What Does The IoT Boom Mean For The Telecom Industry?

The Internet of Things (IoT), which enables any physical electronic device with a valid IP-address to transfer data seamlessly over a wireless network, is quickly gaining significant market traction and bringing about fundamental changes in business models.

According to a recent report by research firm International Data Corporation (IDC), spending on IoT in the U.S. alone is slated to grow at a 16.1% compound annual growth rate (CAGR) between 2015 and 2019 to reach nearly $357 billion.

According to IDC, the U.S. IoT market will reach $232 billion in 2016. The two biggest beneficiaries will be the manufacturing and transportation industries with estimated IoT spending of around $35.5 billion and $24.9 billion, respectively. Cross-industry investment, such as investment in smart buildings, may go up to $31 billion by year-end. Other important business verticals will be in-store contextual marketing, connected vehicles and insurance telematics.

In Dec 2015, the IDC had estimated that worldwide spending on IoT will grow at a 17% CAGR to nearly $1.3 trillion in 2019 from $698.6 billion in 2015. As per the report, the Asia-Pacific region will be the key growth area for IoT with an investment of approximately $280 billion, followed by North America and Western Europe, which will jointly spend in excess of $250 billion. As per industry verticals, the manufacturing sector has seen the highest in IoT spending with around $165.6 billion, followed by the transportation sector, which has recorded an investment of $78.7 billion.

IoT to Drive Telecom Industry Growth

Next-generation superfast wireless networks (4G LTE, LTE-A, upcoming 5G) will provide the primary impetus to the telecom industry. In this context, IoT holds potential to be the #1 factor driving future growth in the space. IoT is a network of physical objects embedded with electronics, software, sensors and connectivity that enables it to achieve greater value and service by exchanging data with other connected devices.

At present, deploying innovative connectivity platforms to deliver seamless, fully integrated mobile communication with global networking has become crucial for the success of wireless service providers’. Massive growth of 4G LTE (Long-Term Evolution) and LTE-A (Advanced) networks across the globe will lead the smooth transition from 4G to the upcoming 5G network standard. Superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of IoT.

U.S. telecom behemoths Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) , network infrastructure giant Cisco Systems Inc. (NASDAQ:CSCO) and UK-based global telecom operator Vodafone Group (LON:VOD) plc. (NASDAQ:VOD) are favourably poised to benefit from the IoT boom.