The monetization of IoT involves some steps that are not familiar to operators. One key target -- manufacturing -- requires that the mobile network operator (MNO) convince clients to trust wireless platforms for mission-critical tasks formerly performed by wired networks, according to Julian Watson, the senior principal analyst of Internet of Things (IoT) connectivity research at IHS Markit.
Watson told Telco Transformation that smart cities are an opportunity, but present challenges. The smart city concept can be a hard sell and election results can lead to reordered priorities. In general, Watson said, the technology is ready and a number of carriers are doing innovative things.
The first part of this two-part Q&A looked at how the introduction of LTE-M and NB-IoT were helping operators to zero in on IoT monetization, which must focus on services, not connectivity. (See IHS Markit's Watson: Follow the Money in IoT Past Connectivity to Services .)
Telco Transformation: How excited are MNOs about the burgeoning IoT business?
Julian Watson: I think they do get very excited about it. Of course, it's their job to do that, but I think there's a sense that there is huge market opportunity out there. Particularly with the introduction of these new low-power wide-area network technologies that we think will massively increase the addressable market for IoT connectivity across verticals.
Deciding which verticals they should focus on first is the main challenge rather than whether or not it is worth investing so much in IoT.
TT: I imagine creating platforms that are extensible to the other verticals and not siloed?
JW: Well, indeed. If you look at the IoT today, it is heavily, heavily siloed. But the idea is that in the next five to ten years some of these silos will disappear and necessarily so. For instance, what we'll see with autonomous cars is much more convergence between the connected car and the smart home. The person driving home will be able to communicate with the home when they get within a certain distance. The proximity may trigger the lights to come on, the heating to come on. You'll need an integrated platform to do that.
Likewise, with the smart city, you really need different areas that are pretty much siloed at the moment to work together. Things such as lighting, traffic lights and vehicle communication. You need everything to work together. That means you can't have all of these platforms. You need a single platform that will enable that integration.
TT: Can smart cities be a win for both carrier and municipality? The city gets upgraded/updated and the carrier doesn't have to chase individual small verticals.
JW: I think there's certainly an opportunity in smart cities. I think it's at a nascent stage at the moment. We are seeing quite a few pilots and small-scale projects going on. What we're seeing is quite a lot of is smart lighting initiatives, upgrading existing city lighting infrastructure to LED. That presents an opportunity for operators, not only in terms of connectivity revenue but in the fact that these light poles can be used as small cells as well to help them improve coverage.
I think probably the challenge with smart cities is that the people who hold the budgets need to be convinced about the return on investment, whether it's in savings on electricity consumption or whatever. Another challenge is that in democratic countries the people in charge can change every few years. So that really can have an impact on the extent to which long-term projects get commitment from the politicians in charge.
Operators are only one small part of the range of companies that are trying to become involved in the smart city opportunity. You have the likes of HPE, IBM, Huawei and ZTE. And then you also have some other connectivity providers that are trying to get into smart city projects. One significant US company that is doing quite a lot around smart cities is Silver Spring Networks.
TT: Is IoT monetization becoming a C-level executive and marketing strategy challenge as opposed to waiting for the technology to be fully baked?
JW: I think the technology is not an issue. I mentioned two technologies, LTE-M and NB-IoT. They're relatively new but they're standardized, they're getting deployed now quite widely. They address what we call the "massive IOT opportunity." There are applications that require greater bandwidth.
4G actually is evolving in two different ways. One is to address very low bandwidth, massive IoT use cases like smart metering. On the higher end of things, you have applications that require significant bandwidth. So LTE is continuing to evolve and to address new use cases. Of course, at some point 5G will appear. And that will be, I think, a significant thing for operators.
TT: What do you think the impact of 5G will be?
JW: What they want to get out of 5G is the ability to penetrate segments that they haven't been so successful in reaching before. Manufacturing is one. But I see it not so much as a technical issue. It's an issue of partnering with the right people, getting manufacturers to buy into the concept of using mobility or cellular because they haven't done so much of that up to now.
And it's also a question of making sure that manufacturers are confident that cellular can provide the sustained quality of service as their legacy technologies. The last thing you want is for it to go down. So, it's work in progress for the operators.
TT: Do you have some examples of recent innovations?
JW: There are some operators who are doing some fairly unique things. For instance, Vodafone has a horizontal connectivity management platform that it's selling to other operators. That's an operator-to-operator play. If an operator has real success with either a horizontal or a vertical platform, there's certainly the potential to sell it to operators in other countries.
China Mobile is creating its own IoT modules. That's pretty unique. It enables it to help enterprises adopt IoT more easily than if they have to buy a separate, third party module.
And then there is SoftBank, which I guess is not really a traditional operator. They are doing some incredibly ambitious things through ownership of ARM. It really has very significant stake in the development of the IoT semiconductor ecosystem and it's made lots of acquisitions in areas like robotics and connected car. So, there are lots of interesting things happening.
— Carl Weinschenk, Contributing Writer, Telco Transformation