ANALYST REPORT
If the Internet of Things is about anything, it’s about data. Telefónica’s approach demonstrates how a CSP can harness its own data to support IoT. But it doesn’t need to stop there. A number of CSPs around the world are establishing themselves as focal points for the exchange of data which is the inevitable consequence of the emergence of the IoT. To break out of the application siloes implicit in last generation M2M services, IoT requires the interchange of data from remote devices with diverse other data sources, all made available to multiple stakeholders. Take the smart cities sector as an example: being able to remotely monitor and control streetlights is valuable, but being able to combine that with weather information, demographics, traffic information – to be used to adjust lighting levels depending in the amount of traffic, or even emergency services – for applications to provide increased lighting at the location of an accident, is more valuable still. Across IoT it is well understood that IoT data is most valuable when combined with other sources. This necessitates a central intermediary to act as a hub. The CSP has a strong case to claim that role. BT in the UK has been involved in such an initiative as part of the MK:Smart activities. Telia has also been active in the space, specifically in the automotive sector as part of its TeliaSense offering. Ultimately this role as data aggregator gives way to that of data bourse, that is: managing the trading of data between various participants. CSPs are well placed to play these critical data-centric roles in IoT. Another under-realised resource for CSPs in IoT is the customer base. CSPs touch almost every enterprise on the planet, and there are many enterprises that need their hands holding as they navigate IoT, and CSPs can be at the front of the queue. In some cases, CSPs already have established systems integration (SI) and professional services arms. This is a perfect conduit for turning enterprise customers in enterprise IoT customers, a fact realised by, for instance, Deutsche Telekom, which is increasingly using its T-Systems SI unit as the lead element of its IoT strategy.
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A further asset that a CSP should seek to exploit is its monetisation capability. This is explored further later in this report. Of course, CSPs are not just passive creatures, happy to simply use the existing assets. They are also investing significantly in IoT-related capabilities, in particular in developing vertical expertise. One of the factors that define CSP approaches to IoT is the extent to which they are focusing on developing and deploying applications for vertical sectors, or pursuing instead just horizontal capabilities, such as the provision of connectivity. The standard-bearer for the vertical approach is Verizon, which has placed a multi-billion dollar bet on the fleet management space, acquiring first Hughes Telematics for US$612 million in 2013, and Fleetmatics for US$2.4 billion in August 2016. The reasoning is clear: the lion’s share of the value in IoT is in the provision of the end application, so Verizon is aiming to be the provider of end services in that specific sector. Other CSPs have pursued similar approaches, for instance Vodafone with its Cobra Automotive acquisition, and the likes of Orange in healthcare, Telefónica in smart cities and retail, and numerous others. Historically the evolution of CSP approaches to IoT was quite linear, it moved from a wholesale approach based on selling SIMs, through to setting up dedicated units, implementing IoT management platforms and then delving deeper into verticals to realise more of the value in IoT. However in the last 12 months we have seen some variation from that. Firstly we have seen some CSPs taking a more horizontal approach to the market. This is not necessarily a less sophisticated offering, more a case of focusing on offering enhanced horizontal capabilities such as those around supporting multiple access technologies or security. Tele2 is probably the best example of this type of CSP. Secondly there is also an emerging trend of smaller CSPs, mostly operating in a single country, accepting a secondary position in the support of IoT. Part of the stimulus for this change of attitude comes from the bigger CSPs and from value added resellers (VARs) who are offering to effectively provide an outsourcing partner for those smaller CSPs’ IoT offerings. One example of this kind of activity is Vodafone’s licensing of its global data services platform (GDSP) platform to other CSPs, and its support for partner market operators. Another is the
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The benefit of a large customer base is not limited to just enterprises. CSPs with fixed-line assets are probably the dominant providers of customer premises equipment (CPE) that could be used for supporting the connected home. The biggest challenges with smart homes today are fragmentation and cost. Incumbent fixed-line providers can provide a consistent environment, albeit national, for vendors to develop devices and applications. Furthermore they can take the view that adding a portfolio of additional services creates stickiness for the core proposition, so can be priced aggressively. Just
don’t expect miracles overnight: smart home is likely to be a slow-burn.
VANILLAPLUS MAGAZINE Q1 I JANUARY / FEBRUARY / MARCH 2017