Summary
What are the benefits and challenges of IOT for the Telecom Industry? IOT is transforming the business ecosystem of the telecom industry. It offers several high potential benefits for the Telecom Industry. But Telecom operators have to adapt their strategies to monetize IOT applications.
Introduction
The web of Things (IoT) is tagged as “the following Industrial Revolution” due to the manner in which it is going to change how individuals live, job, entertain, and also traveling, in addition to the way governments as well as companies communicate with the planet.
The internet has been around for several decades and the number of users has not ceased to increase. Different internet applications, products, and uses have been profiting to many.
A Spectacular Evolution
The evolution of the use of the internet is spectacular and none can die that it has taken a central role in modern life. More and more aspects of life depend on the internet nowadays, at least for a major part, and new uses and applications are being discovered and exploited at high speed. Objects/things that we never thought would be connected to the internet are now becoming smart and getting connected, the mobility has never been easier, the improvement of platforms, speed of bandwidth and standards for interoperability are easing the development of new internet application, leading to new business opportunities we never thought of before. Developments such as cloud computing, analytics, machine learning, big data, business intelligence, etc. are paramount in this regard.
IoT is Transforming the Telecom Ecosystem
With IoT, the concept of Telecom ecosystem has tremendously been altered. The concept has crossed borders to embrace the transportation, construction, agricultural, health, insurance, energy, and so many other industries as we have never seen before. Lots of researchers call it vertical markets, and this will dynamically change the way telecoms create values for their owners.
A Second Disruption after the Smartphones
The telecommunications marketplace was first disrupted by the prevalent use of smartphones. Smartphones opened a pandora’s box to an alternative realm of apps that are free providing a wide range of interaction services – changing SMS as well as phone calls – that merely needed an internet connection in an effort to run.
We’re presently dealing with a 2nd wave of disruption with the prevalent usage of connected devices, which seems set explode. Even when there was currently 10,000 million connected products used in 2015, by 2020 that figure will achieve 34,000 million, of which 24,000 million will be IoT equipment and 10,000 million will be products which will suggest individuals are likely to be completely attached to the system through smartphones, smart watches, tablets, etc.1
Defining IoT
Defining the IoT, Joshi (2016) added that the term is closely identified with RFID as the method of communication, although it also may include other sensor technologies, wireless technologies or QR codes. The IoT is significant because an object that can represent itself digitally becomes something greater than the object by itself.
Bauer et al (2014) write that The Internet of Things refers to the networking of physical objects through the use of embedded sensors, actuators, and other devices that can collect or transmit information about the objects. The data amassed from these devices can then be analyzed to optimize products, services, and operations.
IoT as a Dynamic Global Network Infrastructure
The IERC definition states that IoT is “A dynamic global network infrastructure with self-configuring capabilities based on standard and interoperable communication protocols where physical and virtual “things” have identities, physical attributes, and virtual personalities and use intelligent interfaces, and are seamlessly integrated into the information network.”
Gartner defines IoT as the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.
A Worldwide Network of Uniquely Addressable Interconnected Objects
Many authors have suggested different definitions of IoT, but it can generally be defined as a worldwide network of uniquely addressable interconnected objects, based on standard communication protocols (Mainetti et al., 2011).
Throughout this evolution of internet and internet applications (and of course of information and communication technologies), the concept Internet of things (IoT) or otherwise called Ubiquitous Internet or Internet of Objects…has appeared and shows no sign of slowing down on its implementation and creation of new business opportunities.
A Predicted Evolution Since 2005
The International Telecommunication Union (ITU) had predicted this evolution back in 2005 where it said: “we are heading into a new era of ubiquity, where the “users” of the internet will be counted in billions and where humans may become the minority as generators and receivers of traffic.
As to McKinsey’s Chui, Löffler, and Roberts (2010) in what’s called the Internet of Things, sensors and actuators embedded in physical objects—from roadways to pacemakers—are linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet. These networks churn out huge volumes of data that flow to computers for analysis. When objects can both sense the environment and communicate, they become tools for understanding complexity and responding to it swiftly.
Benefits of IoT for Telecom
The use of IoT in the Telecom industry has many benefits.
