& cplSiteName &

IoT Prospects for Wireless Operators: Good or Bad?

Danny Dicks
Heavy Lifting Analyst Notes
Danny Dicks
1/22/2016
50%
50%

The role of wireless operators in the Internet of Things (IoT) is at an interesting stage in its evolution.

On one hand, IoT markets -- such as the manufacturing and automotive industries -- are maturing and operators are considering how best to deploy third-party enabling platforms of the kind that they are traditionally pretty good at providing.

On the other hand, the operators' core IoT value proposition -- connectivity -- is under threat from new networks and communications protocols that seem well matched to the needs of IoT applications. In fact, one could see the public cellular networks' championing of the new NB-IoT standard, as well as the design criteria for future 5G networks, as being in part a response to the threat posed by the likes of Sigfox to the one part of the IoT value chain that wireless carriers thought was definitely theirs.

One issue facing operators is that many IoT applications are likely to be global in scope, and most operators' networks are not. In addition, operator networks have been designed to meet specific requirements in specific markets (and that doesn't necessarily mean that they will readily support IoT applications). Many of the most mature IoT markets (for instance, machine-to-machine industrial IoT) have established processes, protocols and providers -- it's not obvious what the route into those markets might be for operators.

These challenges are being addressed in multiple ways. Operators are doing one or more of the following:

  • Actively developing (or acquiring) vertical-specific IoT businesses and offering services to end users (generally enterprises in sectors such as automotive and logistics).

  • Partnering with one another to extend their global IoT connectivity service reach or with partners from different sectors to develop an IoT ecosystem.

  • Reselling global IoT enablement services (provided by third parties) that encompass connectivity and additional capabilities.

  • Deploying more capable service enablement platforms from third-party vendors in order to create and deliver broad IoT enablement services to enterprises and developers.

IoT platform vendors think the prospects for operators are good, though vendors that already sell connectivity management platforms to operators (some exclusively use this model) must ensure that their operator customers stick with them as service enablement capabilities are added to the basic connectivity management piece.

Operators will certainly further their IoT cause if they focus on putting in place platforms and tools that deal with the pressing issues around IoT generally, including scalability, generic and application-specific data analytics and reporting, and security. There are platforms available to them that will help -- they don't need to build their own solutions.

The latest Heavy Reading report report, "IoT Platforms: Chasing Value in a Maturing Market," examines the market for horizontal, multi-sector platforms to enable IoT applications. It considers the opportunities for telecom operators in this market; where value resides in the process of developing, supporting and delivering an IoT application; and how much of this value can be captured through the use of a horizontal platform. The report also assesses the offerings of ten leading vendors of IoT platforms.

— Danny Dicks, Contributing Analyst, Heavy Reading

(11)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Founder62562
50%
50%
Founder62562,
User Rank: Light Beer
1/31/2016 | 5:15:52 PM
Re: 3 avenues of growth with radically different revenue prospects
To nasimson I've provided details in my ETSI speech (see link in my original post). To summarize, mobile operators are targeting low-power devices (which were previously not addressable by traditional mobile) via the GSMA's NB-IoT initiative and partnerships with proprietary network providers. Pricing expectations for low-power connectivity has been set by SigFox at about EUR1.2/year per device (+/-). The average mobile connected device contributes revenues of about EUR24/year, hence the 0.05x factor.
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
1/31/2016 | 5:01:32 PM
Re: 3 avenues of growth with radically different revenue prospects
@Ken: > they can expand the base of addressable > devices (adding revenue at 0.05x the rate of > existing devices on average). How to increase the base of addressable devices? Why 0.05X?
DannyDicks
50%
50%
DannyDicks,
User Rank: Blogger
1/29/2016 | 9:03:34 AM
Re: 3 avenues of growth with radically different revenue prospects
Hi Ken - good to hear from you!

Thanks for adding the financial analysis to the options for carriers - a useful contribution to the debate.

Danny
DannyDicks
50%
50%
DannyDicks,
User Rank: Blogger
1/29/2016 | 9:01:16 AM
Re: There is more than what meets the eye
Hi CoFounde03033

Thanks for your comment - I largely agree with all your points :-)

Danny
CoFounde03033
50%
50%
CoFounde03033,
User Rank: Light Beer
1/27/2016 | 8:29:54 AM
There is more than what meets the eye
Thanks for an excellent article Danny.  I think your story is somewhat incomplete I believe.  Here's why.

1.  IoT is a stretch in terms of a service for a telecom operator.  You rightly pointed out that their sweet spot is 'connectivity', which too is under severe threat from NFCs and other emerging protocols.  Similarly, I believe wired telecom services such as MPLS/VPNs are significantly more critical in IoT than what most people tend to believe.  There is a huge embedded base of such wired connectivity in the enterprise space and most telecoms are ignoring it - granted for several reasons.  The simplest way I explain this is the following:  Telecoms job is to ensure packets are transported from point A to point Z in the fastest, cheapest, and most efficient way.  They deal with 'packets' and do not see or know/understand the contents of the packet.  On the other hand, IoT has to do with the content of the package.

