The IoT is transforming our planet into a truly cyber-physical world with the proliferation of connected cars, smart appliances, wearable devices, smart-farms and factories, telemedicine, smart homes, structures and cities, and more. Disruption is happening and happening fast, but no more so than in the telecom industry.
By 2025 to 2030, the number of connected devices is expected to grow to somewhere between 500 billion and 1 trillion (according to John Chambers, Former Cisco CEO and Klaus Schwab, World Economic Forum, respectively). IoT devices now outnumber the world’s population. By 2021, Gartner predicts that one million new IoT devices will be purchased every hour. In this hyper-connected (very near) future, every physical product could be connected to a vast communication infrastructure with sensors “everywhere” providing comprehensive views and insights to our world.
In his book “The Fourth Industrial Revolution”, Klaus describes this wave of disruption driven by IoT, blockchain, autonomous vehicles, Artificial Intelligence (AI), robotics, 3D printing, and other emerging technologies, and how they will irrevocably change the way machines interact with humans and each other.
Klaus predicts by 2025:
- 50% of all internet traffic to homes will be for appliances and devices, not entertainment or communication.
- 10% of people will wear clothes connected to the internet.
- 10% of reading glasses will be connected to the internet.
- 10% of cars on the road in the US will be driverless.
The accelerating rate of change and the imperative for telecoms to innovate in order to remain competitive will create threats for some and opportunities for others. IoT communications will provide growth opportunities for telecom providers who plan for it, and commoditization of core services for those who fail to respond:
- IoT will drive growth in telecom.
- Network + Telecom providers need IoT innovation to remain competitive.
- 500 billion – 1 Trillion connected IoT devices are forecast by 2030.
- IoT spend will be 15X greater than the mobile + internet + PC waves combined.
With hundreds of billions connected devices deployed globally by 2025, network and telecommunications providers are in a scramble to re-align their competitive strategies, data services, and network infrastructure to survive and thrive in the brave new world.
What are the opportunities and threats of IoT for network and telecom providers? How can providers gain competitive advantage by leveraging IoT?
Commoditization vs Value Creation
Revenue dilution, service commoditization, and competition from over-the-top (OTT) providers, coupled with exponential data consumption growth creates a challenging operating environment for providers.
Layer on the additional IoT wave, which will not all use traditional telecom networks and infrastructure, and the industry disruption comes into focus on the horizon. Telecom is “the only industry where volumes are growing 40–60% a year, but revenues are shrinking”, according to Maikel Wilms, Director, Boston Consulting Group. “Unless you have a pretty good notion of where you’re going to be differentiated, there’s a risk you will not be able to monetize anymore.”
The winners in the telecom industry will be those who see this opportunity, jump into the IoT innovation race, and successfully deliver high-value, scalable data-driven and insight-rich services that focus on cost and convenience, while making a positive impact on their customers’ lives or supply chain.
“Telstra is evolving from a telco to a techco — to be a world-class technology company empowering people to connect” – Joe Pollard, CMO Telstra
“We think that startups will be key in our transformation.” – Jean Michel Serre, CEO Orange Labs
Dominance in the IoT space can be captured by telecom providers who innovate via partnerships with customers, domain specialists, analytic and technology providers to develop and deploy the next generation of IoT networks and services.
The Race for Predictive + Adaptive: Edge, Data, and Insight-Driven Offerings
Traditional core network and telecom service metrics, quality, reliability, and capacity allocation are and will remain critically important to IoT services such as smart structures, autonomous cars, health monitors, etc. As IoT becomes more ubiquitous, however, improved network and data analytics capabilities will become the area where providers move up the value chain with their customers.
Telecom providers will have to move out of their comfort zone, internally or via innovation partnerships, into areas such as data attribution and analytics, edge computing, and new IoT protocols such as LoRa, SigFox, and many more.
The ability to perform and provide real-time and predictive analytics and IoT (adaptive) network maintenance will be the holy grail, and eventually table stakes. The key to success in IoT is to not just provide the client with the access to all this new data, but also to manage and provide actionable insights and to potentially have those actions done automatically for them. Provider offerings which enable customers to effortlessly improve services and keep costs down will be the focus.
This actionable insight-driven and predictive approach is the key ingredient of the next generation intelligent, automated IoT networks and services.
Data Governance, Security and Privacy
With the explosion of IoT device points, network security and data privacy risks will also increase dramatically for telecom providers. More devices on a network equal more points of vulnerability. Edge IoT devices often come with limited computational and power capabilities, making traditional security measures difficult or impossible to implement. Many IoT devices, such as those on LPWA networks, do not have an IP address assigned so new security and encryption methods need to be developed and deployed.
Telecom providers will have to develop, partner or license new security and privacy technologies as IoT network intelligence evolves. IoT devices and networks will use these new technologies, such as blockchain, to proactively identify and neutralize any harmful threats. Industry standards and governance models for the ownership, collection, protection and distribution of IoT data is key as IoT and Machine-to-Machine (M2M) solutions are developed and deployed.
Network + Telecom Infrastructure Management
Global network and telecom infrastructure sharing, cloud and CPaaS, have become the norm.
Barriers to entry are lowered and competitive threats increase. Building and maintaining telecom infrastructure is capital-intensive. As 5G and other IoT networks such as NB-IoT and LPWA get deployed, we will see decentralized network services and offerings proliferate.
IoT, with its data-rich insight and predictive capabilities, will play a key role in both 5G network services as well as the surveillance and monitoring of this next-generation infrastructure. An IoT-enabled telecom network with IoT sensors at the edge and cloud-based analytics will enable more efficient network utilization and availability, lower operational costs, efficient energy/power management, and enhanced OSS/BSS capabilities.
In addition, IoT sensors will provide site security and intrusion detection. All this enhanced IoT network data and monitoring capability will enable network and telecom provider to manage key performance indicators more efficiently.
The opportunity for network and telecom providers is to develop or partner with the talent needed to innovate and develop these new IoT processes, platforms, services, and protocols, all focused on creating new, high-value services enabling customers to manage their assets more efficiently and at a lower cost basis.
Telecom providers are well positioned to move up the IoT value chain to increase customer value, for sure.
The key to successfully driving revenue and profit will be in executing the right strategies, in the right markets, and a recognition that value will be created in non-traditional ways, with data driven solutions.
