Telecom Operators' IoT Prospects Bright: All Eyes on LTE-M

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The growing popularity of Internet of Things (IoT), which allows electronic devices with valid IP-address to transfer data over a wireless network, is bringing about fundamental changes in business models. This network of devices allows us to take the next step into the wireless world that is progressively minimizing direct human-to-computer interaction. Since IoT requires wireless data connectivity, telecom operators have been increasingly diverting resources to this area in order to rake in higher revenues with increased adoption.

Why LTE-M?

Notably, GPRS has been the source of wireless connectivity for 'Machine to Machine' (M2M) functions owing to low data requirement and energy efficiency. However, as technologies evolve and the number of IoT enabled device increase, connectivity between such devices will require higher amount of data transmission which is not feasible on GPRS. Telecom operators are vying to grab this opportunity to deploy their LTE networks and rake in high revenues.

However, even though LTE has the potential to transmit heavy data traffic for M2M communication, there are certain issues pertaining to its usage such as energy efficiency. For times when machines are left unattended while IoT functions are carried out, especially during power cuts, LTE connections should ideally use nominal battery power. Additionally, LTE systems in the IoT space have to be cost effective and flexible enough to connect to a wide range of data. Thus, telecom operators are trying to create LTE specifically designed for IoT needs, named 'LTE-M'.

LTE-M: Active Participants

AT&T Inc. T has announced the initiation of LTE-M pilot test in collaboration with Sierra Wireless Inc. SWIR . Verizon Communications Inc. VZ has also announced plans to deploy the technology. However, LTE-M is faced with challenges from other IoT connection standards, such as Narrow Band IoT (NB-IoT), which has drawn the attention of telecom biggies like Vodafone Group Plc VOD .

The Bottom Line

Wireless penetration in the U.S. is high with LTE network accounting for around 78%. However, the wireless market has reached saturation owing to immense competitive pressure from T-Mobile US Inc. TMUS and Sprint Corporation S . Thus, for larger telecom companies like Verizon and AT&T, IoT is a potential revenue generating space. However, LTE-M has to fend off competition from prospective IoT standards like Sigfox and NB-IoT to gain traction.

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AT&T INC (T): Free Stock Analysis Report

SPRINT CORP (S): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

SIERRA WIRELESS (SWIR): Free Stock Analysis Report

VODAFONE GP PLC (VOD): Free Stock Analysis Report

T-MOBILE US INC (TMUS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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