2.  Once again your point re: acquisition of Hughes Telematics by Verizon is right on.  If telecoms want to be successful in IoT, they must acquire domain knowledge, which obviosly they do not have.  As a side note, anecdotal evidence suggests the Verizon-Hughes Telematics marriage isn't a very happy one.

3.  I believe integrating with Jaspers/PTCs of the world is more beneficial to those companies rather than their host telecoms companies - depending upon their agreements of course.  Without real revenue generating IoT solutions sitting on them, such platforms are suboptimal in value.  One of the short comings of connectivity platforms is that they only cater to wireless and ignore the wired communications.

Telecoms operators can be a huge benefit to the overall implementation of IoT, but there are several aspects that need to radically change for them to be effective and successful.  As a first step, telecoms need to revisit their value propositions, accept their limitations and reorganize better.
Founder62562
50%
50%
Founder62562,
User Rank: Light Beer
1/26/2016 | 2:20:56 PM
3 avenues of growth with radically different revenue prospects
In ther near term, mobile operators have 3 ways to grow. Firstly, they can move up the value chain (platforms and applications) which boosts revenues by up to 20x over connectivity.

Secondly, they can expand the base of addressable devices (adding revenue at 0.05x the rate of existing devices on average).

Or, thirdly, they can tackle inter-operability opportunites closer to the data and applicaiton interaction layers of the value chain (potential for a 1.4x revenue boost).

https://docbox.etsi.org/Workshop/2015/201512_M2MWORKSHOP/S02_RECENTIoTDEVandSTRATEGIES/MOREWITHMOBILE_figueredo.pdf

Longer term, operators will have to deal with the converegence between IoT and 'Digital' services (which implies the need for platforms to support multi-party business models). Consider examaples of consumer devices (Smartphones/tablets on Telco #1's network) interacting with connected, enterprise devices (on Telco #2's network).

Ken Figueredo
DannyDicks
100%
0%
DannyDicks,
User Rank: Blogger
1/25/2016 | 6:41:04 AM
Re: 4 way forwards
Sure. Here are examples in each category:

Acquiring / developing vertical specialist IoT businesses - Verizon acquired Hughes Telematics to develop an automotive telematics IoT business; Telefonica developed logistics IoT services with Masternaut

Partnering to extend capability - Swisscom, Deutsche Telekom, Orange, TeliaSonera, TIM, Bell Canada, SoftBank (collectively members of the Global M2M Association)

Reselling global IoT enablement services - Reliance Communications in India resells IoT enablement from global platform provider Jasper

Deploying more capable service enablement platforms - NTT DoCoMo deploying PTC's ThingWorx platform.

Danny

 
ContentD77453
50%
50%
ContentD77453,
User Rank: Light Beer
1/25/2016 | 5:07:15 AM
More Need For Research
Wireless carriers are very important and integral part of the IoT infrastructure. If they want to reap profits from Internet Of Things boom they need to address some security challenges first.
Executiv37157
50%
50%
Executiv37157,
User Rank: Light Beer
1/24/2016 | 9:00:35 PM
Good
Prospects are good so long as they invest in research, personnel and partnerships.

Jason Lebrecht
Joe Stanganelli
50%
50%
Joe Stanganelli,
User Rank: Light Sabre
1/24/2016 | 2:02:54 PM
5G $$$
I am of the understanding that companies view 5G as a far too expensive option.

Conversely, mesh holds a great deal of promise -- but can be difficult to deploy.
Page 1 / 2   >   >>
More Blogs from Heavy Lifting Analyst Notes
A major re-architecting of the network will be needed to deliver future services, as we'll discuss during the upcoming BCE 2018.
Cable is moving into the Internet of Things (IoT) market, specifically homing in on home automation, using its advantage of existing connectivity and customers.
Communications service providers that are specialists in software-defined wide-area networking believe they're doing a good job on SD-WAN security but need to consider some enhancements to continue doing so.
Telefónica's 'fourth platform' uses artificial intelligence to analyze data from underlying platforms in order to better serve customers.
Fiber to the home (FTTH) and mm-wave 5G fixed wireless access (5G-FWA) are not actual competitors, as they both have their strengths and places in the market
Featured Video
From The Founder
Light Reading founder Steve Saunders talks with VMware's Shekar Ayyar, who explains why cloud architectures are becoming more distributed, what that means for workloads, and why telcos can still be significant cloud services players.
Flash Poll
Upcoming Live Events
May 14-16, 2018, Austin Convention Center
May 14, 2018, Brazos Hall, Austin, Texas
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
Australia's Optus on Back Foot After 'Anglo Saxon' Job Ad
Ray Le Maistre, Editor-in-Chief, 4/13/2018
Is Gmail Testing Self-Destructing Messages?
Mitch Wagner, Mitch Wagner, Editor, Enterprise Cloud, Light Reading, 4/13/2018
BDAC Blowback – Ex-Chair Arrested
Mari Silbey, Senior Editor, Cable/Video, 4/17/2018
Verizon: Lack of Interoperability, Consistency Slows Automation
Carol Wilson, Editor-at-large, 4/18/2018
AT&T Exec Dishes That He's Not So Hot on Rival-Partner Comcast
Mari Silbey, Senior Editor, Cable/Video, 4/19/2018
Animals with Phones
I Heard There Was a Dresscode... Click Here
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed