Jola Cloud Solutions' Blog

Your customers are working on mobile data projects right now and demand is predicted to increase dramatically over the next few years, writes Adrian Sunderland, CEO at Jola. If you get it right with M2M and IoT, you will quickly generate high-margin recurring revenue and, due to higher EBITDA multiples, increase the value of your company.

According to McKinsey, revenues from mobile data are set to increase dramatically over the next five years due to the availability, speed and reliability of 4G, 5G and IoT. Statista forecasts that there will be over 25.4 billion IoT devices worldwide in 2030. Fortune Business Insights predict this market will be worth £1085bn by 2027.

People think IoT is low revenue and you’ve got to win hundreds of thousands. You don’t. You can often get a decent ARPU of £10 to £15 on thousands of devices and sometimes margins of more than 40%, so it’s an attractive line of business to pivot into.

Your mobile data partner will need to give you the tools to win deals, usually competing with the direct sales arms of the mobile networks. Your supplier will need to be an aggregator with access to all the networks and ideally, they will also be an independent MVNO. Most importantly everything must be automated, with real-time APIs offering zero-touch provisioning and management through a single self-service portal.

They will need to be innovative, with a constant stream of relevant mobile data and IoT products
that the networks would take years to develop and launch. When you partner with the right channel supplier, mobile data is easy to sell, support and bill.

The opportunity for the channel is significant. ICT resellers already have strong relationships with business customers for IT infrastructure, asset tracking, digital signage, mobile WiFi, monitoring and utilities.

Mobile data is an easy product to sell and provision and needs very little support. Jola took on just over 200 new partners in 2022 and now has over 1300. We put 30,000 multinetwork SIMs into iPads for one public sector project, with a very quick book-to-bill timeframe and no issues. Our SIMs are in devices such as ANPR cameras, CCTV cameras, vending machines, digital signs and tracking devices around the world.

This has been true for UK resellers since deregulation in the early 1980s through the launch of the first competing telephone service to BT in 1986, fax, telex, ISDN, 21CN and now the transition of everything to IP. At the same time, the constant need for more speed drives another fibre revolution creating a plethora of local, regional and national fibre companies. Similar to what happened to cable companies in the 1990s these will inevitably consolidate into a handful of national providers. Most will get bought and some will go bust.

This move to full-fibre brings challenges as well as opportunities. BT has led the way with its ‘unbreakable’ proposition and for ISPs to compete it must develop its own Layer 2 4G/5G proposition. Unless they decide to build their own mobile infrastructure, this requires network integration with a mobile data aggregator. Neither solution is technically trivial and ISPs need to be careful to evaluate the technical competence of potential suppliers before deciding which way to go.

The networks are already switching off their 3G networks and there are thousands of routers out there that need to be replaced to work with LTE. This is a great opportunity for MSPs, many of whom are unaware that their customers are using mobile data already. A channel-only aggregator will use their experience to help you find and replace these with high-margin, high-value alternatives.

Finally, the move to all-IP is bad news for customers of the millions of single telephone lines servicing lift lines, retail, alarm lines and healthcare services. Rather than pay twice the monthly rental for a SOGEA service they are choosing to use tailored 4G/5G products. Apart from hitting the price point, these get around logistical issues like laying cable across third-party space.

We can expect a huge amount of opportunity for the channel. Successful resellers are trusted by their customers, they are more than just suppliers they are advisors. For the SME business, they are perhaps faced with some uncertainty, such as what happens with my PSTN lines and the things connected to them.  The reseller that takes away the uncertainty is in the driving seat to help their customer benefit from the new connectivity as well as solve some of the more niche PSTN replacement problems that are being ignored by the large telcos.

Is the future of connectivity fixed-first, mobile-first, or something in between?

I think the future of connectivity is definitely something in between. There is no doubt that a business that is on-net with one of the fibre providers will want to take their primary connectivity that way.  For them, this connectivity will almost certainly be mission-critical. So, for fibre-connected customers, more and more we see a growing requirement for cellular (4G/5G) backup. Many of the fibre providers are including this as standard with their B2B offerings, providing seamless failover between fixed-line and mobile. 

Of course, not every business is on-net for fibre and so we’re seeing more and more sites where resellers are choosing a mobile broadband solution. According to Ofcom, 73% of homes could benefit from gigabit broadband at the end of last year compared to 82% that could get 5G.  I think that whilst both footprints will continue to grow, in all likelihood 5G will always be the technology used to fill the gaps or provide connectivity where the requirement is temporary (such as construction sites, festivals etc.) or mobile (such as public transport, marine etc.).

The average speed achieved by Three UK’s 5G customers was 275Mbit/s last quarter with the highest performance measured at 1.4Gbit/s!  So there isn’t necessarily a performance compromise to be made through the use of mobile vs. fixed like there was when 3G was the best service available.

