September 22, 2015

Where Will Service Providers Play in the IoT?

As the Internet of Things speeds up, service providers look for ways to participate in this new ecosystem.

From phones and tablets to wearables, the trend is fast moving towards an Internet of Things (IoT), but the real question is who owns the connections and, more importantly, how can service providers make money out of the IoT.

The IoT is not the only emerging entity that is attracting massive disruption. Almost every industry on earth is changing at unprecedented rates. Not least, the previously comfortable world of service providers. They are already adjusting from a high margin, stable business model to a low margin, lean and agile one. Culture, as well as IT, is standing in their way. Culture within service providers tends to frown upon innovation, because in the old days the job was to look after the network. Now, even the business of providing the network is under threat.

In the IoT arena, other, leaner, companies are stepping in to provide the access piece for cellular networks. Sigfox, for example, is rolling out a low cost network, with low cost and low maintenance devices that make the traditional cellular network a high price option for the connectivity.

Service Providers Look for New Advantages
Two areas where service providers seem to be well placed to be competitive in IoT are city-wide applications and the corporate world.

The city-wide application is one where service providers can provide a complete solution, at huge scale, which will allow city officials to run their towns more efficiently and save millions doing so. They can monitor and manage a huge range of assets, including waste resources, parking meters and, as demonstrated at one of the Catalyst projects showcased by TM Forum recently, the town of Milton Keynes in the UK is saving around £100 million by not having to build new parking facilities.

The other opportunity for service providers is the corporate market, where, using the principle that everything is a computer, entire desks and walls can become collaboration areas, which will either foster better cooperation–or conflict. Add these kinds of services and connectivity to a host of business applications that can be provided from the cloud, and it’s clear where a service provider can fit in that scenario. The barrier, though, will be the change of culture. Service Providers will need to go from selling bandwidth to selling a range of business solutions.

But the service provider advantage, even in these two ‘safe’ constituencies is by no means guaranteed. As more and more services are delivered from the cloud, the range of suppliers broadens and the large IT players become direct competitors to BT or AT&T. And, at the other end of the scale, large enterprises that are rolling out IoT applications can now phone Sigfox for their low cost, yet robust needs.

For the moment, service providers are addressing the Sigfox and Wi-Fi ‘problem’ by investing in the companies. After all, Sigfox needs access to the Internet. But now Apple, Amazon and others must be wondering about the possibilities of the final piece, which is connecting everything.


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