A provider of telephony, mobile networks, TV, and internet connection, telecommunications was always an essential as well as lucrative industry.
Of late, however, this seemingly invincible sector has been experiencing a global slowdown in market growth and an increase in customer churn rate. In 2020, telcos saw an actual 3.4% decline in revenue, according to the consulting and research firm Analysys Mason, as a result of pandemic-induced unemployment and business closures. While the profit margins will most likely bounce back in 2021, this decline served as a warning bell for the industry. As a result, telecom operators today are actively seeking out ways to unlock novel revenue streams.
Launched in 2019, 5G has already picked up momentum in both network and device adoption, which will only accelerate in the next five years. Up to a hundred times faster and more energy-efficient than 4G, with much lower latency and increased bandwidth, the fifth-generation connectivity is eminently suitable for the data-driven, real-time IoT technology. Companies across industries are already springing into action, undertaking IoT digital transformations or ramping up existing connected infrastructures, and this tendency presents a perfect opportunity for telcos to diversify their service offer with B2B use cases.
For the majority of telecom companies, IoT is uncharted territory and a departure from the traditional business model. Nevertheless, the existing network equipment, telecom software, and experienced staff give companies an inherent advantage to transform from “dump-pipe” operators to IoT champions that provide vertical-specific connectivity solutions.
What is more, depending on the industry and the use case, telecom operators can assume different roles in the IoT connectivity value chain, each with its additional opportunities and revenue potential:
Manufacturing, healthcare, automotive, and smart home are the four sectors with the highest number of addressable market opportunities for IoT development, and some telecom operators are already striking first partnerships with large-scale enterprises from the industries, while others are tapping into these developments on their own. Below, we investigate notable telco-facilitated IoT implementations and explore their benefits, potential and implications.
In line with the Industry 4.0 trend, manufacturing came to be an avid adopter of IoT. It shows no sign of stopping, with the global number of IIoT connections predicted to grow from 17.7 billion in 2020 to 36.8 billion in 2025, stated Juniper Research in their 2020 Industrial IoT study. With factories digitizing their workflows en masse, the much-needed competitive edge will have to be achieved through not only devices and technology embedded in the production floors, but also the speed, quality and security of the network connecting them.
5G technology is expected to turn the tide for smart factories, allowing the owners to depart from fixed-line networks, gather operational intelligence in real time, and ensure shell-proof IIoT security. However, bringing this level of connectivity to the IoT-enabled shop floor is a job too resource- and time-demanding to be undertaken in-house. This is where telecom operators are already stepping into their role as network developers, tailoring their 5G network offerings to the industry needs.
Asian telecom operators currently prove the frontrunners of smart factory research and development. In South Korea, Samsung partnered with KT Corporation, a major telecom provider, to deploy an end-to-end 5G network that supplies ultra-low latency communication and real-time downtime and defects detection, along with work-from-anywhere capabilities. Following the technology’s success, Samsung implemented it at their Austin (TX) manufacturing facility with help from AT&T.
In the summer of 2020, KT Corporation, SK Telecom, and LG Uplus Corporation stepped forward with separate 5G-enabled IIoT projects. Each of the initiatives aims to help the country’s small- and mid-sized factories overcome pandemic-induced setbacks, extend equipment lifespan, and further diminish factories’ dependency on the on-site workforce.
Chinese telcos also have similar smart factory projects underway. Last autumn, the leading cement manufacturer Conch Group claimed to have significantly reduced energy consumption while improving resource utilization due to the adoption of a 5G and IoT system developed jointly by Huawei and China Telecom.
Pre-2020 forecasts predicted remote healthcare to grow modestly and gradually, in line with the increasing mobile penetration rates and tendency towards homecare. But as the pandemic disrupted traditional medical service delivery, there has been a dramatic shift towards healthcare digitalization.
Initially, it happened out of necessity, but down the line the trend gained its due recognition from medical providers and patients for its efficiency and convenience. Right now, there is a booming demand for healthcare IoT developments, from remote elderly monitoring to unassisted robotic surgery, and the telecom industry is already acting upon these plentiful opportunities to forge closer partnerships with healthcare providers.
With emerging patient and hospital IoT applications involving real-time data transmission within and outside hospital grounds, smart device control and coordination, one-to-many video broadcasting, and more, there is an imperative for 5G connectivity. Telecom operators’ role in healthcare use cases is one of a service enabler, responsible for installing small cells and distributed antenna systems around the perimeter, setting up and configuring new 5G-enabled medical equipment, and supplying dedicated asset and data management software.
At the moment, the budgetary strain is the major roadblock on the way to a sweeping 5G renovation in healthcare. However, understanding these complications, most telecom companies chose to share the costs when partnering with medical facilities. Beyond this, stringent regulatory constraints have always compelled the healthcare industry to be cautious about adopting new technologies, and the case of 5G connectivity, notwithstanding its transformative effect, is not an exception.