We are seeing significant demand for single devices that support Gigabit Ethernet and 5G or for 5G devices that can sit alongside Gigabit Ethernet routers.  Internet connectivity is now mission critical to virtually all businesses whether they are SMEs, mid-sized or the largest of enterprise or public sector.  For the channel, these devices need to be robust, reliable and manageable out of the box.  At Jola, every single device that we supply includes unique software that we’ve developed in-house to make the device provisioning zero-touch and to enhance the remote support that the reseller can provide.  Supplying hardware isn’t just a case of shifting a box anymore, now the reseller needs to make sure it will work perfectly with the customer’s particular mix of connectivity as well as any wide-area network-specific requirements such as SD-WAN or VPN connectivity to other locations.  

The latest generation of equipment is significantly more powerful than what’s gone before.  Two years ago, using the best external antennas, a typical cellular router, even from a premium brand, would struggle to perform much beyond 40Mbit/s.  The constraint was both the device itself but also the cellular service available.  In a recent test, our entry-level 5G router, inside a building, using its own internal antennas delivered 490Mbit/s.

The other major benefit of the new equipment is the cost savings.  Our average leased line customer has 100Mbit/s of bandwidth but our average FTTP customer has 300Mbit/s available to them.  On average our 5G customers achieve speeds of 276Mbit/s (using the Three UK network).  FTTP is around 80% cheaper than a leased line and 5G is around 97% cheaper than a leased line!

Social Housing

Jola supplies MSPs with mobile data solutions to monitor and control the usage of gas and electric systems in social housing. Usage is monitored to try and create efficiencies and move towards a carbon-neutral goal. The challenge their customers have is one of affordability. Hardware costs are high as is deployment countrywide with single network coverage issues.

Hardware

End-users expect always-on 24/7/365 internet connectivity and reliable hardware to be able to monitor usage in near real-time. They don’t want to be paying over the odds for data usage and would prefer to pay monthly for hardware.

Partners can work with end-user businesses to meet the unique connectivity requirements of their customers, helping to test and roll out solutions which exactly meet their needs.

Trends

In the upcoming year, businesses are expected to focus on several trends in the analytics space. Automated analytics is set to increase allowing businesses to quickly analyse data and to generate insights without manual analysis. Machine learning algorithms are predicted to be used more widely to help with decision-making. There will be a greater emphasis on data security. Real-time analytics will be a major focus and there will be a shift towards hybrid cloud analytics as businesses look to gain competitive advantage and retain security over their data.

It is clear that Covid has changed the workplace forever and beneficiaries have been the UC and collaboration solutions such as Microsoft Teams, Zoom and WebEx.  In most workplaces, the option didn’t exist to regularly work remotely and as a result, companies didn’t necessarily provide UC and collaboration tools required.  Covid changed all that and remote working became mandatory for most of us.  At first, we used the tools to simply have multi-person video calls, but quickly started sharing screens and in many cases moved to mass participation web conferences. 

In the past, it was the PBX or hosted PBX providers that were providing UC add-ons to their basic service sometimes at a significant premium.  Now it is the collaboration vendors that, with the addition of PSTN calling, are now displacing the PBX and/or hosted PBX.  It is now relatively easy to port a UK PSTN number to an MS Teams user and use that single client (desktop and mobile) to be able to interact using the rich Teams experience or make and receive traditional voice calls as required.

At the moment the UC collaboration experience is all based on two dimensions video and screen sharing.  However, we already see our SIMs being used in Augmented Reality (AR) and Virtual Reality (VR) applications in specialist industries with purpose-built tools and devices.  However companies such as Microsoft, Apple and Google are investing heavily in AR and VR for both consumers and businesses.  This combined with the widespread availability of 5G makes me think it won’t be too far away before the UC and Collaboration tools that we use every day start to open up AR and VR for widespread B2B use.

How is the UK progressing with the rollout of 5G and full fibre technologies?

All 4 major UK networks are well underway with their 5G rollouts. Three and EE are ahead in terms of numbers of cities compared with Vodafone and O2, however the reality is that most major cities now have 5G which accounts for over 50% of the population.  The expectation being set by the operators is that it will take a further 5 years to reach 90% of the population.  Achieving this will involve turning off the 3G networks to re-use that spectrum to support 5G.  The last 10% may well require technology or an approach that has not yet been used in UK mobile networks such as using 5G satellite constellations to provide infill.

Biggest opportunities

The performance offered by 5G can be better than the performance offered by the fixed line broadband service available in many locations.  The channel are bound to have customers with poor broadband performance and 5G could well be the answer, especially when combined with a high performance 5G router and external antenna.

5G provides high performance Internet access in locations where there is no fixed line connectivity at all.  This means locations where solutions such as hosted voice, collaboration, IP CCTV could never have been supplied are now accessible for the first time.

