Digital Disruption in the Physical World: Reflections from IoT World Forum 2015

Walking away from last month’s IoT World Forum in London, where over 400 IoT enthusiasts from various industries came together to exchange views, two major themes were immediately apparent.

First, it was very clear that the Internet of Things (IoT) will be a huge business opportunity for many companies, including operators. Cisco projects that the market for IoT services and technology could generate $19 trillion between 2013 and 2022, while more than 50 billion individual IoT-enabled devices will be connected by 2020.

Secondly, it’s clear we’re moving toward a digital society. Everyone is becoming digitized, and in fact, European operator Tele2 claims that in the IoT economy, all physical things will have a digital twin. And it’s that digital twin which creates digital dependency and product “stickiness” to customers.

What’s the best way forward for operators? How do telcos who have long been focused on connecting customers with traditional voice, messaging and enabling customers’ data access now pursue intriguing new opportunities in an emerging field? Various presenters, a handful of which were operators, at IoT World Forum offered their suggestions – here’s our recap concentrating mainly on the CSPs’ IoT strategies and takeaways.

Find a Good Monetisation Strategy

Ultimately, IoT is about data, and data analytics.

Naturally, operators want to know exactly how they turn all that data generated from those billions of new connected devices into revenue. It was stressed that connectivity is not the only way for operators to earn from IoT, in fact operators need to go beyond connectivity. So instead, telcos must take a service-led approach, relying on connected devices to offer the data that fuels highly personalised and relevant services to customers.

There was an interesting example of an auto insurance provider that defines customers’ insurance policies based on their driving behaviour, which is monitored and tracked by in-vehicle sensors. In this model, IoT-generated data is directly influencing how a consumer service is delivered and priced. Accompanying this behaviour-based insurance model there was a discussion about the other possible alternatives companies might price the IoT, including an ad-funded model, subscription-based model, consumption-based billing, and data trading.

With IoT, the market is moving from CAPEX to OPEX-driven business models, to a ”software as a service” or what one might even call an ”everything as a service” approach.

Find an Innovative Use Case

Operators showcased an amazingly big spectrum of innovative use cases in the field of IoT. These are stretching from various health apps and assisted living to home appliances, smart logistics, smart cities, connected cars and fleet management. Some operators have even made IoT a primary business focus, including one major Tier 1 operator that explained its concentration on the health vertical. To guarantee the best possible success in this domain, they’ve even hired medical doctors to consult on the digitalisation of healthcare.

Build an Ecosystem of IoT Partners

Nobody walks alone in an IoT-driven service ecosystem. IoT market is not be a “one-man show, but rather an ensemble piece.” No single player offers an end-to-end platform that serves a complete array of business use cases.

Bringing all this data together through a compelling ecosystem and service partners, creates a win-win situation for key IoT players. The proposal is to go forward with a culture of experimentation and multi-party models of joint-testing and trials that allow partners to establish proofs of concept and address difficulties before products are released to market, meanwhile applying the well-known principles of “fail fast or scale fast” and “think big, start small and scale fast.”

Address Changing Behaviours to Win Customers

What makes an IoT offering successful? What separates products that are simply hype from those that are genuinely compelling to customers? One conference presenters said “behaviour change is the killer app of IoT,” while another pointed out that the “user is at the centre of IoT.”

There was a common consensus around the popularity of wearable fitness technology. Customers love their FitBits and Jawbones mostly because these devices help their owners become more active. In this case, an IoT device is addressing specific customer behaviour – the desire to live a healthier lifestyle.

Similarly, David Bunch of Shell asked whether today’s youth – more of whom view cars as functional appliances rather than an aspirational purchase – cares much at all about owning their own vehicle. As a result of this changing behaviour, Bunch argues that it’s more a question of when, not if, connected autonomous vehicles will roam city streets as the preferred method of transportation.

