The two aspects related to lower cost per connection and varied IoT service types demand that MNOs find ways to remain competitive in the emerging IoT connectivity market.
Need for virtualized mobile IoT core network
The smart phone oriented core network and associated costs are not suitable for an IoT service with a different traffic profile and pricing model. The diversity of service types and the need to offer connectivity at lower cost per connection demand that operators pursue dedicated virtualized core networks for IoT. Networks must be able to accommodate a large number of connections for different types of IoT services. A classic traffic model requires a single cell to serve over thousands of connections. A cellular-based IoT end-to-end network design needs to scale to meet such requirements.
To handle diversity of service types, MNOs need to create virtual cores based on the type of service being delivered (connected car / smart meter/video surveillance etc.) and optimize this core according to the traffic profile. For example, if the service involves large number of IoT connections with low throughput from a stationary device, then low throughput would be sufficient at the core but should support massive IoT. Similarly, if the service generates a large amount of data (eg. video surveillance and analytics in a shopping mall), high throughput will be required, but mobility may not be needed.
Virtualization and Cloud will play a big role in driving a radical decrease in the cost of IoT core network connections and lower the price per connection. Based on a TCO study carried out by Bell Labs Consulting, an estimated 60% decrease over five years can be achieved by virtualizing IoT core6.
Large and successful MNOs such as AT&T have collaborated with global IoT network providers such as Nokia WING, Nokia’s global managed IoT service for network operators6. Nokia WING is designed to act as a borderless IoT network.
MNO Sprint has invested on building a dedicated IoT Core network. In November 2018, Sprint launched its Curiosity IoT platform, which operates a dedicated virtualized core and uses software to route IoT traffic on the network. This allows Sprint to guarantee performance of the IoT traffic and reduce latency.
It is estimated that by 2022, competition with IoT MVNOs will intensify in the 20 main countries that control 84% of IoT connectivity revenue7. MNOs have to expand geographic infrastructure deployments to support 20 main countries and to conform to local regulations in countries banning permanent roaming.
The number of IoT connections is growing rapidly with almost all operators seeing rapid growth in the number of connections. However, the average revenue per connection is very low and there is increasing competition from IoT MVNOs offering connectivity at very low prices. In addition, different types of IoT services come with specific performance or economic requirements driving the need for a dedicated IoT core network. MNOs have to invest on deploying virtualized mobile core or partner with IoT network providers to lower IoT connectivity costs and handle different IoT service types.
1GSMA: Mobile IoT Case Study: How Asia Pacific Intelligently Connects to IoT
2The GSMA Guide to the Internet of Things:
3How Verizon, AT&T, T-Mobile, Sprint and more stacked up in Q2 2018: The top 7 carriers:
4Cellular M2M forecasts and assumptions: 2010–2020:
5White Paper titled Cloud Native Packet Core for Operator IoT Services, Gabriel Brown, Senior Analyst, Heavy Reading
6AT&T Adds Feathers to Nokia’s WING : https://www.cbronline.com/news/nokia-wing
7Communications Service Providers Should Evolve as Hybrid IoT Providers to Meet Multinational Clients' Demands: