This article aims to predict when the inflection point for mass traction of cellular IoT will occur. It examines:

  • How historical telco trends achieved market success
  • How those success factors are mirrored with cellular IoT today
  • What challenges remain, with an expected timeline towards resolution

In recent times, cellular module costs have fallen, new cellular standards have been agreed upon to cater for all types of devices within the IoT ecosystem, while the GSMA, MNOs, and IoT systems integrators have created a landscape capable of addressing both roaming and local connectivity requirements on a global scale. The question therefore is no longer if, but when, cellular IoT achieves mass adoption relative to the scale of global IoT: can we predict an inflection point?

Growth in cellular IoT has been driven not only by increased efforts from MNOs to monetize the internet of things; with notable actors including Vodafone, AT&T, Deutsche Telekom and Telefonica reporting significant connection increases between 2017 and 2019; but also by systems integrators. Indeed, these comparatively smaller players have seen market growth to the tune of 73% during the same period, outflanking the MNO market when China is excluded from the count.

 

How historical telco trend success factors are mirrored in cellular IoT

One avenue to predict cellular IoT’s inflection point is to examine how successful telco technology trends have evolved in the past: A2P messaging, cloud computing, and the rise of global MVNOs are notable examples of these. Examining these trends more closely reveals several common factors:
  • A2P makes use of broad coverage and ubiquitous technology to enable the ability to reach the recipient almost anywhere in the world, at any time. Cellular IoT finds commonality with this success factor via the emergence of eSIM technology alongside broad roaming agreements.
  • Both A2P and cloud computing are trusted reliable services. These features are found both inherently within cellular technology and are enhanced by the GSMA’s eSIM specification. For example, it is mandated that players involved in SIM manufacturing and eSIM provisioning and subscription management are part of a certified scheme, reducing the scope for tampering along the value chain. The specification also ensures interoperability between actors.
  • MVNOs across the globe have emerged in response to demand for specialized services and minority demographics within a serving market, where MNOs have either been unwilling or unable to invest in catering for these segments. The same can now be said for cellular IoT, with the MNO market accompanied by over 40 global IoT systems integrators offering cellular technology connectivity, with broad roaming agreements and eSIM support to provide services on a global level. Many of these cellular IoT systems integrators have now evolved from pure connectivity players towards more comprehensive portfolios, either directly or in the form of partnerships, simplifying the overall IoT journey.


Putting it together: when is cellular IoT’s inflection point?

Many of the ingredients needed to catalyze the industry are already in place:

  • Cellular IoT is reliable.
  • Cellular IoT is secure.
  • Cellular IoT can cater for specialist requirements.
  • Mechanisms have been established to achieve global coverage.

However, some elements of the market have not yet fully matured. Examples of these include:

  • Widespread flexibility to support global deployments. While the GSMA’s eSIM specification ensures interoperability between actors, delivering the core functionality of the eSIM - the ability to change connectivity providers and eSIM platforms where required - is a complicated and technical challenge in many instances. Solutions such as Telna’s Connectivity Exchange Hub can abstract this complexity, allowing for a relatively seamless approach to the eSIM concept. However, the technology applied by its Hub has not yet seen global adoption. This means that the full potential of eSIM for cellular IoT will be reached in the upcoming future.
  • Technology choice. Further development for Low Power Wide Area Network (LPWAN) technology, including LTE-M and NB-IoT, must be undertaken. The hardware cost for these modules has undoubtedly fallen, although economies of scale have not fully been reached to lower prices to an optimal level. In part, this is due to the relatively slow development of infrastructure rollout to support these networks, while LPWAN roaming agreements have not yet reached a global scale. In the present situation, some suppliers are recommending adding a 2G radio alongside the LPWAN radio to ensure that a fallback is provided in the absence of optimal network or roaming support. This challenge is rapidly being solved by work being done to test and commercialize eSIM deployments for LPWAN, while MNOs will undoubtedly be looking to advance countrywide and multi-operator support for these types of networks in the short- to medium-term.

Based on this analysis, Kaleido Intelligence estimates that cellular IoT’s inflection point is approximately 2-3 years away. More mature M2M/IoT markets will likely see traction earlier, owing to extant service provider activity alongside relatively well-established business models and knowledge of the market. It is highly likely that the Covid-19 pandemic will have a significant impact on both present and future cellular IoT deployments. Many service providers are reporting some downturn in demand in 2020, which has certainly been expected owing to supply chain bottlenecks and uncertainty surrounding immediate finances. However, it has now been established that cellular IoT can play a critical role in mitigating the negative impact experienced by businesses during the height of the pandemic. In turn, this will drive demand, beginning in 2021, and accelerating from 2022 onwards. 

Ready to learn more?

Join Telna's CEO and other industry thought leaders on October 14 to discuss the inflection point of cellular IoT. Gain valuable industry insights and access our newest exclusive whitepaper.
The webinar will feature input from thought leaders from Telna, Kaleido Intelligence, KORE, BICS and SAP,  with speakers analyzing historical telco trends, success factors within the industry, and expected resolution timelines to determine when the inflection point for mass traction of cellular IoT will occur. 

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Gregory Gundelfinger

Written by Gregory Gundelfinger

Gregory Gundelfinger is the CEO of Telna. A serial entrepreneur from South Africa and a tech-lover at heart, he led the acquisition of Telna in 2015 and developed himself into a thought leader for telecommunications.

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