IoT Already is Driving Connection Growth

The attraction of 5G includes its projected importance as a driver of new internet of things connections. That trend (internet of things connections are a driver of new accounts) already has started.

Growth in the total number of mobile subscriptions was driven by a 14.2 percent increase in the number of machine-to-machine (M2M) connections in 2016, to 7.6 million in the U.K. market, says Ofcom.

That is crucial if one considers the chances 5G will drive significant additional revenue on the part of human users.

The problem is that consumers or businesses will only spend so much on all communications services. In the United Kingdom, for example, since 2011, household spending on fixed network voice and mobile voice has dropped.

Spending on fixed internet access services has grown, in large part because more consumers are paying incrementally more for faster speed services that cost more. Faster speed networks both are a response to higher usage, and arguably drive higher usage.

But there are limits to how much a human is willing to spend on access, or various communications and entertainment services. Generally speaking, consumers have substituted one product for another, even if there has arguably been growth in the monthly percent of household income spent on communications.

The point is that, even in the 5G, there are tough limits on how much incremental spending consumers are likely to entertain.

That is why internet of things and machine-to-machine connections are viewed as so significant: such connections represent a way to grow new accounts without pushing up against consumer spending resistance. Most IoT connections will be purchased by enterprises who have many other value drivers, against which the new connection cost is evaluated.
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