The latest research from Transforma Insights indicates that 5G will grow to account for more than 80% of IoT connectivity revenue by 2040, but mostly by virtue of future-proofing; advanced functionality enabled by 5G Standalone (SA) is not expected to accelerate MNO revenues significantly.
The new report published recently provides an analysis of the revenue opportunity associated with 5G IoT connectivity, focusing more specifically on the additional functionality delivered by 5G SA.
The report details the high number of features of 3GPP Releases 15 to 19 that could be applied to IoT – including higher bandwidth (eMBB), real-time communications (URLLC), and Quality-on-Demand – and quantifies the impact that they will have on MNOs’ IoT connectivity revenue.
Habing assessed the requirements of hundreds of different use cases and the capabilities 5G and 5G SA deliver, Transforma Insights has modelled the likely impact of 5G on IoT connectivity revenues for MNOs.
5G is going to dominate IoT connectivity for MNOs. By 2040, well over 80% of IoT connectivity revenue across Europe and the US will be accounted for by 5G. However, for the most part this is by default, due to actual or anticipated refarming of LTE spectrum, rather than because of any overwhelming demand for 5G SA enabled capabilities.
Most IoT connectivity revenue don’t need 5G. Of the total IoT connectivity revenue in 2040, 9% will come from devices making use of 5G SA functionality. The lion’s share of IoT connectivity revenue (48%) will come from devices that would work perfectly serviceably on LTE (our ‘5G future-proof’ category). A further 26% comes from ‘5G NSA’ connections, i.e. those that need 5G, but not 5G SA. The remaining 17% comes from legacy (i.e. non-5G) networks.
IoT connectivity is not anticipated to justify investing in 5G SA. Only 0.4% of an MNO’s overall revenue in 2040 will stem from 5G SA functionality.
The biggest 5G SA opportunity rests in slices targeted at specific purposes. Rather than dedicated slices for particular companies, the dominant model for selling network slices will be in terms of the ‘Purpose’, e.g. slices for low latency or high bandwidth, or combinations of capabilities. That represents half of the 5G SA opportunity. Dynamic slices account for another significant portion. Emergency services represent a very specific additional opportunity, although the incremental revenue associated with the 5G SA IoT element of such an offering is still fairly modest.
“Our conclusion is that IoT connectivity is unlikely to ride to the rescue of 5G and particularly 5G SA investments. Considering purely those advanced 5G services which are the natural extension to their bread and butter connectivity – including things like slicing, Quality-on-Demand and network APIs – the revenue uplift is quite modest. That doesn’t mean that IoT connections won’t be using 5G networks, we just remain sceptical that many of them will have a requirement for the specifically 5G capabilities,” commented Matt Hatton, author of the report.
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