Vodafone is best positioned to be a hyperscale IoT connectivity provider, followed by Deutsche Telekom, Telefónica, Telenor, KORE and Telia, according to a Transforma Insights study.

The report highlights the need for communications service providers that are serious about addressing the IoT to pivot to being hyperscale IoT connectivity providers.

It analyses the relative strengths of 12 providers of global IoT connectivity in areas such as networks, platforms, vertical offerings and commercial strategy.

The market for cellular IoT connectivity has become increasingly complex and competitive recently. In these circumstances, communications service providers (CSPs) have to take a long hard look at their strategies and approaches to the market. There are effectively two options – find additional revenue streams or put in place systems and processes to cope with the pressures.

The report focuses on the core role of the CSP, that is the provision of connectivity. To succeed in that endeavour requires a CSP to evolve to become a hyperscale IoT connectivity provider. The assessment focuses on whether the CSP has put in place or is in the process of putting in place the necessary capabilities to deliver scalable connectivity to support at least ten times the number of devices at low cost points.

The report rates each CSP based on their aptitude across seven key areas – in declining order of importance – as indicated the chart below.

Based on the assessment against those seven criteria, the top scorer in terms of having the capabilities necessary to be a hyperscale IoT connectivity provider is Vodafone, followed by Deutsche Telekom, Telefónica, Telenor, KORE and Telia.

The opportunity associated with IoT for CSPs is not limited to the provision of connectivity. Many differentiate in other significant ways. Offering vertical services is one option. Many CSPs have very strong, in some cases market-leading, offerings in particular vertical markets. However, for most vertical markets the barriers to entry are high and simply pursuing a me-too approach to launching vertical offerings in every appealing segment is doomed to failure.

Again, Vodafone scores highest for the strength of its vertical portfolio, followed by Verizon, Telefónica and Orange.

There are further opportunities in IoT associated with horizontal advisory, consulting and systems integration services. The challenge with this part of the market is that it is hard to scale. Nevertheless, it is a valuable part of the market. Those CSPs with strong consulting and systems integration capabilities include Deutsche Telekom and Orange.

The chart below summarises the Transforma Insights ranking. On the vertical axis is hyperscale IoT connectivity capabilities. The horizontal axis provides an aggregate score for delivering client-specific services, across both vertical and horizontal advisory, consulting and systems integration.

Transforma said it should be noted that even the highest scoring CSP still had some way to go to meet the requirements of what it considered to be an optimum hyperscale IoT connectivity provider.

Report author Matt Hatton said: “CSPs must continue to evolve towards the goal of being a hyperscale IoT connectivity provider, supporting the necessary suite of scalable technologies and capabilities necessary to profitably address the growing cellular IoT market opportunity.”