France's Orange aims to be the leading service provider in the fast-developing Internet of Things (IoT) industry as part of its Essentials2020 transformation strategy.
Last November, the telco announced details of 17 French cities in which it is rolling out a low-power, wide-area (LPWA) network based on LoRa technology. It has also revamped Datavenue, its data management platform, to include new IoT and big data features branded Live Objects and Flexible Data. The broad aim is to generate €600 million ($655 million) in revenues from all IoT services by 2018.
Telco Transformation spoke with Olivier Ondet, marketing and customer experience director for Orange Business Services , Orange (NYSE: FTE)'s enterprise division, about the French incumbent's evolving role in the IoT business.
Telco Transformation: You've announced an ambition of being the number one IoT operator. How will you go about achieving that and what makes you think you are better placed than other service providers targeting this market?
Olivier Ondet: There are several reasons. One is that as an operator we have a significant presence in 28 countries, we have roaming agreements, we formed an alliance called the GMA [Global M2M Alliance] with Deutsche Telekom to address big deals on cellular. We have also announced the deployment of LPWA in France with LoRa technology. But we also have other skills and assets, like IT and skills for integrating with the ERP [enterprise resource planning] and CRM [customer relationship management] systems within companies. We also have a data management platform called Datavenue and the ability to source and find the devices that are important for any IoT project. As an operator we are forming the alliances we believe are important, but we are also investing throughout the value chain in terms of skills.
We are focusing commercial resources on eight verticals. In automotive, for example, we are selling connectivity, data management platforms and integration services to OEMs [original equipment makers], car manufacturers, fleet management actors and insurance companies. We also have a fleet management activity in France following the integration of Ocean [a fleet management service provider] last year. We are selling to several thousands of companies actually performing a fleet management business. By having a presence throughout the value chain we are facing different situations, but they all have common points.
TT: What is the main focus of your IoT strategy?
OO: Our point is to be able to be present throughout the value chain. When we are providing connectivity, that's an area where as an operator we can obviously sell our own resources, except in countries where we using roaming agreements. With integration, there are countries where we can do it with Orange Applications for Business [the systems integration part of Orange Business Services] but elsewhere we need to partner with local integrators to do the job. And we have the data management platform that supports many verticals. But if a customer has the full Microsoft environment, we are going to be selling connectivity and professional services and integration in an Azure environment. Our strategy is to be present throughout the value chain and mobilize the proper components depending on the deal. If we are not using our components but our partners', we are still building the relationship between these components so we are as relevant as possible as they market is getting formed.
TT: Is the strategy to form partnerships only when you have to?
OO: It's more pragmatic than that. If I take our offer, which is called Live Objects, it has four components. So one is devices and while there are a few devices we would design as Orange most of the time we are sourcing devices. When we are providing security we do it by ourselves -- it's a job we know, we have licenses and so on. With the data management platform we have our own platform but it's not the only one. There are new data management platforms popping up every week. It's a question of having our own but being able to integrate others. And when it comes to integration, we do that in some areas and otherwise rely on partners. It's a question of assessing the assets.
TT: Where is most of the growth going to come from in terms of revenues, with regard to particular verticals as well as specific parts of the value chain?
OO: From a traditional connectivity standpoint, automotive is definitely the number one because it works with cellular. With transportation it's about providing WiFi inside buses, trains and planes, and we are working with Air France here. You have to make sure people can easily connect but also easily be identified by police in case of security concerns. We need to help the transportation company be a good WiFi operator. So we are providing a solution that is not just about connectivity but experience. Another example is smart cities: We have developed a solution to analyze the flows of population within a given territory and we are using that in France and Belgium and looking at other territories. It means you can see how many people are attending a particular event, for instance. We are doing similar things for the retail industry and analyzing profiles in terms of age, male/female segmentation and so on. We need to mobilize big data skills in that case. In a smart city scenario we can use LoRa technology to get data from parking lots to manage city needs.
The Nuts & Bolts of LoRa
A kit for connected object designers to prototype LoRa technology-based services.
TT: What investments are you making to support these big data services?
OO: The first area is in extracting value out of the data that we manage as an operator using anonymization algorithms. The raw data is inside our mobile networks and then we anonymize so that it's not personal anymore. We've built up the solution and we're currently managing more than 4 million data points every minute and it's increasing. The big challenge with data is to protect it and share it. We have a solution called Flexible Data that helps customers to protect and secure data but also to share it.
TT: Is that an area where you need partnerships with some of the IT players that are developing big data solutions or are you going it alone?
