There's lots of noise about how big the Internet of Things will be, but for Verizon's Mark Bartolomeo it all comes down to specific use cases.
Verizon Communications Inc. (NYSE: VZ) has started to gain traction with its Internet of things products and services. In its most recent earnings report, Verizon said revenues were about $690 million combined for IoT and telematics at the end of last year.
Bartolomeo, vice president IoT Connected Solutions, previously spoke about Internet of Things security and the company's ThingSpace platform during his interview with Telco Transformation. (See Verizon's Bartolomeo: IoT Security Top of Mind.) In this final chapter he focused on how regulations can drive use cases, the potential barriers for deploying IoT, and his advice on how to set IoT-related priorities.
Telco Transformation: Looking into your crystal ball, what's your prediction for when IoT really starts to take off?
Mark Bartolomeo: I was on a panel in Barcelona [at Mobile World Congress] where they asked the same question. I think it was a smart cities panel actually. They said, "When will smart cities really take off?" I deferred to the other members of the panel. One member of the panel said two years. I was thinking, "Where is that coming from?" The other person said they thought two, three years. The general consensus on the panel was two to three years.
What I said was it's use case specific. For example, I know that Verizon's Track and Trace for pharmaceutical is going to take off because it has to. There's a regulatory requirement and it's going to happen. It's not a matter of if it's going to happen and when it's going to happen. It's a matter of who is going to happen with?
The second one is ag tech. The reason ag tech is going to happen is because every person deals with the issues of food, such as food safety, sustainability and the aquifer. All of these issues are central to what we do every day. These things are actually foundational when you look at agriculture.
TT: So since you've mentioned smart cities, how will IoT emerge there?
MB: In the smart cities arena, that's also going to take off, but it's going to take off in specific areas. The area that I'll point to is congestion management. The reason congestion management will take off over the next four years, and I think four years is aggressive, is because of all the forces that are coming together. Those are primarily sustainability, economic growth and public safety. Let me go a little bit deeper on that. If you look at specific corridors and municipalities, let's say of Boston, that are highly congested, it's having a negative impact on the economic development in those parts of the cities. If you're not going to be able to get people in and out, economic growth will stop.
The second element of it is that more and more people are using shared transportation with pedestrians and bicycles on those same corridors. We've seen a big increase in fatalities in these municipal corridors. The federal government has just launched a program that is providing money for municipalities to redesign high fatality corridors. It's the mission to reduce their fatalities to zero by 2020.
What you have is something that we truly understand: These corridors were not built for bikes, pedestrians and cars. They were built just for cars. Now we're saying we have a responsibility to our pedestrians and to our bicyclists to take them into account as a transportation mode. That is a real issue right now. We know that people are using multi-modal capabilities on infrastructure that was built just for a car. I think that's good.
TT: What is the business model for smart cities? Who provides those services?
MB: Smart cities, to me, look very much like a telco business. If you think about the guys who were in Manhattan or Chicago in the early 1900s, they had a vision of connecting all these homes, but I don't think they had a vision of doing it all within the next several years. They knew that this was a long-term commitment. I think the municipal leaders are looking for partners that can make that longer-term commitment.
I don't think that it's any less daunting to connect 50,000 street lights and 7,000 intersections than it was to connect multi-dwelling units with basic telephone service and support it for 100 years. It's the same type of approach. It's a very long tail.
TT: What about greenfield IoT applications and services?
MB: Now that changes when you have brand-new infrastructure being built. You look in the Middle East at some of the new cities that are being built, that's all going smart. It just is because it's new infrastructure.
I'm really trying to get everyone to pivot away from smart cities. Instead of always talking about smart cities, talk about sustainability, talk about public safety, talk about economic development, because these municipalities have been with us for hundreds of years.
TT: If you had any general advice in regards to setting priorities for enabling IOT, what would that be?
MB: I think there's a couple ways to go with that. I have all the product management effort here for IoT. It's fairly broad. It's everything from device certification, chips and modules, software, platforms, security, all those types of things. What I always try to get people to focus on is use cases that are compelling. In order to be compelling, you have to have a well-defined business case associated with it.
Our industry tends to do very well in terms of growth when there is regulation. I'll give you an example. The Energy Act of 1997 defined these standards for the development of a national grid framework. You then saw in the early 2000s things like AMI [Advanced Metering Infrastructure], AMR [automatic meter reading], relay switch and substation management really accelerate. You saw it again in the Railroad Safety Act of 2005. The Drug Safety Act of 2013 is about driving the pharmaceutical companies to eliminate counterfeit drugs out of the system. All of those created specific use cases.
TT: You've talked about use cases, but what are some of the business cases for IoT?
MB: You've got to have a well-defined business case. A well-defined business case goes beyond the technology. For example, there's a lot of great technology solutions out there today for smart cities. You cannot dispute the fact that smart street lighting reduces energy consumption by 50%. That is just a fact. You'd say, "Well, why isn't everyone employing it?" Because there's a lot of other issues associated with it. There are issues around a city already having streetlights that aren't at end of life. I have a responsibility, if I'm a municipality, to the taxpayers not to be replacing streetlights in year five that are on a 20-year life cycle.
The second element of a business case is: "Am I really going to have the same resilience and reliability that I have today?" You look at cities like New York, San Francisco and Chicago. They've been through natural disasters and they've been through various types of infrastructure stresses. What they want to know is: "Am I going to have that same level of resilience?" While people are continuing to go after smart cities, I'm not sure the business case is as well defined as everyone thinks it is.
— Mike Robuck, editor, Telco Transformation