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Beyond Connectivity: How Telcos Respond to the Newest IoT Monetization Challenges

Explore IoT monetization strategies of telecoms, from constructing end-to-end traffic flows to creating value-added IoT connectivity

August 12, 2021

7 mins read

IoT monetization is high on the list of revenue generation opportunities for most telecommunications companies. Given that telecoms possess a valuable asset – data – they’re practically sitting on gold compared to other over-the-top media service providers. Capitalizing on IoT in telecom could bring huge profits thanks to newly established selling points provided by 5G and edge computing.

Still, there are obstacles to adopting a successful IoT monetization strategy in the telecom industry. IoT is an entirely new venture that seems to be a great departure from the traditional business of telecoms (and their strong point): connectivity So the question arises of how best to enter this new market.

Apart from that, monetizing IoT would require telecommunications providers to break through barriers:

  • A large non-monetized base of installed IoT devices
  • The high growth rate of connected devices
  • Strong market demand for IoT services
  • The need for vertical market apps
  • Lack of skills and competencies
  • Low technological maturity and interface standardization
  • The deficiency of the standard business model

There’s no doubt IoT will be the next big thing. It promises to be transformative for companies, opening a new era of economic growth and competitiveness. But are the obstacles on the way to IoT monetization really unbreachable for telecom companies? Or is the game afoot?

What’s inside:

  • Explaining legacy obstacles connecting telecom and IoT services
  • IoT monetization strategies in the telecom industry
  • How IoT empowers smart living and ways to monetize it
  • Monetizing IoT: foresight and possible perspectives

Explaining legacy obstacles connecting telecom and IoT services

The major difficulty for telecoms to develop an IoT monetizing strategy is finding and defining services to offer. Through the fourth generation of communications technologies (4G), networks were all about bringing telecommunications services to the masses via better coverage, higher data transmission speeds, improved speech quality, etc.

Still, the upcoming fifth generation of telecom networks (5G) and the taking over of last-mile internet connections introduce a brand-new connectivity challenge. Now, providing high-speed connections and greater accessibility is simply not enough for customers.

And since the Internet of Things is quite a diverse and multifaceted realm, the question of connectivity arises among telco providers, too. There are no fewer than six commonly used types of wireless IoT technologies (see the graph below), with each solution having its own strengths and weaknesses. Telcos can’t have a one-size-fits-all solution, so choosing the communication solution becomes another challenge.
Beyond Connectivity: How Telcos Respond to the Newest IoT Monetization Challenges

Source: Behrtech.com

According to Jan Karlsson, Vice President & General Manager Digital at Ericsson, telcos are challenged to find a way to do more for their customers and partners – create greater mobility for business purposes and connect a wider variety of devices. Telecommunications operators are expected to be flexible, agile, and ready to change course at any moment.

Apart from that, telecoms need to figure out how to solve issues with:

  • Connectivity technologies and spectrum licenses
  • Lack of device quality and quantity for use cases
  • The high cost of connected devices
  • Primary market demand at the prime price point

So, what are the possible ways for telcos to actually start monetizing IoT?

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IoT monetization strategies in the telecom industry

Discussions at TM Forum’s Internet of Everything InFocus led to the idea that telcos have four paths of IoT monetization: via networks, platforms, or applications, or by running a full-cycle operation. What path do telcos plan to choose?
Beyond Connectivity: How Telcos Respond to the Newest IoT Monetization Challenges

Source: TMForum

Network: a low-profit strategy

The most obvious and most natural IoT monetization strategy is expanding the existing network. Most operators already possess various IoT sensors and devices along with a great deal of network connectivity.

What comes next seems like natural growth from connecting people to connecting everything. To do this, telcos would need to consider either connectivity through a licensed spectrum or alternatives in the unlicensed spectrum, like Wi-Fi or low-power networks.

Platform: exploring boundaries

Some telecom companies are already adopting IoT platform architectures. For example, Orange has launched the Live Objects platform, which covers the core functionalities for their IoT project. The platform manages connected devices, analyzes collected data, and claims to be designed for all companies operating in the industrial and service spheres.

Vodafone has also released its own IoT platform, a complete IoT offering based on Vodafone global infrastructure. It covers managed IoT connectivity, device management, and application enablement, providing vast opportunities to make IoT technology work for businesses globally.

The most recent IBM study on ecosystems confirms that 57% of telecommunications operators plan to become platform providers in the near future.