OO: It's a mixture. When we talk about Flexible Data, it's our own technology. When we do a big data project using the Microsoft or SAP environments, we will be using the framework from them and doing integration on the project. The challenge is not just processing data but having relevant data from which you can extract value. We are carefully working on getting more value from the data and being cautious in following privacy regulations because that is a matter of trust with customers. When it's about sharing customer data, it's about making sure customers know what is happening.
TT: What progress are you making on monetizing big data?
OO: I prefer to say creating value. But we have been able to develop offers for the tourist industry just by replicating something developed for the first customer. We are creating something new that didn't exist before. We also have a geofencing offer in France where the consumer is using Orange to say that I accept my data is being sent to a retail company and that I will receive an SMS when I am close to a shop. We are helping retail actors to deliver a better service -- it's not spam and it's coming at the right time.
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TT: How fast is the overall IoT business growing?
OO: I can give you one figure which is that today we are managing more than 9 million objects out there for customers -- which is a question of connectivty, data management, devices and so on -- and that's almost doubled in two years. The growth rate is pretty high. The group has announced that by 2018 as part of its Essentials2020 strategy it will reach €600 million [$655 million] from B2C and B2B IoT. We are obviously below that but it's a question of investing. There are two big ruptures that will happen. One is regarding the efficiency of networks for carrying data. With technologies like LoRa, we can divide by 15 the quantity of energy you need to carry small information to do with parking meters, whether a door is open or closed, whether there is a water leak. If you take a cellular network, when you are using a large battery and sending something like one SMS every day the object is going to cost something like €200 [$218] in three years, and after that you will have to change the battery. Networks are definitely part of the story and we want to make advances, whether in B2C or in B2B, to help every company take advantage of this evolution.
The second breakthrough is in algorithms. We are creating data lakes for our customers. When we perform indexation and prediction algorithms we can extract information from data lakes about the appetite for digital offerings and so on. Today we're creating a project for our retail customers where you input data from shops' loyalty cards -- you put that in the data lake and do real-time indexation and generate better customer statistics. We are using the algorithm from a company called Splunk to do this but we are configuring it for the customer and making it run on the platform we have in Europe, and mainly in France, to ensure the data is properly managed.
TT: You've given some reasons for using LoRa in preference to existing cellular technologies but why did you pick it over other LPWA technologies?
OO: Because it's open with an open ecosystem, and that's important because we are talking about a much wider variety of objects than with the cellular ecosystem. The LoRa ecosystem is pretty good and so on November 25 we announced the launch not only of Live Objects and Flexible Data but also of the first 17 cities in which we're deploying LoRa. We also announced the availability of a starter kit so that companies can start working on objects using LoRa technology. That means when it's ready and as our network expands they can go to market with our network and the other assets I've been describing.
TT: How important is LoRa to the overall Orange IoT business? Is there a role for cellular?
OO: It's a first step. Our whole strategy is to go to standardized technology within the mobile world. LoRa is an open alliance and it's an open environment. But our plan is to use the standardized technology and to get this through the 3GPP. A whole standardized ecosystem will eventually stop the fragmentation that could happen. LoRa is a first step -- it's not the one and only. We are also investing in standardization.
TT: Does that mean LoRa could eventually be replaced -- that it's a short-term solution?
OO: Short being long because when you start with projects like that you need the networks and solutions to work for at least five years, if not a decade. But at some point, yes -- there will be another technology and the new objects will use that. But in terms of the form factor, they will look like the ones we are developing with LoRa.
TT: What role will 5G play in the future?
OO: With 4G we are expecting optimized versions for objects that are less energy consuming. Most of the R&D efforts have been about increasing the bandwidth of networks and also managing mobility. When you come to IoT that is not the problem anymore -- you want to optimize energy consumption. Today we are working on the standard to make sure there is this kind of optimization. Once we have 5G, some optimization will come that will concern IoT and some will be for the standard mobile business.
TT: Other than through new access technologies, how will IoT force operators to adapt?
OO: When we deploy our LoRa network we will be using the sites we already have -- our mobile network capacity -- and when we go to more standardized technologies the rollout will not be that different from the way we are deploying networks now. But it's also a question of having the vertical use cases ready at hand, the IT skills and resources, the data management platform, the ecosystem devices and integration skills. We've been investing in IT skills through Orange Applications for Business, which is the result of several acquisitions over the past decade. We have more than 700 people working on IoT day-to-day at Orange and a good half of them on software development.
— Iain Morris, , News Editor, Light Reading, Editor-in-Chief, Telco Transformation