A Connectivity Shift From Commodity to Value Asset
It has long been accepted that connectivity in terms of airtime buying and selling has become a commodity. Traditionally, players dealing with larger IoT customers have tried to position themselves ‘up the stack’ in some manner, be it through strategies to deliver turnkey solutions, value-added services, or vertical-specific tooling and expertise.
As expected, AI dominated the conversation in Kaleido’s meetings, and strategies in this context are diverse. Nevertheless, one cannot help but conclude that the prospect of AI – and the regulations that are developing around it – serves as an interesting opportunity in terms of how providers and their customers view connectivity. Connectivity used to be viewed primarily as a transport mechanism. Sell SIMs and Megabytes, and amplify coverage through direct roaming agreements, sponsored roaming and roaming hubs.
As we observe in our recently published Networks for IoT report, regulations and enterprise requirements are now eroding this model, and how players tackle this issue in terms of go-to-market and technology are becoming arenas to play in:
- Connectivity resilience came up on several occasions. Addressing this requirement can be a function of the core network or as a solution delivered on the SIM, and these differing approaches naturally have their own advantages and disadvantages. What is certain is that the belief that ‘no one is prepared to pay for it,’ something Kaleido observed during MVNO Nation in November last year, has been shattered. Verticals such as metering, healthcare, security and others depend on ‘always on’ connectivity, and players that can effectively demonstrate highly resilient solutions have a premium connectivity market to play for.
- Data sovereignty was inevitably a theme. For some, this represents an opportunity in terms of infrastructure services, as Capex- and resource-shy MNOs aiming to enable customers directly on an international basis will struggle to do this. For others, SPoG (Single Pane of Glass) in combination with SGP.32 allows the more challenging use cases to be dealt with on a localised basis. What is evident, however, is that neither SGP.32 nor SPoG are any kind of panacea for connectivity. More on that in a moment.
- Security and observability capabilities embedded into the CSP offering are finally coming to the fore. Aeris may have launched Watchtower multiple times, but its strategy has been right all along. Now incorporating cellular network observability into a SASE solution is a key enabler of end-to-end policy management for enterprises, and something that has been severely lacking the industry. CSP Industry partnerships with Zscaler, Paolo Alto and Fortinet ultimately still result in fragmentation, however.
SGP.32 and SPoG
2026 is the year of eSIM IoT, and that means everyone is excited to talk about service launches and market potential. It’s clear that success is far from guaranteed, as the industry continues to trip itself up on marketing hype and overpromising. When talking about SGP.32, you’ll hear a lot of the phrase ‘project-based’ which, ironically, was a famed phrase during the SGP.02 era. There are still several layers of complexity that need to be addressed:
- Interoperability. We’ve talked a lot about this before. Most early solutions delivered are likely to be single vendor in terms of EUM, eIM, and SMDP+, so from an architecture perspective, should be tested and ready to go. Where multiple vendors are involved in the stack, a different story arises. There is a recognition that this needs to be addressed, and there were encouraging signs that the ecosystem should be in a better place within 2-3 years.
- Lock-in effects. SGP.32 lock-in can either be achieved technically (preventing eIM reconfiguration) or commercially. There are definitely signs that commercial lock-in is already part of some players’ strategy which is a sad development. Ultimately, money talks, and education surrounding eSIM pitfalls can be a powerful tool to discourage this kind of practice.
- SPoG (in terms of aggregated management of several CMPs) to manage and orchestrate diverse eSIM fleets is evidently viewed as a key strategy among several providers. The overall benefit to most SPoG implementations remains rather nebulous: if the idea is to present a unified interface for eSIM orchestration and complex (as is typically the case among customers requiring SPoG) management of policy , the number of players actually addressing this is reduced to fingers on one hand. There is an interesting discussion to be had in terms of deep and light integrations across partners, and how this is balanced against commercial constraints and customer needs.
Power is Nothing without Control
So said Pirelli once. ‘Control’ continues to be a central theme for some players in the market. To an extent, you can see why – allowing a customer free-for-all over configuration and security has obvious implications that end up with fines, or worse. However, the resolute insistence that as much of the stack should be owned and managed by the MNO as possible is going to have a real commercial impact, given the software-defined nature of networks and connectivity today. The power shift is already in evidence: the fact that an upstart such as Lolo Company can demand full visibility of signalling and payload traffic at the behest of its automotive partners to deliver a solution capability well beyond the majority of CSPs today is a sign that cooperative business models are likely to be most effective moving forward. ‘My way or the highway’ seems like a dead-end.
More broadly, it is clear that, while simplicity rules for some segments in the market, other segments would rather the industry was open to a modular, composable ecosystem. CMP from one player, core network and connectivity from others – a best of breed selection is quite clearly important to some customers embedded into IoT, but, in their eyes, lacking from players’ propositions.
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