November 11, 2016

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How Telecom Operators Can Harness the Internet of Things

Tapping the B2B Opportunity: How Telecom Operators Can Harness the Internet of Things to Grow Revenues and Boost Brand Loyalty

Telecom operators worldwide today face shrinking margins and growing subscriber churn in their consumer-focused business, amid increasing competition from over-the-top communication service providers (CSPs). To ensure sustained relevance in a fast-evolving marketplace, telcos need to move beyond just providing connectivity and security services.

Monetizing the enterprise segment more effectively could be the key for carriers. A 2.6% annualized increase in telcos’ B2B revenues between 2014 and 2018 is likely to outpace a 0.6% rise in the consumer segment over the same period, Bain estimates.

As telecom providers look to leverage various disruptive digital technologies for reinventing their business models, the Internet of Things (IoT) is emerging as a potentially transformative enabler. If designed and implemented the right way, IoT can help you deliver innovative, value-added products and services, and end-to-end solutions, to your enterprise clients. This, in turn, can drive diversification of your revenue streams, increased B2B market share, and enhanced customer loyalty.

The IoT opportunity in B2B

Your enterprise customers today require an increased number of mobility solutions, expanded storage capabilities, tighter security and on-demand data services to grow their digital businesses in a sustainable manner. And, given your unique role in facilitating enterprise connectivity and networking, you can position yourselves as a strategic partner for your B2B clients.

You need to leverage your various existing enterprise infrastructure assets—including billing and customer relationship management (CRM) systems, data centers, and operational and support systems (OSS/BSS)—to foster innovative B2B services. This is where IoT and various related machine-to-machine (M2M) communication technologies can come in handy.

According to McKinsey, IoT is likely to create close to $11.1 trillion a year in economic value globally over the coming decade. B2B applications across manufacturing, agriculture, healthcare, mining, oil and gas, construction and office environments are expected to account for almost 70% of this projected value, the consultancy forecasts. So, the opportunity for telecom operators like you to harness a hyper-connected enterprise landscape for sustained revenue and profitability growth is for real.

Realizing IoT potential

As you look to sell new enterprise connectivity products and services built around IoT, you should consider partnering with B2B clients such as manufacturers, automobile suppliers, hospital operators and miners. Equally crucial will be the kind of business model you establish in the IoT ecosystem.

Here are some of the potential monetization routes worth exploring:

Connectivity provider

Occupy the lowest position in the IoT value chain, merely providing the requisite infrastructure for helping businesses connect their machines and sensors. Here, your customer is not the end user but the IoT service provider.

IoT enabler

You assume the role of the IoT platform provider, provisioning a wide range of services including device management, product catalog handling, rating and billing, and customer care and billing. This takes you one step higher up the value chain.

IoT provider

Build a direct relationship with your enterprise customers by providing differentiated experience and enhanced value. You could do this through the adoption of a managed services model involving multiple vendors, thus actively managing the IoT platform as well as the underlying devices, data, and services.

Embracing this model could enable you to provide end-to-end solutions such as fleet management, in turn yielding higher margins, and increasing customer loyalty. Let us look at some specific ways in which you can make yourself more relevant to your increasingly discerning enterprise customers in an uber-networked world.

  • Provide access to platforms or markets. For instance, Telefonica’s ‘Thinking Things’ platform, comprising stackable modules, helps companies create new products or services connected by multiple vendors.
  • Explore offering data aggregation and storage platforms for various industries, with cloud-based connectivity at the core of your IoT strategy. Examples on this front include AT&T’s ForHealth and Orange’s Datavenue solutions. Telecom Italia also delivers extensions on top of connectivity services, such as a cloud computing solution through a scalable, on-demand data center.
  • Provide analytics solutions as a service, enabling enterprises to generate actionable insights from the huge volumes of data aggregated across connected devices. These insights can help businesses optimize operations, and predict relevant trends and possibilities with regard to demand and customer behavior, among other dimensions.
  • Offer innovative solutions and services for the healthcare vertical, and boost the top line. As a case in point, you can provide hospital bed monitors, and simultaneously, help care providers manage the entire product lifecycle spanning equipment charging, optimization of business processes, and customer and network management.
  • Develop IoT-based software platforms for automotive manufacturers that provision services such as weather and traffic reports, roadside assistance and Internet radio to cars on the road.
  • Offer cellular and satellite connectivity services to businesses. U.S. wireless carrier AT&T has partnered with satellite integration company Globecomm to provide unified services. These ensure that a device uses cellular infrastructure whenever possible, and shifts to a satellite in the absence of network signal.

Play a major role in cultivating ‘smart city’ ecosystems by tying up with real estate developers, utilities, municipalities, system integrators and technology providers to offer value-added solutions. For instance, Verizon has partnered with the city of Boston on a smart city project designed to promote road safety and achieve zero fatalities by 2030. Similarly, AT&T has joined forces with leading technology and industrial companies to build a framework that would let cities remotely monitor road conditions, water systems and traffic lights, among other things.

Building the technology backbone

In order to be able to truly capitalize on IoT-related opportunities, you need the right set of technologies and tools that can enable you to effectively manage your network, devices and data. Here is a lowdown on some of the key relevant capabilities you need to build or enhance:

  • Upgrade your legacy BSS setups, or build real-time systems to ensure quick and hassle free rollout of new services
  • Ensure elasticity in storage and computing, as well as at the networking level
  • Integrate hardware, software, and distributed computing and storage for effective data management
  • Use robust and real-time billing and charging solutions to maximize revenues across various industries

In a nutshell

By adding effective IT growth domains to your IoT business, you can position yourself to stay ahead of the competition, and deliver a truly differentiated solution stack. These domains include enterprise mobility, machine-to-machine interaction and collaboration, infrastructure, and security and data analytics. To generate an optimum return on your investments in IoT, focus on select promising verticals, create the right go-to-market and service model for each segment, and craft compelling technical solutions.