Unlike discussions that position the IoT as a sort of futuristic piece of science fiction technology, the tenor of the conversation at IoT World Forum focused on real, pragmatic solutions. For operators, the way forward involves service-led business models and creativity pricing, the creation of beneficial partner ecosystems, establishing innovation labs and a priority on IoT-enabled services that serve evolving customer behaviours and desires.

Download our book, Operation Nexterday, to learn the strategies and solutions that help mobile operators innovate their service offerings and intrigue Generation Cloud consumers.

TM Forum Live! Recap: The IoT and NFV Revolution is Already Here

This year’s TM Forum Live! invoked the theme of digital business transformation and a digital ecosystem for telecommunications. As my colleague, Steve Hateley, wrote recently, leading voices in the industry took time at the event to share their views on the key opportunities and challenges available to operators who embrace creative thinking in an era of digital disruption.

Without a doubt, two of the biggest opportunities of this ongoing and dramatic transformation involve the Internet of Things (IoT) and Network Function Virtualisation (NFV). Several speakers, dedicated streams, catalyst projects, key notes and exhibitions offered proof points to demonstrate that not only is this transformation on its way – in many cases, it’s already happening around us. Here are three major NFV and IoT takeaways from the show.

An Impending Surge in NFV Deployments

Comptel has discussed at great length about the transformative impact of NFV deployments on telecommunications. As we wrote in our book, Operation Nexterday, operators who don’t adopt NFV to speed their service delivery and achieve greater agility and scalability could soon see their competitors pass them by.

It would appear many more are starting to realize this, and thus, prioritise NFV deployments in the immediate future. According to one survey that was conducted by Heavy Reading and presented at TM Forum Live!, 23 percent of operators expect to implement NFV commercially within their networks within the next year, while 44 percent expect to do so within the next two years.

In a presentation, Appledore Research Group estimated that as many as 250 ongoing NFV trials are occurring around the world, which includes multiple proofs of concept within a single operator’s network and around 25 early “live” NFV deployments. These deployments are already revealing benefits: Virtual E-CPE (customer premises equipment) rollouts, for example, lead to ten-fold improvements in OPEX savings, while Virtual RAN (radio access networks) rollouts offer a smaller footprint and reduced energy consumption. The Heavy Reading study, which surveyed mobile operators specifically, highlighted many benefits to NFV, with respondents saying it helped achieve scalability in their IMS core and offered value in the policy and charging control function and their evolved packet core.

The IoT Inflection Point

Similarly, there was much discussion around the IoT “inflection point” – as in, the point at which IoT implementations and projects begin to trend upward.

For example, Volvo CIO Klas Bendrik discussed how the car group is addressing consumers’ desire to stay connected at all times by developing interfaces that allow drivers to identify safety hazards, time-saving routes and fuel-saving driving behaviours. The company intends to test 100 self-driving automobiles on Swedish public roads in 2017, which will be the first opportunity members of the public will have to ride along in an autonomous car in normal traffic.

Elsewhere, BT Group Director of Research and Technology Chris Bilton discussed an IoT project in Milton Keynes, England, in which BT Group was able to support the development of a citywide parking optimisation initiative that could be the first step of a full “smart city” project. The global market for Smart Cities is expected to be valued at $400 billion by 2020. The Milton Keynes project will be underpinned by a “Smart Data Hub” that will collect anonymous city data about factors such as energy, water and transportation, to let the partners and developers to address city challenges and innovate on new developments and solutions.

Urban planning, energy management, health care – these are all areas in which IoT is already making a difference, and naturally, operators are getting involved. As we discussed in Operation Nexterday, Telefónica uses machine-to-machine (M2M) connectivity to enable IoT services in the Tesla Model S in Europe, and separately manages a smart energy meter project that comprises 53 million devices across Great Britain. The company also relies on sensors to offer fleet management solutions to ensure trucks stay on course, meet delivery objectives and manage fuel efficiently. Tomorrow’s fleets of trucks could, then, look quite futuristic, covered in sensors that support various measurements and actions. These systems rely on M2M technology that is already within operators’ grasp and ready to be leveraged.

