IoT Benefits & Growth Opportunities for Telecom Industry

The concept of Internet of Things is not very old. It was coined by Kevin Ashton back 1999 (Ashton, 2009) and featured on Gartner’s “hype-cycle for emerging technologies” in 2011 (Fenn & LeHong, 2011). Looking back at the history, the concepts of “pervasive computing” and “embedded internet” have been around for quite some time and people tend to make analogies between those terms. Despite the fact that IoT has not been around for long, the disruptions it has caused to industries are enormous. Industries like health, energy and utilities, retail, transportation, manufacturing, agriculture, etc. have been impacted by the arrival of IoT in a big way. This trend does not stop there. Other industries are not immune to the same disruptions IoT has brought about. Telecom industry has also been hit hard and impact is visible – positive for those who moved fast to take up opportunities created by IoT and negative for those who have been slow or lacked means and/or strategies to follow the trend. 

When Gubbi et al. (2013) introduced their article, they mentioned that the next wave in the era of computing will be outside the realm of the traditional desktop. The technological progress has turned ordinary “Things” into smart devices. Objects like a watch, thermostat, bulb, meter, camera, speak and so on are now more intelligent than ever thanks to sensors, processors, actuators and connectivity. The objects otherwise called “Things” have become “Smart” and can interact with people and between themselves, thus generating tons of data, “big data” that are useful at some extent.

This phenomenon is rapidly developing to the extent that some researches predict that by 2020, connected (smart) objects will be estimated at 32 billion worldwide (Adshead, 2014).  

The diminishing cost of sensor technology has been a key factor in expanding Wireless Sensor Networks (WSNs) vital to the development of IoT infrastructure. This has enabled many areas (and industry) such as health and wellness, home and building automation, improved energy efficiency, industrial automation smart metering and smart grid infrastructures, environmental monitoring and forecasting, more flexible RFID infrastructures, asset management and logistics, vehicular automation and smart transport, agriculture, smart shopping (Mainetti et al. 2011) among others, take advantage at some extent of IoT despite some shortcomings. 

Despite rapid advancement of IoT, security and privacy are great sources of concern for IoT development. With billions of devices being connected on the network, fear for intruders arise. End users also are not assured as to how their data will be used by the companies and laws and regulations are still at their infant stage.

Notwithstanding all these challenges, many industries and including Telecom have opted or are exploring ways to include IoT in their business models. The spirit of first-mover advantage and the potential of revenue streams from this technology are key drivers for operators to embrace it.

The Telecom industry has been trying to integrate IoT in their operations to build on the momentum seen in other industries and to take advantage of the potential gains it promises; however, a number of obstacles and constraints are hampering that effort.

Telecom industry is infrastructure-intensive and requires enormous investment to re-invent itself and/or quickly integrate the latest innovations in its strategies. Those innovations, concurrently open up business opportunities to other players, including small new or existing players who eat away on the market share of old players. As digital proliferates the telecommunications industry, incumbent Telco’s find themselves in the middle of a paradox…. They are, after all, not only providers of their own digital products and services but also enablers for other sectors, by providing the essential connectivity infrastructure for functioning and growing in the digital economy, which results in a growing demand for broadband access (Meffert & Mohr, 2017).

For example, new players have created over-the-top applications that have replaced some of the traditional telecom services hence gaining some market share at the expense of old players. These players provide services to consumers over the internet by bypassing traditional distribution channels formerly owned by big telecom companies. Good examples would Skype, Netflix, YouTube, Xbox 360, and so many more. 

This being said, the industry is losing revenues to other players as has been observed by many scholars.  

This paper reviews business models of telecom companies and how prepared are they to catch up on the IoT opportunities. New business models including IoT are reviewed for different Canadian telecom companies to highlight their readiness in the market. To better understand the industry vis-à-vis IOT applications, a PESTEL analysis has been carried out in the course of this work. Recommendations have been drawn based on the findings of this paper.