Prediction 1: The contest for global dominance in LPWA networking technology will be limited to Narrowband IoT (NB-IoT) and LoRa.
We expect NB-IoT and LoRa to prevail because: LoRa has significant momentum, with networks on all five continents. The technology is backed by vendors such as Cisco and IBM and communications service providers (CSPs) such as Du, Swisscom, and KPN.
The weight of the established telecoms industry (including Ericsson, Huawei, Intel, Nokia, Qualcomm, and Vodafone) will be sufficient to make NB-IoT a major contender.
Other technology options appear more likely to be adopted in only a small number of countries.
SIGFOX has a strong position in France and has announced several network deployments elsewhere, but lacks broad industry support. Its business model may also be unattractive to many potential partners.
Other technologies such as RPMA, which is being used by Ingenu and Weightless SIG, have not built significant momentum.
• Niche players, such as Telensa, will continue to win smart city contracts, but they lack the scale of support of LoRa or NB-IoT. Even if our prediction that NB-IoT and LoRa will prevail proves wrong, and other technologies succeed instead, we expect to be in a much clearer position by the end of 2016 than we were at the end of 2015.
Prediction 2: Some will be disappointed by the number of LPWA connections in 2016; they shouldn't be.
• Analysys Mason is forecasting that LPWA will have "only" around 50 million connections by the end of 2016. Compared to the billions of IoT connections predicted, this number will disappoint some. However, it shouldn't, because most initial use cases—especially for smart city projects—are for large contracts that take years to complete.
• We expect connection volumes to accelerate toward the end of the decade as greater clarity emerges regarding the technologies, developing ecosystems, and emerging applications.
Prediction 3: More CSPs will publicly outline 3G network decommissioning strategies in 2016, partly because M2M is now a limiting factor in 2G network decommissioning.
While some operators (e.g., AT&T and Singtel) have announced plans to shut down their 2G networks, Telenor Group, in turn, plans to maintain 2G and close its 3G network. The need to preserve 2G M2M connections, which represent the majority of M2M connections worldwide, is a significant constraint on the complete decommissioning of 2G networks. We expect more telecom operators to follow Telenor's lead by decommissioning 3G networks before 2G.
Predictions for IoT and M2M Use Cases
PREDICTION 1: M2M in 2016 will be dominated by the connected car: the number of connected vehicles will increase to more than 150 million, with the largest operators reaping the benefits.
• The connected car opportunity is the most attractive M2M opportunity for telecom operators due to its massive scale (more than 800 million connected vehicles are projected by 2023) and the potentially high average revenue per connection (ARPC).
• Operators with global reach will be able to enjoy the biggest rewards, thanks to the integrated connectivity offerings they already have with automotive companies. We expect smaller companies to continue struggling to gain traction in the automotive space.
PREDICTION 2: We expect greater integration of the various IoT pillars.
We expect to see more attempts to use IoT to create unified user experiences, for example, linking connected car services to the smart home. Progress was made in this direction during 2015. For example, at IFA 2015, Deutsche Telekom demonstrated the integration of its QIVICON smart home platform with the infotainment system of the BMW i3 connected car. Furthermore, the Smart Citizens project, supported by Cisco and Intel, allows consumers to share data from multiple devices (including phones and wearables) to provide input for smart cities.
PREDICTION 3: The Internet of Things will likely begin to communicate in 2016. We expect to see a greater emphasis on adding capabilities beyond basic data connectivity to IoT devices, such as voice and video. This could include a health monitoring device that also allows users to make a voice or video call in an emergency. WebRTC may be one component.
IoT AND M2M STRATEGIES
PREDICTION 1: Some restructuring of M2M teams is expected as operators approach mature market opportunities.
We expect telecom operators to move closer to M2M and the greater IoT opportunity in 2016, potentially resulting in a reorganization of M2M units.
Operators will focus on three approaches:
• Using M2M to generate new connectivity revenue (e.g., connected cars). These activities align more closely with existing M2M business unit activities. Operators will aim to differentiate their offerings and make them less susceptible to churn, as we have seen with AT&T's Drive initiative.
• Using IoT to protect existing revenue (e.g., smart homes). These activities may be more closely aligned with other parts of an operator's business. AT&T and Comcast are using home automation solutions to complement their fixed broadband businesses. New connected devices could be used to help protect the core mobile business.
• Providing platforms for vertical markets, especially when connectivity revenues alone appear to be low. Healthcare is a key example of this. We are projecting fewer than 50 million mobile healthcare connections in 2020. CSPs are using their scale to develop an additional services platform that captures a larger share of revenue. Operators doing this include Deutsche Telekom, Telefónica, and Telstra. M2M business units were originally created to produce new pricing plans for mobile broadband SIM cards. However, they are creating platforms and some packaged end-to-end solutions, becoming specialists in a range of vertical markets, and are a driving force behind new, low-power networks. Consequently, some degree of reorganization seems likely.