Partnerships Key to Accelerating IoT Innovation

The IoT opportunity is huge. Cisco estimates the industry could be valued at $19 trillion by 2024. If IoT disruption is already upon us, how do we accelerate its growth?

One key will be the establishment of new partnerships to unlock an open playing field for faster innovation. Mari-Noëlle Jégo-Laveissière, executive vice president of innovation, marketing and technologies at Orange, explained in TMForum Live! the need for telcos to build a partner ecosystem that extends beyond the usual suspects. Today telcos, she explained, are partnering with companies who they do not normally talk to and who are not like them. Examples include automobile manufacturers, pharmaceutical providers and IoT developers. On top of that, open APIs and platforms will allow developers to innovate faster, bringing new IoT solutions to market at a rapid pace.

Comptel has often advocated for the benefit of non-intuitive telco partnerships, specifically agreements between mobile operators and over-the-top (OTT) content providers to deliver new content-driven mobile data packages. Similarly, such out-of-the-box thinking could enable savvy operators to identify new service opportunities in IoT.

Want to learn more about the ongoing telco digital transformation? Contact Comptel Marketing ([email protected]) to find out when our Beyond the Event Horizon roadshow is coming to your city.

And join us in November for Nexterday North, our can’t-miss antiseminar where we will take a non-traditional, bold look by leveraging the concept of Thinking Ahead (looking at other industries to examine our collective blindspot), Thinking Again (re-examining industry learnings to challenge the status quo) and Thinking Beyond (learning from emerging startups who are disrupting the digital world).

When Refrigerators Talk: The Role of Telcos in the Internet of Things

Telecommunications is at a crossroad. The demand for data is reaching unprecedented levels and there’s no sign that it’s going to be slowing down. In fact, in the very near future, our refrigerators may be using just as much data as our phones.

Olaf Swantee, the CEO at EE, recently wrote that this era of connected living will soon usher in smart homes, wearable tech and a multitude of other connected gadgets, leading to an explosion in connected touch points that need to be managed by communications service providers (CSPs). At Comptel, we couldn’t agree more. The question, then, is: how will telcos adapt to this new reality?

What will the world look like when our cars are talking to our coffee machines and synchronizing with our cloud-stored media or our refrigerators are updating our shopping list apps in real-time? What will the world look like when, as Google CEO Eric Schmidt predicts, the entire world is online?

The rapid proliferation of touch points and the amount of new and varied applications they bring will drive the need for increased agility and cost-effective growth in infrastructure, operations and management processes. The true era of connected living is dovetailing with another technological revolution: software-defined networking (SDN) and network function virtualization (NFV).

The Adaptability Game

The introduction of SDN technology will offer CSPs ways to operate an expanse of digital services at break-neck speed. The flexibility to build and host applications in the cloud will add to the ability to react quickly and roll out supporting features for new services.

This kind of adaptability will be crucial in a connected economy. With so many more touch points in the mix, operating across a wide spectrum of use cases, CSPs will need to be able to smoothly manage policies and bandwidth alike. A single user’s data plan could soon encompass not one or two devices, but twenty, thirty or fifty. How would a data plan for a refrigerator look? And what if one refrigerator has a video display to show users when they need certain groceries? Or, in terms of wearable technology, how can CSPs work with healthcare providers when it comes to medical devices that are connected to the cloud?

With the legacy and multiple OSS/BSS systems that many CSPs still have in place, it may seem like an overwhelming problem to manage. But with SDN and NFV, operators can more easily and economically manage the end-to-end deployment and orchestration of these complex services across all these devices, deployed across virtual networks.

The Internet of Things (IoT) will necessitate – and possibly expedite – the virtualisation revolution that’s already underway in telecommunications. The control plane is evolving, and at the tail-end of this transformation, we’ll see an artificially intelligent, agile orchestration layer that can understand the role of each and every device in the broader context of user behaviour and network patterns.

The excitement around SDN and NFV that we’ve already seen at TM Forum Live! is only going to grow as more connected devices come online. In this case, at least, we may actually see two trends where the hype is matched by the reality.

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