- The amount of data that operators have access to is a treasure trove for the industry.
- Telco’s can predict consumers’ behavior and expectations, predictive analytics applied to those data can help avoid network outage, operators can plan and monitor maintenance more effectively, can optimize the bandwidth and coverage according to the patterns and customer behavior, they can improve customer service with the help of IoT and big data, etc.
- IoT can help improve customer experience by tapping into predictive analytics to avoid network outage during peak hours or main events.
- It can also help monitor and more effectively plan for maintenance to avoid downtimes and loss of revenues. But these are indirect ways telecoms gain from IoT technology.
- Operators have more opportunities to add services and products on their existing portfolios and create new sources of revenue. Innovation and Research & Development are key to this kind of move since IoT is relatively new to the industry.
Challenges of IoT
Many companies have IoT projects (products and services in the pipeline) but haven’t yet shown the revenue from them. Many other companies are struggling to integrate IoT in their regular operations.
- However, traditional Telco’s have shown to be more rigid and less flexible when it comes to integrating this technology.
- Legacy business models are close to this technological progress and need to be re-opened to include it. Doing so, a re-design of business models will cause a chain reaction on other sub-systems. For example, not too many telecom companies, if any, have a ready infrastructure to accommodate this new technology.
- Minimum infrastructure with IoT capabilities has to be laid down. New protocols, platforms, applications, and trained personnel are needed to fully implement it.
- In general, radical innovation in Telecom is harder to implement than incremental ones since the former requires time and investments and change in the know-how of the operators as well as in mindset. Gubbi et al. (2013, p. 1646) define IoT as “a radical evolution of the current Internet into a network of interconnected objects that not only harvests information from the environment (sensing) and interacts with the physical world (actuation/command/control), but also uses existing Internet standards to provide services for information transfer, analytics, applications, and communications.”
Collaboration and Integration are Vital to Taking Advantage of IoT
Collaboration and integration are vital to taking advantage of IoT. Telecom industry has not yet shown how ready they are to collaborate to integrate the IoT in their daily operations. Shared business models are likely to play a central role in the monetization process of IoT.
A Global Telecommunications Study report by EY (2017) highlighted some of the main challenges for telecom going forward as follows:
Source: EY (2017): Digital Transformation for 2020 and Beyond: A Global Telecommunications Study report
Lack of Organizational Agility Remains a Challenge
Lack of organizational agility is obviously noticed in the implementation of IoT across the industry considering how slow it is so far. This causes a kind of disruptive competition brought upon by novel players who affront old industry players.
From a global perspective, Meffert and Mohr (2017) report that Amazon, Apple, Baidu, Google, Microsoft, Samsung, and Tencent, as well as pure tech companies such as Cisco, Huawei, IBM, and ZTE, are all growing their presence across the traditional telecom’s value chain with innovative technologies—from network and service through devices and operating systems to applications and media.
OTT Players are Offering Core Telco Services
Moreover, the same authors say that OTT players are offering core telco services such as voice or messaging, and the media space is becoming their domain. Tech and Internet companies are also increasingly active in growth areas, such as cloud space and services, competing with Telco’s for clients and revenues.
They are tying customers to their own ecosystems, while making reliance on traditional operators a thing of the past. With carrier-neutral connectivity (for example, e-SIM), many tech and Internet companies are enabling seamless changes between operators and eliminating the hassle of changing telecom providers. Hence, digital players are systematically attacking existing telco profit pools and will continue to do so-eating up Telco’s’ revenues and margins. This makes differentiation purely on B2C products for traditional Telco’s a highly questionable proposition in the future.
Regulatory Developments Must Be Understood
In addition to these revenue-eroding trends, they add, regulatory developments—especially in Europe—have cut down roaming revenues dramatically. All told, the opportunities that newcomers, tech, and Internet players are capitalizing on may slow growth for traditional Telco’s, costing them upward of $300 billion. Worldwide, the compound annual growth rate (CAGR) for traditional Telco’s is estimated at only 0.7 percent through 2020.
Conclusion
IoT has tremendous potential to benefit from IoT development but the represent The Telecommunication industry has to go through adaptation to capture the value of IOT with new products and services.