5G requires new devices to take full advantage of the increased performance.  A fact often overlooked is that all the UK networks support LTE-Advanced or 4G+ with a much larger footprint than their 5G networks and yet the vast majority of 4G routers on the market today don’t take advantage of the extra performance.  In some cases a good quality LTE-Advanced or 5G router would provide up to 4 times the performance on 4G compared to using a device that doesn’t support LTE-Advanced.  In many cases where you’re deploying 4G in a fixed location we would recommend installing a 5G router because it will provide much better 4G performance and will be ready for 5G when the coverage reaches that location.

Biggest challenges

One of the biggest challenges is that a customers existing equipment may not be ready for the latest 5G or full fibre technologies. This means that there is a potentially significant capital expenditure required.

To address this problem, we launched our Device as a Service offering.  Good quality, high performance 5G devices are expensive, potentially three or four times the price of the equivalent 4G device.  Our channel told us that this was an obstacle to 5G adoption.  So now we offer all our devices on an Op-Ex model so that the channel partner and the customer don’t have any hefty upfront costs that might put them off taking advantage of 5G.

All 4 major UK networks are well underway with their 5G rollouts. Three and EE are ahead in terms of numbers of cities compared with Vodafone and O2, however the reality is that most major cities now have 5G which accounts for over 50% of the population. The expectation being set by the operators is that it will take a further 5 years to reach 90% of the population. Achieving this will involve turning off the 3G networks to re-use that spectrum to support 5G.  The last 10% may well require technology or an approach that has not thus far been used in UK mobile networks such as using 5G satellite constellations to provide infill.

Opportunities for the channel

5G has opened many opportunities for the channel. The performance offered by 5G can be better than the performance offered by the fixed line broadband service available in many locations.  The channel are bound to have customers with poor broadband performance and 5G could well be the answer, especially when combined with a high performance 5G router and external antenna.

5G provides high performance Internet access in locations where there is no fixed line connectivity at all.  This means locations where solutions such as hosted voice, collaboration, IP CCTV could never have been supplied are now accessible for the first time.

5G requires new devices to take full advantage of the increased performance.  A fact often overlooked is that all the UK networks support LTE-Advanced or 4G+ with a much larger footprint than their 5G networks and yet the vast majority of 4G routers on the market today don’t take advantage of the extra performance.  In some cases a good quality LTE-Advanced or 5G router would provide up to 4 times the performance on 4G compared to using a device that doesn’t support LTE-Advanced.  In many cases where you’re deploying 4G in a fixed location we would recommend installing a 5G router because it will provide much better 4G performance and will be ready for 5G when the coverage reaches that location.

Jola launched our Device as a Service offering to solve a problem that has been caused by 5G. Good quality, high performance 5G devices are expensive, potentially three or four times the price of the equivalent 4G device. Our channel told us that this was an obstacle to 5G adoption. So now we offer all our devices on an OpEX model so that then channel partner and the customer don’t have any hefty upfront costs that might put them off taking advantage of 5G.

2G/3G Sunsetting

The 5G rollout is leading to the 3G networks being switched off over the next 3 years. This is a huge opportunity because there are millions of devices that are 3G only and don’t support 4G. This means that when the 3G network is switched off suddenly payment terminals, tablets, kiosks, digital signage displays and many more devices will just stop working! 

This means that you have the opportunity to generate revenue from the hardware swap-out but also this is a great time to speak to your customers about swapping out your customers mobile data SIMs.  Many organisation did deals years ago with MNOs (particularly the M2M / IoT divisions of the MNOs) that the channel could replace via an aggregator like Jola, saving your customers significant money and making a healthy margin at the same time.

5G in the future 

Today 5G is being delivered using the same frequencies as 4G and typically delivers average speeds of around 150Mb/s and over 500Mb/s in perfect conditions. However, to unlock the true potential of 5G and deliver multi gigabit ultra-low latency performance then the operators need to start using the spectrum in the millimetre-wave (26Ghz – 40Ghz) bands and this will require regulatory change and significantly higher investment.  When this happens I think 5G can really deliver on the promise of any application anywhere and it’s not inconceivable that fixed line access is no-longer essential for many businesses and use-cases.

It is very common for the channel to use APIs for both availability checking and for provisioning tasks such as setting up new services.  With fixed line broadband and leased line services then availability checking is usually a key first step for a reseller to collect a lead.  So, they may have a postcode checker box on their website that collects some information about the customer’s location before using an API to provide a list of services that are available all without any human intervention required on the part of the reseller.

