Chris Penrose, president of AT&T’s IoT business, offered a glimpse of the operator’s strategy as it gears up for the launch of its narrowband-IoT (NB-IoT) network in 2019, noting scale and bundling tactics will help it turn a profit in a business with low per-device revenue.
Speaking with Mobile World Live, Penrose highlighted AT&T’s experience with its existing LTE-M network, but said the operator expects new business models to emerge around its low-power options.
“You are going to, I think, see more bundling of connectivity with the device itself and/or getting away from monthly rates into multi-year offerings because these [devices] have long battery lives and are not pushing that much data.”
Earlier this month, AT&T rival T-Mobile US announced the rollout of an NB-IoT network that will offer connectivity for $6 per year for up to 12MB of data per device. Analysts were quick to point out that such a cost structure was unlikely to be a major money maker for operators.
Penrose acknowledged that average revenue per user (ARPU) may not be high, but, using the operator’s recently launched LTE-M button as an example, said AT&T can pull a margin on both the connectivity and the equipment it sells.
“We have to make sure that we’re designing our solutions to understand the revenues that come along with it and then keep the cost structures in line so even at very low revenues you can still drive profitability off the connectivity and then maybe layer other things like equipment or applications and solutions and analytics on top of it for an additional revenue stream.”
He added scale will also play a key role in the network’s success, and said the operator sees a significant opportunity to transition IoT devices currently on Wi-Fi to its cellular network.
By bringing millions of these devices onto cellular, Penrose said AT&T will be able to activate a revenue stream that it wasn’t able to access as a source of income at all in the past.
“When you’re looking at all the different ways in which connectivity happens today, less than 10 per cent of all IoT is actually going over cellular. If you can now begin to bring a lot more devices onto the wireless networks because you now have technologies that are secure, low-cost and really tap into a market that might’ve gone on to Wi-Fi or alternative technologies, you expand the size of the market which you can go to,” he concluded.