Light Reading – Telco IoT in 2018: Firework or Flop?

Despite the bullish sentiment that has long surrounded it, IoT continues to underwhelm, as far as most operators are concerned. Data gathered by Northstream, a Swedish consultancy, and shared with Light Reading in late 2017 showed that IoT revenues as a percentage of total sales were just 1.59% for Vodafone Group plc (NYSE: VOD), 1.18% for Verizon Communications Inc.(NYSE: VZ) and as little as 0.53% for Spain’s Telefónica in the third quarter of that year…

In the kind of hockey-stick projections not seen in the telecom market since the birth of 3G, Huawei predicts the number of IoT connections will soar from about 600 million in 2017 to 3.8 billion by 2020 and 35 billion by 2025. Over that same period, operators’ IoT revenues will rise from $8 billion last year to $38 billion in 2020 and as much $400 billion in 2025. As a proportion of total sales, IoT revenues will necessarily grow from 0.5% in 2017 to 20% by 2025.

These forecasts prompt guffaws from Northstream CEO Bengt Nordström and are bound to be viewed with skepticism by many of the operators that Huawei serves. It is not just the rate of growth in connections that looks optimistic, either. Huawei’s forecasts imply that average revenue per connection (ARPC) falls from $13.33 last year to $11.43 in 2025, a compound annual growth rate of -1.9%. Yet Analysys Mason reckons ARPC is falling at a rate of between 5% and 10% annually. And Huawei’s ARPC numbers look high when compared with IoT service charges from companies using non-cellular technologies. LoRa connectivity, for instance, is available from as little as €5 ($6.15) annually, according to advertising….

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