Despite these setbacks, there is no shortage of its successful implementations in medical facilities. In 2019, the US telecom operator AT&T went on to create “the hospital of the future” based on the Chicago Rush University Medical Center. As a result of the network upgrade, Rush Hospital became an environment where everything, from medicine cabinets to beds to MRIs, is interconnected, trackable, and manageable. Powered by AT&T’s 5G and Multi-Access Edge Computing service, Rush can also manage cellular traffic over a local network and a wide area network, delivering medical care anywhere, even over long distances, without delays.
Self-driving technology has faced a fair share of roadblocks, but today it finally appears ready for the streets more than ever. This can be attributed to technical refinements of vehicle mechanisms and recent developments in data analysis and predictive maintenance algorithms, but one of the major factors in this breakthrough was the onset of 5G.
The latency and transmission speed of 4G networks was sufficient for short-range vehicle-to-vehicle (V2V) communication only. V2V technology enables driverless cars to wirelessly exchange information about their location, speed, direction of travel, and so forth within 300 meters. Despite its feasibility, V2V communication coverage limits its use to the confines of certain urban areas.
5G, in contrast, allows for a much faster and broader-range data transmission, promoting communication not only between vehicles but also the traffic infrastructure, smart buildings, and pedestrians’ devices. Such a holistic system, called vehicle-to-everything (V2X), harbors promise to greatly improve self-driving cars’ coordination and increase both traffic efficiency and safety for all road users.
According to Frost & Sullivan’s 2020 Strategic Analysis of the Global Vehicle-to-Everything (V2X) Market, the next five years will see a steady rise in V2V technology sales and are forecasted to reach $1.12 billion in North America, $3.29 billion in Europe, and $6.27 billion in China. The acceleration of V2V adoption is partly driven by increasing partnerships between automotive OEMs and telecom operators serving as network developers.
While V2X implementation is only nascent, several companies already have successful connected car pilot projects under their belts. The first ones were Nokia and Softbank, a Japanese telecom company, that conducted a joint test of non-standalone 5G technology for autonomous vehicles early in 2020. Held at Honda’s R&D center, the trials put to test Nokia’s proprietary radio equipment and covered four use cases. The trials proved 5G suitable for the connected car technology and encouraged the two companies to continue development in the field of 5G-connected mobility for the road.
Aware of Nokia and Softbank’s success, many other automakers are also partnering with telecom operators to bring their autonomous vehicle projects to life. The most notable of them is Audi, collaborating with Huawei and other telcos to launch 5G connected cars in the foreseeable future, and Ford, planning to deploy V2V-enabled vehicles in China in 2021 with the help of local telecom providers.
Amazon, Google, Apple, and tech companies of similar rank are the names we strongly associate with IoT home automation. Indeed, these giants have been at the forefront of the development and popularization of the connected household, releasing their smart speakers, security cameras, locks, thermostats, and other controlled devices so deeply ingrained in our lives.
In contrast to their expertise in building desirable smart appliances, tech companies are not as successful in supplying adequate means for homeowners’ to tie their often heterogeneous devices into a cohesive infrastructure and make them work together. Smart home hubs, massively launched by major providers some years ago, were intended to translate devices’ low-power communication protocols into a single ‘language’, thus allowing disparate appliances to communicate and be controlled by the owner. Unfortunately, the hubs were received tepidly by customers and failed to gain prominence due to high prices, technical constraints, and security vulnerabilities, prompting most companies to curtail the solutions’ further developments.
Against this backdrop, telecom is emerging as a service creator, providing superior smart home connectivity and the accompanying infrastructure. While another go-between mechanism is the best solution that tech companies can supply for coordinating appliances with incompatible communication protocols, telcos offer to tie smart devices together in a cloud hub instead of a physical one, letting the homeowner manage their connected ecosystem via a smartphone.
Also, with the inherent advantage of the existing infrastructure, telecom operators can deliver a dedicated smart home service powered by the dedicated NB-IoT and LTE-M radio technology standards, which will provide faster connection and lower energy consumption. Beyond this, telcos can bundle smart home offers with their existing services, like cable TV or home internet, thus increasing their value proposition.
Now, most major telecom companies in the US, Europe, and Asia have smart home implementations, with some offering solely connectivity and others venturing further into proprietary smart household devices development. Among the leaders in the field is the German operator Deutsche Telekom with their Magenta SmartHome product range, the American AT&T company that provides the Smart Home Manager app to all of their internet customers, and Comcast, another US telecom conglomerate, offering the home security and automation service Xfinity Home.
The rollout of 5G has catalyzed the new, potentially large wave of IoT transformation across industries. This drive presents telcos with a wellspring of opportunities to increase their profits, extend their service offer to B2B, and forge mutually beneficial partnerships with the leading enterprises from across the industries.
While the vertical IoT connectivity use cases described above are the most accomplished so far, their numbers are soon to be replenished by other notable developments. Sectors like retail, agriculture, energy & utilities, and entertainment also have many addressable opportunities for 5G-powered IoT transformation, and telecom operators are already rising to these new challenges.