The introduction of billions of connected devices, known as the Internet of Things (IoT), is set to change the way the world works, and will, to varying degrees, impact the everyday lives of the vast majority of the world's population. But it goes far beyond a personal experience.
The Industrial Internet of Things (IIoT) is fundamentally transforming how enterprises do business in ways both big and small, obvious and subtle, consumer facing and behind the scenes. It also has the potential to add $14.2 trillion to the global economy by 2030, according to Accenture, so it's easy to understand why the major wireless operators want to stake their claim in the action now.
Wireless operators such as AT&T Inc. (NYSE: T) and Verizon Wireless have been playing a major role (that of connectivity provider) in the machine-to-machine (M2M) communications space for more than 20 years, but the IIoT is emerging as perhaps the biggest opportunity in the all-encompassing Internet of Things. (See IoT Prospects for Wireless Operators: Good or Bad?)
IIoT is the combination of machines, apps and analytics that together transform the manufacturing process. And it's happening, to varying degrees, in all the major economies of the world: In Germany it's part of what is termed Industrie 4.0; in China, two government initiatives (Made in China 2025 and Internet Plus) are the catalyst for IIoT developments. (See The Rise of Industry 4.0 and watch out for IIoT Prime Reading reports on developments in Germany and China in the near future.)
Heavy Reading senior analyst Steve Bell notes that this affects many industries that have used M2M for years, but in isolation. Now, they are able to connect their supply chain, ERP enterprise resource planning (ERP), purchasing and processes with the manufacturing floor.
"Discrete sensor systems can now be connected to the cloud and the data in different formats can effectively be merged and blended and extracted," Bell explains. IIoT will impact all enterprise verticals in some way, but the ones likely to benefit most include transportation, automation, manufacturing, industrial mining, processing and aviation.
The enormous scope and potential of IIoT has caught the attention of all the major wireless operators in the US, though AT&T and Verizon have been the most aggressive so far. As part of his 2016 predictions, T-Mobile US Inc. CEO John Legere suggested big things to come from the carrier in IoT, but a spokesperson said it's not currently focused on IIoT. Sprint Corp. (NYSE: S), too, has been more focused on upgrading its LTE network than tackling IIoT.
AT&T and Verizon, on the other hand, have made big bets on IIoT: Verizon acquired Hughes Telematics to break into the automotive market, for example, while AT&T was a founding member of the Industrial Internet Consortium, a group that was formed in March 2014 with five members and has since ballooned to include more than 245 member companies.
Partners or pioneer?
Both operators see their roles as encompassing much more than just connectivity, but they're staking their claims in somewhat different ways. While AT&T is keen to partner for those aspects outside of its core competency, including potentially with the new low-power wireless network players that are building momentum, Verizon believes it has all the platform pieces -- network, cloud, security, professional services and apps -- already in place.
Mark Bartolomeo, Verizon's vice president of Internet of Things Connected Solutions, says the carrier's goal is to simplify IoT into an end-to-end integrated solution for enterprises. IoT, he says, requires working with customers that have not led as early adopters with M2M because of its complexity, lack of standards and the fragmented ecosystem of partners.
"IoT brings together all the elements they've been struggling with to adopt M2M faster and see returns," Bartolomeo says.
AT&T is singing a similar tune, but appears to be much more open to partners. According to AT&T Enterprise IoT Practice Leader Mobeen Khan, it breaks down its involvement in IoT until three layers: connectivity; platform; and solutions or apps. Until recently, connectivity would have been via its LTE or 3G network, but now AT&T is exploring multi-network connectivity for devices that don't need cellular connectivity, such as a satellite access for remote parts of the world or WiFi for a hospital basement. All this is managed through AT&T Control Center, which applies business policies around what to connect to and when.
AT&T is also exploring low-power network alternatives, Khan says, including the GSM Association (GSMA) 's proposal for low-power access through CAT-M or narrowband IoT solutions. (See How IoT Forked the Mobile Roadmap.)
"We're in the process of evaluating all of them -- whether it makes sense to adopt one or use all of them or work with partners or deploy ourselves," Khan says. "A decision has not been made but we do feel certain use cases require [a particular solution]."
Verizon supports LTE, WiFi, Z-Wave, Zigbee and private spectrum in its connectivity portfolio, but it's less keen to explore alternatives such as low-power networks that aren't derivatives of the LTE standard. Bartolomeo says that Verizon already has an advantage in that its LTE network has thousands of towers deployed, covering 98% of the US and letting it offer connectivity at a much lower cost. LTE modules are still around the $15 range, but he believes they'll fall to the $5 to $10 range in the future.
Next page: In search of standards