The Financial Impact of Roaming IoT on Telecom

By: Jacqueline Lee| - Leave a comment

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Cisco predicts global mobile traffic will increase sevenfold, to 49 exabytes, by 2021. Growth in connected devices and video consumption over cellular networks is encouraging telecoms to invest billions in infrastructure upgrades. However, while total data traffic worldwide is 11 times greater today than it was in 2008, telecom revenue has only increased 3.5 times, Morgan Stanley reports.

But according to Wireless Week, a new joint survey from ROCCO and UROS has identified a new potential revenue stream: roaming charges from the Internet of Things (IoT). As much as half of roaming revenue for carriers could come from IoT devices by 2020. The question is whether these charges, plus growth in data demand, will be what telecom providers need to sustain themselves.

Wireless Sensor Networks Decrease Roaming Charges

Right now, most of IoT traffic connects to the internet through carrier access-point networks. But improved wireless sensor networks (WSNs) can enable IoT devices to communicate with each other without an internet connection, likely pulling a large portion of wireless traffic off carrier networks.

WSNs consist of IoT devices and a gateway, which communicate with each other through either star or mesh topology. Star routes all IoT network traffic through the gateway, while mesh topology bounces traffic between IoT nodes until it reaches the gateway. As IoT Today explains, mesh topology is inherently self-organizing, and it’s resilient because there’s no single point of failure.

When these devices pair smart energy-harvesting with batteries, especially by generating and storing solar power, they create an always-on communications network. This network can support edge functions without ever connecting to the internet.

WSNs are essential in applications like isolated offshore oil rigs, where cellular signals are hard to come by. These improvements in edge communications will inevitably move into less isolated networks. While telecoms save money by spending less on upgrading architecture, once WSNs reach a critical mass, mobile phone and tablet customers can use WSNs to bypass telecom networks altogether, creating a kind of default public Wi-Fi on steroids that threatens to eat into carriers’ mobile revenues.

How Telecoms Can Adapt

Morgan Stanley predicts that 5G’s lower power drain on devices, improved reliability and higher bandwidth — all achieved without building out wired and fiber infrastructure — could provide telecoms with the advantages they need over cable internet providers. But someone still has to pay for 5G infrastructure updates; Morgan Stanley anticipates carriers will defer costs onto tech equipment vendors.

As WSNs move traffic off cellular networks, lower latency should improve internet connection speed. Historically, improved cellular network performance has fueled consumer demand for services like video and cloud computing, all of which drive carrier data traffic and revenue. This pattern indicates how carriers can leverage 5G infrastructure to power innovative services. They can rest assured that infrastructure capital expenditure is subsidized by their own equipment suppliers, regardless of whether or not IoT devices themselves connect to the internet to incur roaming charges.

The cloud also will play an essential role in orchestrating IoT-optimized infrastructure, even if software-defined networking controllers don’t field every ping from every connected device. Even if rudimentary data analysis happens at the edge, organizations will still need cloud resources for IoT-related storage and analytics, and telecoms will happily charge for those communications.

Although roaming charges provide short-term revenue increases to carriers, the growth of WSNs and edge computing will minimize cellular internet connections for IoT. Still, there’s plenty of opportunity for carriers to make money off the IoT revolution.

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About The Author

Jacqueline Lee

Freelance Writer

Jacqueline Lee specializes in business and technology writing, drawing on over 10 years of experience in business, management and entrepreneurship. Currently, she blogs for HireVue and IBM, and her work on behalf of client brands has appeared in Huffington Post, Forbes, Entrepreneur and Inc. Magazine. In addition to writing, Jackie works as a social media manager and freelance editor. She's a member of the American Copy Editors Society and is completing a certificate in editing from the Poynter Institute.

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