IoT: The Future Is Bright for Operators
The Internet of Things (IoT) is something of an enigma. For many in telecoms, it is something happening to other industries: In reality, it has the potential to radically transform the telecom world.
Unfortunately, few operators have yet determined what it is or what they want to do about it.
The machine-to-machine (M2M) market has been around for many years, with applications and systems that tended to be closed and proprietary. The IoT connects many of these closed systems through the cloud, to not only an exploding universe of connected devices and sensors, but also to users of connected devices. During the past two and half decades, mobile operators have developed a unique relationship with subscribers, so their networks and cloud services could be the perfect conduit for the interaction of services based on the IoT.
The challenge for operators is to find a business model that delivers value for customers and is profitable. A significant part of their challenge is determining what an IoT network architecture and business operation should look like. These dilemmas need to be resolved quickly because, within the next five years, serving the IoT market will become the critical mission for any communications service providers.
As industries such as automotive, utilities, transport and logistics feel the competitive pressure of IoT, the scramble for partners to help them will accelerate. One of the principle capabilities these companies will seek of their partners will be their ability to deliver complex solutions quickly. With rapidly developing technologies all colliding and changing the competitive landscape, companies will be looking for trusted providers of integration, connectivity and service provision. Consequently, mobile operators will need to step up -- or others will step in.
In what will rapidly become the fast-paced world of IoT, the ability for operators to flexibly serve global customers across multiple industry and public sector operations will require them to make fundamental changes to their business culture, network capability and operational processes.
The network technology will be affected by IoT because it is a horizontal, virtual domain that interacts with all aspects of the existing architecture, but forces the operating parameters to be exercised in ways that have previously not been considered. The network will have to handle new paradoxes, such as the need to be more open to embrace software and hardware developments, and interface with partner companies for complex solutions; yet at the same time it needs to be secure in order to prevent intrusions that could result in loss of data or operational control of customer systems. As a result, IoT will accelerate the deployment of NFV and SDN to ensure that the agility of the network meets the constantly shifting global requirements of the IoT networks as economically as possible.
In an IoT world that blends the digital and physical worlds with human social networks, data becomes the raw material and the operators can play a pivotal role in bringing context to that data. Their deep relationships with subscribers can add value to the interpretation of interactions between "things" and people across diverse industries and geographies, in order to help develop smarter services. This means evolving new skills, products and services around data analytics and business consulting.
Partnerships and alliances will have a far greater influence on telecoms business in the next five years. The network operators will need to develop a range of skills and foster a new business culture in order to develop ecosystems of complementary services, and to sustain strong vertical partnerships within multiple industries. Added to this will be the requirement for national operators to nurture horizontal partnering skills with other national operators, in order to offer global footprints to multinational corporations and compete effectively with international operators.
Faced with mounting performance pressures and a constantly changing business mix, the rapid emergence of the Internet of Things will force some radical rethinking of the role that operators play. The vertical industries, struggling to embrace IoT, retain substantial investments in legacy systems that have limited ability to interface with the explosion of "things" and systems that will be occurring inside and outside the company. This is the perfect scenario for telecom providers to be able to deliver IoT-as-a-service. Handling communications, connectivity, security, data management and analytics are all high value services, with potentially long-term commitments from clients.
The next five years will be anything but dull in the IoT and telecom industry space. This is why I'm optimistic about how the business will develop, and am looking forward to Carrier IoT: Making Money From Machines, the Light Reading conference that I'm chairing in Atlanta in February, which will focus on how operators can make money in this rapidly changing world of IoT.
— Steve Bell, Senior Analyst, Heavy Reading