IDC predicts that the worldwide installed base of Internet of Things (IoT) endpoints will grow from 14.9 billion at the end of 2016 to more than 82 billion in 2025 . At this rate, the Internet of Things may soon be as indispensable as the Internet itself. Cisco has also put the value of the global IoT market at $14.4 trillion for 2022. However, the debate is still open as to how such a market value will be shared by providers of devices, apps, services, and connectivity.
The industry is just starting to explore the business cases for IoT and how the revenues will be shared between the various contributors within the IoT value chain. There is a consequential opportunity to define the evolution of the Wi-Fi platform and broader unlicensed ecosystem so as to enable the evolution of the business cases for Wi-Fi service providers. However, with certain IoT applications sending only a few bytes of data per day, there will likely be novel approaches to the evolution of access charging and associated impact on established roaming capabilities.
Mapping the Value in IoT
The Wireless Broadband Alliance is building a vision for 2020 and beyond around IoT market opportunities for Wi-Fi and other unlicensed wireless technologies. The initial step is to examine business cases for IoT to see how revenues might be portioned out. The potential variety of uses and configurations makes this undertaking complex: for example, some IoT applications may only send a few (but vital) bytes of data per day, whereas others may broadcast almost continuously. The value is also moving away from access (increasingly, a commodity) to the applications, meaning that network connectivity should also seek to include value-added components of identity and service management.
IoT Connectivity Opportunities and Use Cases
The top three market areas for IoT connectivity identified in the WBA report are consumer/home, transport, and energy, with the leading categories of applications being automotive, asset tracking, fleet management, and security systems. The use cases selected for discussion and reference so far are:
- Connected Product Quality Analysis (industrial sensors, etc.)
- Operations Asset and Material Tracking
- Real-Time Asset Health Monitoring
- Industrial Process Automation
- Smart Outdoor Lighting
- Smart Heating Ventilation and Air Conditioning (HVAC)
Wi-Fi connectivity also has a specific role to play in enabling the small trilogy, as WBA puts it, of appliances, entertainment, and lighting.
Mapping Market Needs and Technologies
Communications requirements for these applications vary considerably, as the following examples show. Smart metering needs city-wide coverage; while home applications require indoor coverage within a house. Medical imaging means transporting large volumes of data, but an industrial actuator control may only need very short data transfers. Some devices, like off-site sensors must have long battery life, whereas other smart appliances take their power from the power grid.
Different wireless access technologies tend to address different IoT requirements, and monetization must be planned accordingly. For example:
- Wi-Fi is currently the only choice for high throughput applications with reasonable coverage, although compared to other technologies, it comes with higher cost and power consumption.
- When wide-area network coverage with high scalability is required, such as in smart city applications, LPWAN technologies are often more suitable.
- IEEE 802.15.4 is well adapted to large number of devices in a network for which low throughput, low cost, and low power are the main requirements, like home automation.
- High reliability and throughput requirements, coupled with those for low cost and low power (home healthcare, for instance), may be best met by BT and BLE.
- WiGig is currently the technology of choice for applications with very high throughput, and low latency and determinism, such as industrial control and machine vision systems.
However, this picture may change, for example, with the arrival of new Wi-Fi technology requiring significantly lower power.
Monetizing Over Multiple Domains
One of the most prominent subjects of discussion, whether monetization-specific or not, is that of network roaming, and possible solutions to meet IoT needs in this area. Besides references to recommendations, initiatives, and technologies such as WRIX, LoRa, and Passpoint/NGH, the report suggests that Wi-Fi can also offer pointers here, because it has already developed itself to become more secure, seamless, and interoperable.
The Future of IoT Monetization and Pricing
At least four different monetization models are predicted for the IoT:
- Hardware based: This is the most basic form of monetization. Network connectivity is added to an existing or new product, often with a web-based tool for remote management.
- Service based: Traditional product offerings are transformed into a recurrent service offering, changing the customer relationship and customer lifetime value to the provider.
- Data insight based: Businesses generate revenue by monetizing the data (properly aggregated and anonymized) collected from the Internet of Things.
- Ecosystem model: Delivery of a shared platform to enable multiple ecosystem partners to monetize their offerings.
Pricing models can then vary between conventional one-time charges, periodic subscriptions, freemium models, pay-as-you-go (like much of the cloud model today), and even pay-for-results. WBA does not recommend any approach specifically. Instead, the report lays out a range of possibilities for vendors and providers, who must then apply them as appropriate to meet market requirements and preferences.
To learn more about the work the WBA is currently undergoing, download the extensive white paper IoT New Vertical Value Chains and Interoperability.