Finding New Revenue Opportunities with Enterprise IoT
Virtually everyone owns a mobile phone. In some countries mobile penetration is over 120%, however, that market saturation does not leave mobile operators with many new revenue opportunities aside from trying to upsell existing customers on plans for their wearables and tablets. That challenge makes the enterprise market even more important than ever when it comes to putting up the kinds of numbers that wow investors and analysts. More enterprise revenue also is critical for covering the steep cost of deploying new technologies such as 5G.
5G’s virtualized architecture is ideally suited to power enterprise Internet of Things (IoT) and Industry 4.0 applications. And in many cases, the arteries that power those applications will be private 4G/5G networks. ABI Research estimates that this market will be worth US$109 billion by 2030. For example, 76% of manufacturers plan to replace their factories’ Wi-Fi networks with private 5G, according to an Analysys Mason survey.
It is a mistake to assume that “private” means those enterprises will own their 4G or 5G networks and thus spend less with mobile operators. Although owning a RAN and core certainly is an option, Analysys Mason’s study found that most manufacturers, logistics providers and other enterprises prefer the two alternatives that rely heavily on a private slice of a public 5G network. So in most cases, private 4G/5G networks will mean more money, not less, for mobile operators.
No More Dumb Pipes
Mobile operators and other types of Communication Service Providers (CSPs) have also expanded beyond providing voice and data connectivity and now offer value-added IT services. Examples include hosting, cloud applications and cybersecurity, as well as vertical-specific hardware, software and services such as fleet telematics for oil and gas companies and virtualized IoT for farming.
While agriculture is not considered a ‘traditional’ enterprise, it has used cellular since the GPRS and CDMA 1X days. And now with complementary IT and 5G, the sector can now expand the field (no pun intended) of potential applications and customers. So, besides wringing more revenue out of each enterprise customer, these services also can help reduce churn by creating stickiness.
At the same time, hyperscalers and other non-CSP service providers are delivering additional types of complementary services such as analytics, IoT management and more. These companies are taking advantage of the advanced networks, such as 5G, that CSPs are paying to build and operate. In a sense, they are like OTT streaming services and e-tailers — the “dumb pipe” problem that telcos have lamented for decades.
To avoid the latest iteration of that problem, CSPs are trying to match those offerings, but that is easier said than done. Some CSPs are overcoming competition and other marketplace challenges by partnering with systems integrators, specialist vendors and other companies that have expertise and customer relationships in specific verticals.
In some cases, CSPs are partnering with hyperscalers. For example, one of Microsoft’s partners in Azure Edge Zones is AT&T. “This will enable developers to build optimized and scalable applications using Azure and directly connected to 5G networks, taking advantage of consistent Azure APIs and tooling available in the public cloud,”Microsoft says.
Layering on Value
Another way that CSPs can make themselves one-stop shops for enterprise IoT is by offering value-added services based on existing capabilities and assets such as care, catalog management, charging, billing and more. These enable CSPs to support enterprise customers in new B2B2X opportunities. However, to play that role and reap the finance rewards, CSPs must open up their architecture, allow easy onboarding for new offerings, deliver smooth and flexible offering definition and management and provide self-service tools for the enterprises.
All of these value-added services do not diminish the importance of the connectivity that CSPs provide. However, CSPs should take a fresh look at how they charge for that connectivity to maximize its revenue potential. Voice, messaging and data services are now typically priced at a flat rate for unlimited usage. Instead, CSPs could base their pricing on the value of the service that they enable.
One example is 5G, whose Ultra-Reliable Low-Latency Communications (URLLC) feature set provides latencies as low as one millisecond. Enterprises are increasingly showing that they are not only willing to pay a premium for quality but that they expect to. So, a mobile operator could leverage URLLC to deliver ultra-low-latency 5G services for Industry 4.0 applications such as smart grids and time-sensitive networking (TSN). Other potential examples include analytics, leveraging network components such as Policy Control Function (PCF) to secure bandwidth and real-time services.
Real-time information, along with location and subscriber preferences, could be fused with artificial intelligence (AI) to enhance the customer experience with B2C IoT applications. For example, a swimmer by the sea would automatically get notified of tides and current conditions based on sensors placed in the coastal area.
The bottom line is that there is no shortage of potential B2B and B2C IoT revenue opportunities. That is great news for mobile operators looking for ways to monetize their new 5G networks.