CSPs and IoT – Big challenge, big opportunity
The Internet of Things (IoT) industry means millions of objects will use networks to communicate with apps and services. Each one will demand bandwidth, security and quality of service commitments and while providing this will be a challenge, the proliferation of these connected devices is an opportunity communications service providers (CSPs) cannot ignore, writes Jonny Evans
Critically, the IoT gives CSPs a chance to move up the value chain. “This is a shift away from the traditional CSP business, so they must consider whether to build, buy or partner to make the transition,” explains Paul Lalancette, managing director and IoT Communications industry lead for Accenture Digital.
To achieve this transition, Avi Kachlon, the chief executive of FTS, says CSPs: “must be able to onboard new partners and IoT service providers rapidly; to launch new, bespoke contracts; to rapidly adjust existing contracts; and to understand and respond to the different needs and business logics of each industry.”
Dr. Shane Rooney, executive director at GSMA, also identifies roles for CSPs. “CSPs have an opportunity to show how diverse the deployment of IoT can be, by using IoT technology across a wide range of customers and vertical sectors,” he says. In many cases, CSPs will need to enhance existing teams with new skills as they seek to build business in sectors in which they have no traditional expertise.
“CSPs have a chance to be pioneers in the IoT space, and showcase just how successful it can be – a great example being through the deployment of low power wide area networks (LPWAN) and technologies,” Rooney said.
Meeting anticipated network demands is driving both new solutions (5G, LPWA) and motivating carriers to make better use of existing bandwidth. “The answer is NFV,” says Cam Cullen, the vice president of global marketing at Procera Networks. “This makes it possible to introduce new monitoring and filtering technologies to manage peaks in IoT traffic on demand.”
With so many IoT sectors to support, CSPs must become sufficiently agile to rapidly create business and BSS systems for multiple usage cases. “Some IoT applications will be mission critical like health care device monitoring,” adds Martin Morgan, the vice president of marketing at Openet. “CSPs can use policy systems to ensure the correct QoS is being applied, and charging systems can monetise accordingly.”
Security is also a challenge. The connected devices that comprise the emerging IoT will gather large quantities of sensitive user data, from bank details to location, health data and more. Within this context, “CSPs must recognise that IoT devices could become the weakest links for significant attacks on critical infrastructure, including that of the operators themselves,” warns Alex Mathews, the lead security evangelist at Positive Technologies.
The recent distributed denial of service (DDoS) attack on internet infrastructure company, Dyn, used an array of compromised connected household devices in the exploit. More recently in November, 900,000 Deutsche Telekom customers saw their routers crashed by malware. “We will see more stories like this,” Mathews warns.
“Device manufacturers should consider integrated security at the device stage,” advocates Stamatis Georgoulis, the senior director of product management at Cobham Wireless. “Consumers should take advantage of available security methods to protect their devices. CSPs … must continually stress-test their networks.”
Success will require real business cases aimed at real customers, and in some cases just meeting the challenges CSPs face will be differentiator enough. “More importantly, users of the service must also find value in that differentiator and it must be something they’re willing to pay for,” says John English, the senior manager for service provider solutions at Netscout. “When it comes to IoT services, one key differentiator will be offering access to a guaranteed, secure, and reliable connection, which will result in much greater importance being placed on service level agreements.”
For Morgan, the opportunities are already real. “We’re already seeing CSPs in the US offering connected car services, where consumers can share a data allowance across multiple devices – one of which just happens to be their car,” he points out. This illustrates the “opportunity to sell IoT-related services to a wider segment of the existing customer base”, such as home automation, security and more. “Being able to bundle these services into multi-play offers will make services stickier,” Morgan explains.
Creating personalised deals that meet different user, security and service requirements may generate revenue improvements for CSPs. “Mobile plans can be tailored around usage of different devices, as more everyday objects and innovative gadgets are connected to the IoT and are adopted by a growing number of consumers,” says Georgoulis.
This might be true, but “in order to go beyond providing commodity connectivity services and play a more central role in the IoT ecosystem, they will need to implement smart revenue sharing solutions that can facilitate these partnerships,” explains Kachlon.
The challenges and rewards may be great, but it is important not to underestimate the profound impacts these technologies will have and the vast nature of the digital transformation IoT creates. No industry is immune to this. Thomas Neubauer, Teoco’s vice president of business development and innovations says, “If every household has a solar roof, enough surplus energy would be generated to allow peer-topeer transactions between households, without the energy provider as a middleman. In the same way that blockchain technology enabled such transactions for money; IoT solutions in combination with blockchain could bring about a fundamental change in the energy market.”
With the once in a lifetime potential to get into so many industries, competition will be fierce, but not everyone will make the cut. Already there are signals that hint at future consolidation as CSPs seek to grasp the moment. “In 2015, there have been around 470 IoT contracts signed between operators and industry verticals globally, almost of them for B2Bbased features and services,” adds Neubauer, who confirmed that 40% of these went to just three CSPs.
“The scale and resources that individual operators can draw upon to deliver more than simple IoT connectivity – such as systems integration expertise – will be key to how well they fare,” he says.
category: CSPs News