A new Position Paper from Transforma Insights analyses the substantial changes occurring in the Connectivity Management Platform (CMP) space, including the impact of unit economics on the approach of the various CMP vendors and the operators that use them.
Until recently the Connectivity Management Platform (CMP) landscape was relatively static. Two vendors (Cisco and Ericsson) dominated – albeit with some operators picking alternative approaches – and functionality evolved slowly; there was relatively little to upset the status quo. However, in the last two years there have been a lot of emerging dynamics that have upset that situation and thrown the CMP space into a period of transition, particularly driven by the changing economics of delivering cellular connectivity for IoT.
Challenging economics
Transforma Insights has previously highlighted the challenges associated with the dilution in average revenue per connection for cellular-based IoT – for instance, in the blog post ‘How will connectivity providers cope with ‘$1 IoT’?’, which examined how revenue per connection was declining, to the point of dropping below $1/year in many instances. The more widespread use of LPWA technologies, LTE-M and NB-IoT, will continue to drive the average spend on connectivity down.
This has implications for many aspects of how connectivity providers support those connections. One of the major issues relates to the CMP and associated costs. Operators are increasingly looking very closely at how they can afford to support low revenue connections. This has a knock-on effect on the providers of those CMPs: how to support operator customers at declining revenue per connection (sometimes as low as USD0.20/year) at the same time as supporting their complex requirements – and all against a background of being essentially loss-making.
Tiered approach
Effectively the IoT connectivity market is bifurcating, with one market focused on high-end, high-bandwidth, high revenue, connections (such as automotive), relying on richer value-added features, and the other focused on low-end, low-data, low revenue. The former can continue to be addressed using existing processes and platforms, even if a bit of streamlining wouldn’t go amiss. The latter, however, probably needs a rethink, to ensure that it can be addressed profitably. It needs its own channels, processes, and perhaps a separate lower-cost CMP.
One of the reasons why MNOs particularly are considering their options on CMPs is to be able to better address that low end of the market. In many cases they are looking at a CMP strategy that reflects a market segmentation that recognises this bifurcation. Deutsche Telekom, for instance, has its 1NCE subsidiary to address the low-touch prepaid end of the market, while its main core DT IoT business addresses the more demanding customers. Â
The established vendors have also recognised this dynamic, with tiered offerings. Cisco’s comprises three levels: Advantage, Essentials and Lite. Similarly, other vendors such as Comarch and Mavoco also have tiered offerings.
Newer entrants
It has become more financially viable to build a CMP and deliver a rich set of features based on being cloud-native. This has resulted in a greater level of competition in the space. There are now dozens of Connectivity Management Platforms in use. Many are simple skins of another vendor’s platform, with varying degrees of differentiation. And many are only used by a single connectivity provider as their in-house CMP. However, the ‘market’ for CMPs, i.e. the options for licensing by connectivity providers, has grown in the last few years. In some cases this is a result of operators deciding that they have an in-house CMP that is sufficiently feature-rich that it can compete with the incumbent players. In others it is a result of new entrants.
Established vendors
The CMP market has historically been dominated by two platforms: Cisco’s Control Center (previously Jasper Control Center) and Ericsson’s IoT Accelerator (formerly Device Connection Platform, DCP). Most major mobile network operator (MNO) groups used the platform from one or other of them. In some cases, this was alongside their own (e.g. Deutsche Telekom, Orange and Telefonica) and in a few cases it was both of them. A small number of major MNO groups opted to rely entirely on their own infrastructure (e.g. Verizon ThingSpace and Vodafone GDSP). Beyond this, a small number of MNOs opted to use some alternative CMPs from Aeris Communications, Comarch, ZTE and others. The bigger MVNOs tended to build their own, while smaller ones white label CMPs from MVNEs.
Fairly or unfairly, many MNOs have become increasingly frustrated with the two major CMP vendors. During the research for our ‘Communications Service Provider IoT Peer Benchmarking Report‘ (February, 2023) we asked the biggest MNOs in the world about their experience with their CMP providers. The response was generally negative. Some were frustrated by price rises, which is perhaps no surprise, while others were critical about a perceived slow progress in product roadmap.
To provide some balance to this, we see some of the criticisms as unfair. The complaints about price increases were levelled mostly at Cisco, but it was crucial for it to turn Control Center into a sustainable business, which now seems to be the case. And complaints about roadmap must still be seen in the context of these two platforms, particularly Cisco, continuing to be the market leaders. And it should be seen in the context of very significant demands for customisation from many MNO customers, each of which will need to enter a queue in the relevant CMP’s development pipeline.
Market reality
In the face of the changing economics, the various stakeholders have adopted very different approaches. Cisco has opted for a dual approach, raising prices to make its Control Center business profitable, and at the same time introducing additional value-added features and tiering. Ericsson has opted to exit the market altogether, transferring its IoT Accelerator business to Aeris Communications.
On the operator side, there is increasing interest in exploring options for using a more broad range of alternative CMPs, including from the likes of emnify, Eseye, floLIVE or Mavoco. That exploration of the alternative options was one of the key talking points of Mobile World Congress in February, as discussed in our recent blog post ‘The IoT view from Mobile World Congress and Embedded World: ‘transition’ is the word’.
Tranforma Insights’ new Transition Topic Position Paper on Connectivity Management Platforms is one of a series of Transition Topic Position Papers that Transforma Insights will publish throughout 2023. It is based on a set of ten key aspects of IoT that are going through a period of seismic change, technically, commercially and operationally. The first topic to be addressed is Connectivity Management Platforms and the fundamental changes happening in their functionality, economics, and market dynamics. Transforma Insights will host a webinar on the topic, ‘The future of IoT Connectivity Management Platforms in an era of transition’, on If you are an MNO considering its options on Connectivity Management Platforms, we recommend tuning in for the Transforma Insights webinar on 16th May, where it will be joined by Nir Shalom, CEO of floLIVE, in addressing all of the issues raised in this article, and many more.
