Industry 4.0 will bolster IoT connection growth for global CSPs

Industry 4.0 will contribute to a surge in IoT connection additions between 2022 and 2025

TBR expects Industry 4.0 to drive a renaissance in new, commercially viable use cases for the network between 2022 and 2025, which will spur revenue-generation opportunities for communication service providers (CSPs) that deliver the connectivity layer and value-added services to businesses. Industry 4.0 will bolster IoT connection growth for CSPs as they target large contract wins in areas including transportation, smart cities, smart factories and healthcare, which are expected to integrate a massive number of IoT devices to enhance operations.

Private 5G networks will play a pivotal role in advancing Industry 4.0 as these networks will provide the security and precision needed to support mission-critical workloads such as in manufacturing. The current, widespread availability of mid-band spectrum in EMEA and APAC markets will provide CSPs in those regions a time-to-market advantage in deploying private 5G networks as U.S. operators wait for the regulatory clearance of CBRS and C-Band spectrum over the next several years.

Enterprises will turn to private 5G networks due to their enhanced security and reduced latency

TBR believes private cellular networks will be a predominant initial 5G use case as enterprises will increasingly opt for 5G connectivity due to its ultra-low latency and enhanced security. Manufacturing plants will be an ideal environment for private 5G networks as the ultra-low latency and minimal jitter provided by 5G will enable connected devices such as robots and other manufacturing equipment to more effectively meet production quotas on the assembly line.

TBR’s Telecom IoT Market Landscape, takes a deep dive into the commercial cellular IoT-related initiatives of global stakeholders in the telecom market, including telecom operators, cable operators and vendors that supply the telecom market. The research includes key findings, market size, regional summaries, technology trends, use cases, verticals, operator and vendor positioning and strategies, acquisition and alliance strategies, and opportunities that are specific to the telecom industry.

CSPs focus on supporting advanced use cases and network technologies to maximize IoT revenue

Industry 4.0 will spark the adoption of advanced IoT use cases as well as the integration of network slicing and private 5G networks

TBR projects global CSP IoT revenue will increase at a CAGR of 24.9% through 2023 as the launch of mobile 5G services contributes to revenue growth acceleration starting in 2020, and operators, particularly in China, begin capitalizing on advanced use cases. As the 5G and digital ecosystems develop, advanced IoT use cases will emerge that can leverage the unique performance characteristics 5G offers, specifically high bandwidth and low latency. Connected transportation, AR/VR, and mission-critical IoT are all likely to be preliminary use cases for 5G technology, but the commercialization of these use cases will take a couple of years to unfold.

Though advanced IoT use cases that require the precision promised by 5G, such as remote surgery, are being explored, many of these services will not become commercially available until the mid-2020s at the earliest. Additionally, solutions such as remote surgery and V2X (vehicle-to-everything) automotive services will be burdened by significant regulatory and societal challenges.

TBR anticipates Industry 4.0, which includes mass 5G adoption globally, will ramp up around the 2022 to 2025 timeframe and result in heightened spend on ICT infrastructure as demand for new use cases, including advanced IoT solutions, increases. As Industry 4.0 progresses, leading enterprises in certain verticals such as manufacturing, logistics and warehousing will likely opt for private 5G networks that they buy, own and control. Private 5G networks will provide enterprises enhanced data security and the precision needed to support advanced IoT solutions. Private 5G networks will provide new revenue opportunities as customers will in many cases be purchasing these networks directly from telecom vendors rather than CSPs.

Though some larger enterprises will opt for private 5G networks, TBR expects most smaller companies will need to support advanced IoT solutions via a slice from a CSP. Though network slicing solutions will provide revenue opportunities for telecom vendors, adoption will be limited initially as most global operators will delay migrating to 5G core networks, which is essential to support network slicing, for another several years. Though many operators outside of China and South Korea will delay upgrading the 5G core because the system will be costly to install, early adopters will gain a time-to-market advantage capitalizing on advanced IoT use cases requiring the accelerated data speeds and ultra-low latency enabled by network slicing.