Five (5) Challenges Telcos Have Difficulty to Enter IoT Business

In a recent posting on “IoT is Here: Where do Service Providers Stand in the Age of IoT?“, Ajmal Khan Adam Sharif from Huawei Technologies pointed out a good comment when he was referring to a comment made by the CEO of one of the biggest telco in Malaysia:

“This is echoed with many other operators’ thinking that I have met and engaged in the region. Most operators still see their role as pipe provider only as they can’t see the endgame of IoT and how the operators will add value.” Ajmal commented.

5 Challenges Telcos Faced

Most incumbent telcos who have been operating in the cellular space have similar challenges and views. And they are probably right. Here’re my thoughts on why I think most operators view IOT or M2M skeptically:

1. The growth of M2M is not as fast as expected. The idea of connecting the machines is not new. Most operators started offering vehicle tracking and remote meter reading more than 10 years ago.
2. The M2M ARPU (Average revenue per user) is low. Probably 4-10 times lower than the normal 3G/4G broadband ARPU.
3. M2M devices (with Simcards) are difficult to manage. And most of these devices are left unattended. Operational costs can be high.
4. Undecided how and where the telco can add the value. Will it be end-to-end (which is not their core expertise) or only provide connectivity.
5. Impatience in reaping the IoT benefits. IoT is still immature, especially in developing countries. Many users are still trying to grasp the ideas of how IoT benefits them. Telcos (especially the public listed ones) are not keen on any business that cannot forecast their revenues.

I have also posted the article “4 Main Challenges To Become An Internet of Things (IoT) Service Provider“. If the telcos are an “incumbent”, they might be tied to their legacy business, focus, technology, competencies, etc Many have tried to venture out from their comfort zone to the next level in providing IoT solutions but failed.

There are probably two main challenges for the telcos to break away from the above skepticism. First – Change of mindset and Second – Find the Right Business Model.

What do you think?

About the Author

Dr. Mazlan Abbas is an IOT Evangelist, Thought Leader, and CEO of FAVORIOT.  He is very passionate to build a Generation IoT of the future. And currently, his company, Favoriot, is offering a FREE IoT platform subscription to start your IoT journey in a simple and rapid manner.