With the introduction of 5G, telecommunications has shown immense growth over the past year. According to the Telecoms Global Market Report, the market is expected to reach $3461.03 billion in 2025 at a CAGR of 6%.
But currently, the industry is at an inflection point. The innovation of the devices themselves have shown very little change in design or technology and everyone who wants a device already owns one, research states the current average is 3.96 devices per person. This begs the question, what will drive this rapid growth over the coming years? The answer is in IoT.
Research suggests that IoT can generate $1.8 trillion in revenue for mobile network operators. To benefit from the emerging innovations and additional revenue streams, telecom companies must adapt to new technology and opportunities.
#1: IoT will greatly impact telecoms market and audience expansion
IoT and automation will have the most impact on overall growth of telecoms in the near and far future. Right now, the device per person and the population are relatively stable, mobile and network connectivity services are largely commoditized and telecommunications services are relatively indistinguishable from those offered by the competition, but this will not be the case when IoT kicks into gear.
As IoT devices will not necessarily be owned by the people using them, a lot more devices will serve more than one person, and this will vary with time and location. Additionally, machine to machine communications (M2M) will play a large role and contribute to the overall number of IoT devices in a big way. Thus there will be a huge growth in the number of devices the network has to serve, thus telecom operators will need to be both proactive and reactive in order to be able to better serve the needs of their clientele.
When leveraging IoT systems, telecom companies have an opportunity to expand their offerings with an array of IoT-enabled services in such areas as smart manufacturing, smart retail, smart city, smart home, vehicle and asset tracking.
In fact, recent research found through new opportunities telecom companies could boost their revenues by 500% over a five-year period when expanding into new offerings and customers. Some service providers have already caught onto the trend and have implemented IoT technology. For example, after AT&T introduced their own IoT platform, they managed to sign about 300 new deals in a single year.
#2: 5G adoption will continue to play an important role in overall telecoms growth
According to reports, 5G is 10 times faster than current LTE networks. This increase in speed will allow IoT devices to communicate and share data faster than ever. While IoT and 5G don’t always seem to directly correlate, the two impact each other greatly when it comes to data, networks and how they interact with consumers. The high-speed connectivity, very low latency, and greater coverage that will arrive with the next-generation network will be key for IoT devices. The traditional cellular mode utilized by telecoms is more widespread, however the P2P approach of IoT networks is becoming more and more widespread. This is due to several key differences in the nature of the traffic and services the networks need to provision.
Telecoms traditionally offer services centered around media consumption and calls, which rely on high speed, low latency data transfer, which does not play a role with IoT devices. As one network type starts to catch in its adoption to the other, so will the different type of traffic, leading to a technological convergence: cellular networks of the 5th generation will move away from 4G more toward Low Power Wide Area Networks (LPWAN). Eventually the two will converge and form a homogeneous network serving a non-homogeneous traffic distribution. This will create more stable connections and opportunities for connected devices like locks, security cameras, and other monitoring systems that depend on real-time updates.
#3: Telecoms will begin to shift services and revenue from Internet access to IoT network applications
In the near future, telecoms will likely stay stagnant and won’t change much in terms of innovation of the services they offer that existed prior to 5G. For example, data is already fast enough that the everyday user does not know the difference between 5G and 4G. While there may be noticeable improvement, at its core it remains to be the same basic service. Phone design in addition, has not changed much and is starting to run dry on innovation.
But looking into the future, the majority of telecoms will shift services and revenue from Internet access for people to providing connectivity for IoT network applications and M2M communication. Their services will be more and more device-centric, rather than people-centric.
In the end, IoT will likely play a leading role in 5G networking and it would not be unexpected if it easily overtakes the majority of services offered and traffic capacity filled.
