Telecom firms converge on US$143B digital water market opportunity

Amidst increased demand for digital solutions from water utilities and industrial firms, a host of telecommunications companies have responded with dedicated strategies to capitalise on the market opportunity, according to a new report from Bluefield Research, Connecting Water Infrastructure: Telecom Company Strategies in the Global Digital Water Market.

Digital water, which is the application of digital solutions and tools for utility and industrial water management, has seen a 53% increase in project activity in 2016. Digital water spend in the top 10 key markets is forecasted to grow from US$8.7 billion to $20.2 billion by the end of the decade. Globally, this activity puts the growing sector on a 10% per year pace, led by the US, Australia, UK, and select Northern European countries.

In conjunction with the water sector’s growing appetite for more advanced communications, the industry’s connectivity requirements are becoming more apparent. Communications network operators and vendors are targeting a range of data-related challenges that include power consumption, bandwidth and cost.

Nina Rossiter, digital water analyst from Bluefield Research, commented: “Telecom companies are by default well-positioned to meet growing demand for digital water connectivity within their existing geographies, capable of leveraging existing network infrastructure and local relationships. When utilities and municipalities are looking for ways to connect assets and move data, telecom providers are often seen as a natural fit.”

No longer content to serve as silent partners and indirect connectivity providers, select telecom companies such as AT&T, Vodafone, BT, and Huawei are carving out distinct strategic positions in water including go-to-market strategies and network offerings. Analysis of telecom companies globally, shows that select firms are vertically integrating their approaches by offering implementation and integration services. In some instances, like Telstra and Verizon, they are going a step further by selling proprietary hardware and software directly to water utilities.

These strategic pivots toward water are driving competition between established cell carriers, Internet of Things (IoT) network pure-plays, and water technology incumbents. While the competitive landscape remains unsettled, the dynamics are further complicated by the emergence of new communications protocols – such as 5G, NB-IoT and LoRaWAN – that are expected to accelerate digital technology adoption in water.    

“In recent years, we have definitely seen an uptick in ‘outsiders’ looking into water from Big Tech to critical infrastructure players,” Rossiter added. “Like these companies, telecom firms are more accustomed to different industry conditions, highlighted by faster sales cycles and technology adoption. How they respond to the fragmented and challenges of the water sector remains to be seen.”