Summary:
Digitizing and connecting the physical world offers great economic benefits and improves our lives. But how and where can telco’s create real value with IoT? And what structural blocking factors, such as interoperability, need to be resolved in order to unleash its full potential?Complete Blog
Internet of Things - IoT: the next tsunami?
The telco market is facing severe challenges. Voice and SMS revenues are under pressure, broadband data networks deployment requires costly investments, and global competition is squeezing profits. Moreover, many telcos perceive IoT as the next tsunami for fixed, wireless and mobile data traffic from billions of devices that are interconnected onto their networks, globally. In order to decide on your next strategic move, you need to find out what trends are relevant to your ambitions, your position in the value chain, the required ecosystem and business model and the execution of these strategic moves.
Relevant trends
The potentially explosive needs for global mobile connectivity of IoT OEMs and the high margin value-add services required around this, represent an incredible opportunity for MNOs. Fixed and mobile networks are merged (FMCs), enabling content distribution via omni-channel routes. Business intelligence and advanced analytics become a necessity rather than a ‘hype’ to maintain a competitive advantage and provide a platform for development of new types of products and services.
And there are many more IoT trends that are relevant for telcos.
For instance, B2B vertical solutions are very likely to be true value creators
– even more so than consumer applications. Also, a large part of the huge
amount of data generated by IoT systems is hardly monetized today, e.g. for
prevention and optimization. Developing markets offer great potential. And data
security and privacy are a major concern in nearly all IoT vertical application
domains – and therefore also an opportunity for telcos.
Value
chain positioning: Tier 1
Tier 1 MNOs are already claiming the position in the IoT value chain. They have launched IoT value propositions, often in partnership with wider ecosystem players and enabled by their own technical platforms, such as in-house platforms, multiple platforms, and partnerships with specialized platform providers. Tier 1 (mobile) data global connectivity products could include e.g. IP addresses, embedded/smart/soft/SIM, IMSI re-use, HLR, OMA&P activities, e.g. vertical/horizontal plays, advanced analytics, business intelligence, IoT implementation support and consultancy.
Tier 1 MNOs are already claiming the position in the IoT value chain. They have launched IoT value propositions, often in partnership with wider ecosystem players and enabled by their own technical platforms, such as in-house platforms, multiple platforms, and partnerships with specialized platform providers. Tier 1 (mobile) data global connectivity products could include e.g. IP addresses, embedded/smart/soft/SIM, IMSI re-use, HLR, OMA&P activities, e.g. vertical/horizontal plays, advanced analytics, business intelligence, IoT implementation support and consultancy.
Tier 2
and 3
Tier 2 and 3 MNOs have neither scope nor scale to serve multi-country IoT OEMS. They could offer a different range of products and services with a distinctive role, e.g. best global connectivity services, best wholesale price, trusted end-to-end service implementation provider and business advisor to OEMs, et cetera. Tier 2 managed (mobile) data integration services could be e.g. security & privacy, ‘as-a-service’ offering & management portal, home location services, billing and charging. Tier 3 (often in collaboration) could be e.g. vertical/horizontal plays, advanced analytics, and business intelligence.
Tier 2 and 3 MNOs have neither scope nor scale to serve multi-country IoT OEMS. They could offer a different range of products and services with a distinctive role, e.g. best global connectivity services, best wholesale price, trusted end-to-end service implementation provider and business advisor to OEMs, et cetera. Tier 2 managed (mobile) data integration services could be e.g. security & privacy, ‘as-a-service’ offering & management portal, home location services, billing and charging. Tier 3 (often in collaboration) could be e.g. vertical/horizontal plays, advanced analytics, and business intelligence.
Ecosystem
and business model
A collaboration ecosystem concept would aim at offering flexible and competitive prices for IoT global connectivity to OEMs. With required key differentiators from Tier 1, telcos should offer a global footprint for mobile data at near-local rates to serve new clients. Also, doing business with the ecosystems should be easy. It requires IoT know-how and knowledge sharing, as well as operational, technical and execution delivery local capabilities. Finally, value added services and IoT solution connectivity management platforms offer great potential.
A collaboration ecosystem concept would aim at offering flexible and competitive prices for IoT global connectivity to OEMs. With required key differentiators from Tier 1, telcos should offer a global footprint for mobile data at near-local rates to serve new clients. Also, doing business with the ecosystems should be easy. It requires IoT know-how and knowledge sharing, as well as operational, technical and execution delivery local capabilities. Finally, value added services and IoT solution connectivity management platforms offer great potential.
Challenges
These ecosystems face several challenges that need to be overcome. For instance, there are multiple technical standards per MNO, region and country. Also, companies need to consider security versus a comfortable level of openness between members. Networks need to be interoperable, and silos must disappear. New capabilities are needed, such as multi-country rating and billing, content-based charging, and roaming steering. The most effective legal structures are still to be formulated. And operational, organizational and managerial structures are not established yet
Benefits
for telcos and their customers
To really capitalize the potential value of IoT, telcos need to collaborate with peers or other companies. This would offer great value to their customers, from low or local mobile data roaming dates and access to global coverage and multi-local footprint to end-to-end IoT solution implementation and go-to-market support for their own portfolio. For telcos themselves, benefits include new global customers, additional data revenues, low entry and operating cost (with solid ROI), mobile data connectivity and wholesale management, et cetera.
To really capitalize the potential value of IoT, telcos need to collaborate with peers or other companies. This would offer great value to their customers, from low or local mobile data roaming dates and access to global coverage and multi-local footprint to end-to-end IoT solution implementation and go-to-market support for their own portfolio. For telcos themselves, benefits include new global customers, additional data revenues, low entry and operating cost (with solid ROI), mobile data connectivity and wholesale management, et cetera.
The challenge is to start and engage on the execution of
such a collaboration strategy. This will require leaders to truly embrace
data-driven decision making.
