The Rise of Licensed IoT in Telecom and What it Means

In the ever-evolving landscape of telecom, a significant shift is taking place as IoT continues to expand.

After the major telecom carriers released their reports for Q4 of 2023, we reported on an emerging trend of growth in telecom subscriber bases is being driven more by increasingly rapid expansion in licensed IoT connections than by mobile phone subs.

2023 was a year of unprecedented growth for licensed IoT with the top three American telecom giants collectively adding over 30 million new licensed IoT connections. Currently, AT&T is winning telecom’s race to expand into IoT — having grown its IoT base by a remarkable 19% in 2023. By the end of the year, AT&T boasted a staggering 241 million wireless subscribers, with IoT making up more than half of their total base. 

Despite these impressive numbers, it can be difficult to get a clear picture of this growth because of inconsistent reporting — especially since not every carrier provides a breakdown of connection types in their quarterly reports. 

What exactly does it mean when we talk about licensed IoT?

To comprehend the growth of licensed IoT it’s crucial to grasp the distinctions between licensed and unlicensed IoT. Unlicensed IoT devices are things like wearables and smart home devices like smart lights and smart doorbell cameras that use WiFi connections to transmit data. 

Whereas licensed IoT devices:

• Operate on telecom networks using cellular connects, which means they often have additional security measures. (This is why licensed IoT is also known as cellular IoT)
• Can transmit signals longer, which means signals can go farther.
• Use a fixed spectrum range to avoid interference. (In the United States, licensed IoT spectrum is regulated by the FCC, which means that you can file complaints against operators of unlicensed devices that are interfering with your licensed connections.)
• Require a SIM card or eSIM subscription, whereas unlicensed does not[JC1] .

Unlike unlicensed IoT devices, which are largely stationary and intended for indoor use, cellular IoT is most useful for applications that are outdoors, in remote or difficult-to-access locations, or that move from location to location. 

For example, cellular IoT is already being used to lower the cost of emissions monitoring and leak detection for oil and gas companies. This real-time monitoring reduces the amount of time that operators need to spend on-site as well as allows companies to have a faster, more immediately targeted response in the event of a leak or other disaster.

eSIM is driving growth in licensed IoT through reduced deployment cost and growth in consumer-facing applications.

The growth trajectory of licensed cellular IoT is further propelled by the adoption of eSIM technology, which is lowering the cost of IoT implementations through reduced hardware costs, simplified installation and deployment, and increased flexibility. 

In a December report on eSIM disruption of IoT, John Marcus — Senior Principal Analyst for Enterprise Technology and Services at Global Data — said, ​“eSIMs have been around for a few years, but it is fair to say that before now there has been much more enthusiasm on the part of users and device makers than mobile network operators, which have viewed them as a threat. That is starting to change, following the publication of a new industry specification for IoT eSIM [in 2023]”.

This trend is fueling optimistic growth projections from analysts:

• Counterpoint research predicts that IoT eSIM connections will grow 43% annually between 2023 and 2030.
• GSMA predicts that globally, cellular IoT connections will reach 3.1 billion by 2025.

As the cost of licensed IoT connections goes down, operators are pushing beyond infrastructure-based applications like emissions monitoring into more consumer-facing applications. In November of 2023, AT&T launched its new ​“affordable in-car Wi-Fi plans” as part of its continued strategy to invest in connected roads and highways.

And just last month, Ericsson — a large manufacturer of network equipment — announced a collaborative venture with European telecom operator Telia, T-Mobile, and technology investment firm SoftBank to trial always-on 5G connections for Windows 11 laptops. The pilot program will use automated eSIM management to enable automatic network switching while traveling for uninterrupted 5G data services.

It’s still too early to say what the future holds for licensed IoT technology.

With eSIM technology leading the charge, the future promises not only enhanced connectivity but also a seamless and cost-effective IoT experience for consumers and businesses alike. 2024 looks to be another year of exciting developments as licensed IoT continues to redefine the contours of the telecom industry, one connected device at a time.