Historically, the market for IoT applications that are enabled by cellular connections has been characterised by significant friction. Applications would need to be integrated into the Connectivity Management Platforms (and potentially other platforms) of mobile operators before an operator could offer them in their markets. Generally, operators have used a single (or, at most, a limited number of) connectivity management platforms, and the result has been a mostly fragmented environment for any putative provider of cellular connected IoT solutions looking to address worldwide markets. There have been attempts to develop ecosystems around different connectivity management platforms (e.g. Jasper, Ericsson’s DCP, and Vodafone’s GDSP platform) but each of these platforms is typically only used by at most one, or two, operators in most markets worldwide.
All that might be about to change though, with the advent of public cloud-based connectivity platforms. Affirmed Networks is a leader in this space with their vEPC (Virtual Evolved Packet Core) proposition and Aeris are happy to deploy their Aeris Mobility Platform (AMP) on the public cloud.
This trend towards cloud-deployed core network capabilities is likely to be reinforced by the advent of 5G, with higher cost core networks and a more fragmented operator environment, including enterprise users setting up private 5G networks.
The key observation is that as the costs for a mobile operator to integrate to a connectivity management platform fall (as can be expected in the case of webscale public cloud based solutions), so it becomes more economically viable to integrate to a greater number of connectivity management platforms, and for other players to integrate to those platforms or set up their own.
This simple dynamic could potentially turn the market for cellular application provision on its head. In future it could be possible for a company like Affirmed Networks to aggregate a number of cellular application providers to the, say, retail industry and to offer that portfolio to cellular operators via a single relatively simple, low cost, integration. Other ‘vertical’ ecosystems may evolve around other cloud-based core network providers. The result would be mobile operators integrating to multiple cloud core network providers, so that they could access the cellular-connected IoT solution portfolios of each.
This potential new dynamic would clearly be a boon for the systems integration industry, which would benefit from integrating to a single cloud core network provider that can in turn integrate to a range of cellular operators globally as needed.
For the cellular operators, a new strategy for the DX space would need to place more emphasis on engaging ecosystems (both of end users and solutions providers) and brokering commercial relationships. The key differentiator of mobile operators in the IoT space, and now DX space, has always been the existing billing relationships that they have particularly with small and medium size businesses. If the dynamics as outlined in this blog take hold, the operators will need to double-down on leveraging those existing commercial relationships, and de-emphasise actually developing their own solutions.