionality needed to support the new 5G standard. This is the option that has made 5G deployment and commercialization possible as early as 2019.
https://www.ericsson.com/fr/blog/3/2022/5/5g-sa-et-5g-nsa-quelles-differences-
5G SA: 5G in standalone mode, or SA, is 5G that operates "on its own" without relying on existing 4G infrastructure. This is the definitive, long-term option for 5G.
MNO: A mobile network operator (MNO), also known as a telecommunications service provider, offers wireless voice and data communications to subscribed mobile users.
https://croslegacy.ec.europa.eu/content/Glossary%3AMobile_network_operator_%28MNO%29_en
MVNO: MVNOs (Mobile Virtual Network Operators) are operators who do not have their own radio network. Instead, they rely on the services of one or more mobile network operators to offer mobile communications services to their subscribers. Currently, there are four mobile network operators: Bouygues Telecom, Free Mobile, Orange, and SFR. MVNOs purchase wholesale communications from these operators. Even though they lack their own radio network, MVNOs are independent operators. They have full control over designing and launching their commercial offers, as well as complete responsibility for providing mobile communications services to their customers.
https://www.arcep.fr/professionnels/operateurs-des-telecommunications/liste-des-mvno.html
ARPU: Average Revenue Per User represents the average monthly sales generated by a company from each individual user or customer. Initially developed by telecommunications companies, ARPU aimed to determine the average revenue or sales generated by a single subscriber over a year. Today, ARPU is widely used in various industries, including online services and mobile applications, to provide accurate insights into a company's sales performance. It's important to note that there is no standardized definition for ARPU, and it varies between companies in terms of calculation methods and parameters.
https://www.journaldunet.fr/business/dictionnaire-du-marketing/1207665-arpu-average-revenue-per-user-definition-traduction-et-synonymes/
AUPU: for Average Usage Per User represents the average consumption of a unit (voice, SMS, data, etc.) on the same basis as ARPU.
Compound annual growth rate: CAGR
Slicing: Network slicing involves dividing the network into several sub-networks, known as "slices." Each slice operates independently, although they are deployed on the same physical infrastructure.
https://reseaux.orange.fr/actualites/5g-network-slicing
