Though the Internet of Things (IoT) is heralded as a future money spinner for industries far and wide, one analyst says telcos won’t see 5G-related windfalls from IoT any time soon.
As reported by RCRwireless, New Street Research partner Andrew Entwistle dumped cold water on the future of IoT and its relationship to 5G wireless networks, saying that it does not offer “any business case for a telecoms operator.” Entwistle was speaking at a 5G seminar in Australia.
Entwistle’s take goes against popular industry sentiment that 5G’s role as IoT enabler will give operators new vertical revenue streams.
“I’m perfectly prepared to accept that the internet of things is extraordinarily interesting to equipment makers and vendors, to systems integrators, to policymakers, and to people concerned with the social role of communications services in our lives,” said Entwistle.
“But there is an awful lot of noise about the internet of things that doesn’t actually translate into, to put it strongly, a whole hill of beans for the telecoms operator who’s looking to sell services to achieve revenue per customer or revenue per device.”
To illustrate his view, Entwistle described a theoretical hospital of the future that installed healthcare-related IoT devices using 5G network capability.
“Not a single penny” from 5G and IoT?
“The telecoms operator will not see a single penny from any one of those devices. They sell a 5 [gigabits per second] fiber into the data room of the hospital today, and in 10 years’ time they’ll probably still be selling a 5 Gbps connection, or 10 Gbps fiber at half the price of today’s 5 Gbps fiber,” he said.
“I can’t see any business case for a telecoms operator. An operator said: ‘We will have 1,000 times as many devices and we only need 1,000th of the [average revenue per user] in order to build a business as big as our existing business.’ That’s not a business plan, that’s just multiplying two numbers together and making a brave assumption.”
Market skeptics worry that the telcom operators’ IoT-driven 5G business faces the likelihood of low traffic volumes and revenue yields, with relatively thin margins.