Custom applications: meeting specific needs of B2B telecom clients

Applications can be developed by telcos themselves, outsourced to competent third parties, or purchased. In such a way, telecom companies will maintain a diversified portfolio of in-demand solutions for particular verticals that generates substantial profit.

For example, a manufacturing company may be inclined to purchase a set of industrial IoT solutions and communication services in bulk from a single vendor responsible for the hardware infrastructure and software platform.

Discover how our German client built a flexible industrial IoT platform with OAT capabilities using an expert team of Intellias engineers

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Operations: managed services

Some telecom companies monetizing IoT data are planning to run their entire operations themselves, managing the service-level agreements (SLAs) of IoT services. This is quite an ambitious project that not many telcos are about to undertake.

How IoT empowers smart living and ways to monetize it

Another big focus of telcos and IoT technology in particular is the development and popularization of the “smart living” concept. Internet of Things monetization seems to have the most potential in the manufacturing, transportation and logistics, healthcare, and smart home/city sectors.
Beyond Connectivity: How Telcos Respond to the Newest IoT Monetization Challenges

Source: IDEMIA

The industrial Internet of Things

The application of IoT in industrial manufacturing is often presented as a revolution bringing the whole industry to a new level. In reality, it seems to be more like evolution but with great potential. Most IoT technologies already implemented in the manufacturing industry are at a technological level. They cover connectivity, networking, data analytics, cloud computing, wireless communication, edge computing, and much more.

The next big thing is taking over the functional level of the industry. There’s a great need to implement real-time process control and improve efficiency, reliability, profitability, and safety to eliminate environmental risks for each asset set in industrial enterprises.

The key to monetizing IoT lies in creating an environment that removes most traditional technological limitations imposed on automation systems. The new level of agility achieved might simplify the application and operation of both automation systems and industrial topologies, cutting the cost, speed, and size limitations of older technologies.

Transportation industry

The transportation industry faces unprecedented change powered by IoT technologies. Self-driving cars, connected traffic lights responding to traffic in real time and reducing road congestion, connected cars communicating with parking meters that direct drivers to the nearest available spot – all these smart technologies are aimed at optimizing infrastructure, mobility, and public services. Telcos are expected to play a significant role in advancing smart city services by expanding 5G networks and facilitating faster and more efficient connections.

Find out how a major Intellias project resulted in creating a powerful Internet of Things traffic congestion solution for a European client

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Healthcare devices

Digital transformation has reached the healthcare industry too. More and more mobile healthcare devices are getting connected to IT infrastructure, so organizations are facing challenges with collecting and processing data.

For collecting and processing data in the healthcare sector, the Internet of Things comes in handy. It promises to cut costs, improve efficiency, and provide valuable insights into patients’ health. IoT devices can collect critical data and become tools to analyze and process information. Taking advantage of these technologies would help clinicians make more accurate diagnoses, gain better insight into patients’ health, and diagnose patients’ conditions in real time.

Smart homes and cities

The expansion of the smart home market is also highly anticipated in the near future. Fighting the climate crisis, improving the comfort of day-to-day living, and delivering more convenience in daily routines are where IoT will play the most significant role.

Companies monetizing IoT data need to step outside the device box and start thinking more as service providers. Consumers tend to buy and experience one device at a time, while telcos can’t keep producing separate services for all of them. Companies have to start seeing the entire emerging ecosystem and plan on their services to support it.

Monetizing IoT: foresight and possible perspectives

Telcos are promised great possibilities in terms of monetizing IoT. In the age of fifth-generation networking technologies, the expansion of IoT networks, and the development of the smart living concept, data is becoming the new oil. Collecting, processing, and visualizing it is the key to gaining revenue.

Still, one huge question remains: data security. All ecosystem partners have to ensure data availability, integrity, confidentiality, and accountability. Telcos so far have enjoyed a highly trusted position with their customers, even exceeding the level of trust in financial institutions and governments in some countries.

With the instant increase in IoT adoption come new threats to consumers’ data across networks and devices. A huge amount of confidential personal information can at once become vulnerable to hacking attacks.

Telcos are in the best position among other industries to start developing initiatives and services that focus on increasing trust in customers and the security of personal data. Still, they need to adopt best-fitting technologies such as the blockchain, cloud services, AI, and security approaches.


Looking for the best solutions to monetize IoT in your telecom business? Contact our experts for technology consulting and adopt global best practices.

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