US Giants Carve Out Role in the Industrial IoT

AT&T and Verizon are taking different approaches to the Industrial Internet of Things, but both want to play a pivotal role in what's expected to be a multi-billion dollar industry.

Sarah Thomas, Director, Women in Comms

February 2, 2016

9 Min Read
US Giants Carve Out Role in the Industrial IoT

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.

Figure 1: IIoT's Ship Has Come In AT&T has a deal with A.P. Moller-Maersk Group to connect refrigerated containers on its shipping lines, making this one of the largest IIoT deployments of its kind. AT&T has a deal with A.P. Moller-Maersk Group to connect refrigerated containers on its shipping lines, making this one of the largest IIoT deployments of its kind.

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

In search of standards
The two carriers also differ in the importance they place on standards for IoT, which could ultimately help drive down the cost of modems and simplify the network options. While AT&T's Khan downplayed the importance of standards, noting that the industry wouldn't wait for them, Bartolomeo said they are absolutely critical to drive adoption.

"I don't think anyone is waiting for standards to come out in this area," Khan adds. "Standards are important as technology matures and to lower cost over a long-term basis, but I think -- just like you're seeing in low-power networks -- there are many different technologies, each with strengths and weakness, but no one is waiting for one standard. The market will drive the adopting and standards."

That's the impetus behind the Industrial Internet Consortium, of which AT&T was a founding partner, along with major players in the US IIoT market including Cisco Systems Inc. (Nasdaq: CSCO), General Electric Co. (NYSE: GE), IBM Corp. (NYSE: IBM) and Intel Corp. (Nasdaq: INTC).

Dr. Richard Soley is the executive director of the IIC, as well as the Chairman and CEO of the Object Management Group (OMG), an international, nonprofit computer industry standards consortium, and executive director of the Cloud Standards Customer Council, an end-user advocacy group. The IIC itself is not a standards organization, although its goal is to help influence resulting standards with the results of its various test beds.

When it launched, the IIC set out to form test beds using IoT in manufacturing, smart electric grids, smart city and preventative maintenance systems. "It's a powerful way to discover new products and services that come from applying IoT to industrial systems, but to also come up with requirements and priorities for where we do need new standards, then we hand over to standard organizations," Soley says.

The group now has 15 test beds up and running with another 15 in development. Soley says the group isn't looking for one standard to rule the IIoT. Rather, it accepts that there will be different protocols, networks and APIs and sees its job as bridging them -- acting as a semantic integrator and mapping the messages.

For more on the Internet of Things, visit the dedicated IoT content section
here on Light Reading.

Companies may not be waiting on standards, but they also recognize that forming all the right relationships with hardware and software companies on their own would prove challenging. That is where the IIC comes into play. It is bringing together 245 companies to broker these relationships and create the test beds in which they all work together, learning from the failures as much as the successes.

Of course, the sheer number of companies involved can create a confusing proposition for enterprises, which was Verizon's biggest argument for being the single company-facing brand. Heavy Reading's Bell agrees that the biggest challenge for most enterprises is that IoT is confusing. Enterprises need to ensure they are getting a cost-effective platform and one that won't need to be updated every ten years when a new network comes about, especially since many of their sensors may be in remote, hard to reach areas.

"It is a big challenge with different protocols being used and different wireless connectivity," Bell says. "People have bought old machines without connectivity or, in some cases, have it but it's not easy to change them. A huge aspect of this is taking legacy equipment and systems and protocols and trying to link them together."

Is the answer having one throat to choke, as Verizon is proposing? What about if your sole provider is a carrier that tends to upgrade its network with each new generation, sun-setting parts of old networks when the spectrum is needed?

Bartolomeo says that Verizon has a team that works with device manufacturers to help them upgrade their devices to the latest network typology well ahead of time, as well as building in service level agreements (SLAs) around the network. But he also sees more companies making the move to 4G already anyway, driven by shrinking costs and a desire to future proof their network.

"The problem isn't technology, it's about complexity, so IoT in industrial is about simplifying solutions, truly as solutions, not fragmented pieces sold by an ecosystem of partners," Bartolomeo says.

Given the scope and potential of projects, however, there's a case to be made for going best-of-breed. Bell says enterprise interest in IIoT typically starts out as a way to lower cost and improve efficiency, but it has the power to transform their entire business -- linking up systems, getting truly real-time quality control and process management, tracking materials, managing processes and more.

"It's an overused word -- ecosystem -- but it's about partnerships," Bell says. "It is about the requirement to partner deeply with your customers and other providers of services. You have to structure your organization, put in place policy and procedures and systems to facilitate that."

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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