Ten years ago it was possible to put a SIM card into a cellular device and send it almost anywhere in the world and it would work, connecting to any of the operators in the market with which the originating SIM provider had an agreement. Typically this was most operators in any given market. There was a global market for connectivity, albeit one where connecting via roaming was expensive and may not deliver all of the opportunities of network transparency and troubleshooting. Global MVNOs and out-of-footprint operators such as KORE Telematics and Telenor Connexion performed strongly.
In the early 2010s, however, there emerged a trend towards greater parochialism, limiting the opportunities of overseas players. Regulators implemented various limitations such as the prohibition on permanent roaming in Brazil, the requirements for a local address in India, and tax obligations in Turkey. There were also similar commercial equivalents. In Canada, for instance, the network operators adopted a strategy of denying roaming to devices that they perceived as being permanently homed in Canada. The same was also true of the United States. There is no suggestion of impropriety in either the regulatory or commercial limitations. They can be seen as closing loopholes that allowed operators that were not registered in the country to operate without a licence. Surely not in the spirit of roaming agreements.
Between 2015 and 2020 operators gradually overcame these new barriers. They encouraged the development of the eUICC standard to allow SIM localisation and struck agreements, formed alliances and made acquisitions to ensure they could provide the local breakout necessary to comply with the rules. The swing towards the local had been largely fended off, although it had the effect of concentrating more capability in the hands of the bigger operators which had the resources to build alliances, roll-out subscription management, strike partner deals, and so forth. A globally democratised system had become global again, but more concentrated.
The next 5 years will see the pendulum swing back towards the local, for a few reasons. The old separation between the device and the network which allowed the device to roam on any network no longer holds with 5G. The network has become part of the client offering in a way that it never was with previous generations. Network slices, private networks and mobile edge computing create a closer relationship between the customer and a specific network, either public or private. Of course this won’t apply to all devices. However, for high value use cases around factory or port management, for instance, there will be a distinct advantage for local operators able to deliver the network customisation required.
Simple track-and-trace applications clearly don’t need all the functionality delivered by 5G and will naturally gravitate towards technologies such as NB-IoT. But even this is showing signs of being more local that, say, 2G. Firstly there is still a lot of roaming to be agreed for NB-IoT. There are a handful of deals but nowhere near the multilateral interoperability that we have seen with prior technology generations. It will come, but it will take a few years. There is a further issue with NB-IoT being such a new technology: there are still teething problems with network optimisation to be worked out and it’s much easier to resolve them when you have an end-to-end view of the network and device. The expectation with NB-IoT was that it would be enabled with a simple software upgrade to LTE. The reality has been rather more challenging with much more optimisation being required.
The implications of this swing back to the local is that it becomes increasingly important to have local operations. It also, again, strengthens the hand of the bigger players who have the resources to build local agreements.
Transforma Insights is currently compiling its IoT CSP Benchmarking Report which is due to be published in August 2020. This topic of the provision of global vs local connectivity will feature, alongside analysis of other major trends and detailed profiles of major IoT connectivity providers.