I don’t think it’s an accident that Jola’s largest resellers transact almost exclusively using APIs.  Whilst we have arguably the most feature rich mobile connectivity management portal in the form of Mobile Manager, for many resellers they want to pull all that functionality into their own portals.  We decided right in the beginning that anything we develop into our portals should also be available via an API and that strategy has paid off.  Resellers can now perform the full lifecycle management of a mobile SIM card via an API including the initial provisioning, the in-life management and usage monitoring through to changing the tariff on a SIM card or even cancelling it at the end of it’s useful life.

If a reseller makes the move to using APIs then I think it’s important to think about consistency.  So decide which workflows you’re going to automate via APIs and ideally always use that workflow rather than sometimes using the API and sometimes using a GUI.  The reason is that it’s likely that your API workflow will be keeping data in sync between your internal systems and your suppliers’ systems.  So, if you don’t use that workflow consistently you can end up with a situation where your internal systems are out of sync that can lead to billing issues or confusion when it comes to providing support for that service.

I think API usage will be become even more widespread.  The massive adoption of the hyperscale clouds such as Amazon Web Services and Microsoft Azure is providing really powerful, easy to use and well documented API gateways that simplify the process of interacting with all kinds of different APIs.

Open APIs are in their infancy and I don’t think there’s a great example of their adoption within the channel today.  However the promise is clearly exciting and potentially could lead to the channel add a new layer of stickiness to some otherwise commoditised services.  For example, your mobile phone SIM card could have a set of open APIs that gave access to things like SMS history, call logs, data usage information.  Then an App developer could use those APIs to provide really in depth management capabilities into an easy to use App available from the App store.  Now, if your SIM supported those Open APIs but your competitor didn’t and your user valued the capabilities delivered by that third-party App then it’s unlikely they’d switch SIM provider to somebody that doesn’t have that capability.

A few years ago IoT was driving transformational change in certain market sectors such as utilities and transport.  The return on investment was so rapid that if you didn’t invest in IoT you were vulnerable to competitors who were already benefiting from efficiencies being gained from their investment in IoT.  Today you would struggle to find a water supplier that isn’t monitoring their distribution networks in real-time or a transport company that isn’t tracking and monitoring their fleet in real-time.  In fact, in these industries, they’re probably on their second or third generation of solutions.  

Today every market sector has a problem that can be solved by IoT.  A few years ago companies would seek out an IoT specialist or perhaps the IoT division of a mobile operator for help.  Today, IoT is mainstream and companies are turning to their trusted IT service provider or telecoms service provider for advice.

IoT sits adjacent to so many other services that resellers may find it relatively easy to fill gaps in their portfolio.  For example, somebody that is already selling traditional mobile could find adding IoT connectivity a natural extension and if you’ve already got businesses that trust you to supply, support and bill their mobile handset SIMs then you’re halfway there.  You may be providing public cloud consultancy or services.  Over 80% of IoT projects are built using one or more services in the public cloud and so there’s a great opportunity to develop an IoT business using tools and technologies that you already know.

IoT opportunities don’t just come because you add an IoT product or service to your portfolio.  You already have customers with huge IoT opportunities but you just don’t know it yet.  At Jola, we have a process called the Mobile-Data Revenue Generator™ (The MRG™) that helps resellers identify opportunities in their existing base and helps develop the necessary products, services and skills to be successful in winning those opportunities.

3G Sunsetting 

The sunsetting of 3G and indeed 2G has huge implications for the IoT market.  There are millions of devices out there that only support 3G that need to be replaced.  There are millions of SIMs that only support 3G, even if they’re in devices that are capable of connecting to 4G.  So there in many cases, the starting point should be an audit of your customers' use of IoT and M2M connectivity and devices.  Some major sectors are payment processing terminals, vehicle telemetry/vehicle trackers, remote environmental sensors, digital signage etc.  In many cases, your customers may not be aware of the ticking time bomb within their own organisation.  Of course, for the reseller, this is a huge opportunity not just to solve a problem but to save their customer money.  The reality is that connectivity costs have come down significantly over the past few years so your customers’ 3G solution likely supplied by one of the big four mobile operators will look very expensive based on today’s prices.  Of course, swapping hardware could be expensive but with solutions like the Jola Device as a Service then you may be able to solve their problem without any CAPEX at all whilst delivering better performance and the latest features.

Every IoT solution will involve a variety of vendors from the device manufacturer, connectivity supplier, device management software vendor, application vendor, and cloud or hosting location.  In some cases your customer will be coming to you for just one element of the solution, in others, they’ll be looking for the end-to-end solution.  Many vendors are not geared up to sell via the channel and should be avoided.  Only a truly channel-only specialist will be able to help resellers at every step of the engagement with a new IoT opportunity.  The low-hanging fruit in all IoT opportunities is connectivity.  The reality is that mobile network operators have quite rigid product sets and limited management bandwidth to deal with a lot of opportunities.  Of course, if the opportunity is sizeable then they’d rather win it themselves.