Summary Bullets:

• IoT providers that have led the market for years continued to press forward in a more mature but still unpredictable market, navigating technology and commercial disruptions while considering new growth opportunities

• Pricing, competition, consolidation, eSIM, and trends in the key connected car space (including growth in 5G connections) were among the issues discussed in analyst briefings

Leading traditional IoT connectivity providers from the ranks of mobile network operators broke little or no news at MWC 2024 held in Barcelona, although each maintained an impressive presence in terms of exhibits, speakers, and IoT business leaders. Disruptive IoT MVNO and platform provider 1NCE did manage to draw significant attention from its booth near the food trucks, launching a unique offer for emerging high data requirements use cases priced simply at EUR5 per gigabyte. 1NCE has been offering prepaid low bandwidth services (ten years for $10) for use cases such as smart metering, street lighting, and asset tracking for several years. Now it has innovated again, offerings speeds of up to 25 Mbps for video surveillance and industrial monitoring requirements using its flat rate pricing for data usage.

Uneven Growth

1NCE has seen rapid growth, with 18,000 customers gained since its launch in 2018, supporting 22 million IoT connections currently. With so many of those paid upfront, the company has been able to fund additional expansion, partnerships, and further platform and service innovations. However, it is challenged to find new revenues while serving its installed base over the long haul. Other providers including large MNOs like Telefonica have experienced similar dynamics with largescale, prepaid narrowband IoT (NB-IoT) deployments, which bring short-term revenue growth alongside long-term costs, contributing to uneven or unreliable success metrics for the business. This was reflected in the conversations between GlobalData and key IoT providers on their 2023 progress. One was rightly proud of 20% annual revenue growth, while at the same time, sharing concerns over price erosion and accelerating market consolidation among IoT connectivity and platform providers. Another suggested that in the future, IoT connectivity business performance should really be measured by EBITDA rather than net adds or revenues.

eSIM as Opportunity

Despite its potential threat to MNOs in the consumer space, the opportunities for eSIM outweigh the threats in IoT, at least according to the leading connectivity management players who briefed GlobalData. Deutsche Telekom has its own IoT iSIM (nuSIM) module leveraging Qualcomm, Giesecke+Devrient, and other partners’ technology to help pre-connect and manage devices especially with its NB-IoT and LTE-M services, with a current focus on adding integrated support for non-terrestrial connectivity. Telefonica says it is being super aggressive on eSIM, seeing it as a good fit given its challenger status in many of the markets where it operates. New industry standards for more seamless operator profile switching for eSIM-enabled IoT devices will solve long-time problems for manufacturers who want to pre-integrate connectivity in their products, making them more portable globally. An emerging trend toward banning permanent roaming for IoT devices by national regulators will make support for eSIMs essential. By supporting customers taking advantage of connectivity to other operators’ networks, continued success will come to those able to differentiate on superior device management.

Positioning and Go-to-Market

All providers want to supply more than connectivity, positioning themselves as a partner rather than a vendor. However, as one leading European player noted, all IoT business is incremental. Selling solutions on top of connectivity has been the goal for years, but it’s not always what customers are seeking. For example, a new innovative operational analytics solution using AI and machine learning may seem compelling in terms of optimizing their IoT deployments, but customers don’t necessarily expect to have to pay for it.

Although difficult, growth can also be achieved by regional expansion, and it’s another way eSIM and iSIM may grease the wheels for new go-to-market approaches. Multiple European IoT providers are considering new franchise or distributor models in markets where they don’t have a public network, leveraging local players who do not have their strengths in platforms and solutions to access new customer markets.

Connected Car Still Dominates Cellular IoT

A significant portion (30% to 50% or more) of IoT providers’ connections support connected car applications, which is of course another beneficiary of eSIM connectivity. It has also made its own contribution to short-term growth dynamics in IoT connections, driven by the electric vehicle (EV) trend and associated charging network buildouts, but this recent surge will tail off. In the meantime, one US market leader noted a huge push into 5G for connected cars, going so far as to identify the long-sought “killer use case” for 5G as simply network longevity. Cars are expected by their manufacturers and owners to be used for at least 10 years, and need to be equipped with a network connection that will still be here in 2034. Recent switch-offs of 2G and 3G networks worldwide have focused the minds of connected car (and other product) makers around this issue. Even if the main use case today is still infotainment services, QoS-on-demand enabled by network slicing on 5G standalone networks could help finally usher in adoption of more advanced driver assistance use cases.