There’s good news and bad news for telecommunications companies in 2017, according to a new report from the Economist Intelligence Unit.

The bad news

Perhaps unsurprisingly the Telecoms in 2017 report finds that revenue from traditional channels like voice calls and text messaging will continue to fall, while the pressure to invest in infrastructure, such as “future proof” 5G networks, remains strong.

Mobile broadband demand is increasing, driven by sophisticated handsets. Meanwhile, smart devices and IoT technology continue to strain wireless networks. Spectrum constraints and ongoing competition from OTT services like Netflix and WhatsApp are also concerns, as is regulation, according to the analysis.

Matthew Kendall, Chief Telecoms Analyst, writes, “The EU is already well on the way to imposing a digital single market and will phase out roaming fees by June 2017. In the US, the new president, Donald Trump, has previously spoken against net neutrality and in favor of internet censorship, although his policy aims remain unclear so far.”

New opportunities

The result of all this, Kendall concludes, is “an almighty headache” for operators. They face slow growth and difficulty monetizing their offerings.

“Capitalizing on new technologies will be important for revenue-poor operators,” he says, citing vehicle connectivity as a prime example.

Connected cars were responsible for 32 percent of cellular connections in the US in the first quarter of 2016, outstripping phones (31 percent) and tablets (23 percent), according to a US-based consultancy, Chetan Sharma.

“As more connected cars take to the roads— eventually incorporating self-driving technology—this trend is only likely to gain ground,” Kendall says.

The revenue opportunities for operators are significant but they require “a readiness to collaborate with a wide range of actors who would benefit from information about drivers, from restaurants to chain stores.”

Monetizing IoT

Over 20 billion devices and products are already using IoT technology —from thermostats in the home to ATM machines and retailers’ distribution systems, and this trend is set to offer huge opportunities for operators too.

In 2014, Cisco predicted that the IoT would have a five-to-ten times greater impact on society than the internet. A recent report by Citigroup argued for telecoms operators to embrace the “digital transformation” and to do more to develop IoT-related technologies such as mobile banking, cloud-based TV, smart home functionality and e-health services.

“How precisely to define the IoT, how it will develop and how telecoms players can best monetize its potential remain unclear. Yet its capacity to transform telecoms is undoubted,” the EIU report says.

Monetizing IoT for telcos was one of the many interesting discussions at the Great Telco Debate recently, with a lively discussion around where telcos add (and gain) value. To date, much of the activity has been about taking cost and wasted work out of the system. The focus now is on how to generate revenue out of a connected product, the delegates and speakers found. Read more here.

We also look at this issue in more detail in our new report, The roadmap of options: Monetizing and managing IoE services.