o quickly capitalise on Internet of Things (IoT), telecom companies are going to offer IoT services. While they are going to be a net service provider, they also have an opportunity to be a net consumer of IoT.
New wide area network technologies are gaining momentum. Compared to 3G/4G or Wi-Fi, these technologies have much lower power consumption but are also very slow in speed.
The speeds may seem low, but they are sufficient for IoT devices and the technologies offer battery life of several months versus days.
While these new protocols such as LoRa (low range radio) are gaining momentum, there is another school of thought that Wi-Fi is much cheaper and the unit economics are already there.
The chip industry is in a chicken-and-egg phenomenon. Unless you have the volumes, you won’t have the price advantage and unless you have the price advantage, you won’t have the pricing right (for volumes to happen). This is once again a battle of standards, and time will tell which one succeeds.
I was speaking to Rohit Nalwade, CEO of Keeptrak, a leading IoT company in India. They work with several telecom companies. He said something very important. According to him, while all telecom companies sell SIM cards, a few of them are more IoT friendly than others. For example, some telecom companies offer full-fledged APIs (application programming interfaces) to get device data. Some even offer a site where the IoT company can go, see the status of the SIMs, remotely activate and deactivate them and also integrate with their billing applications.
This, he said, is key, as IoT companies will have millions of devices in the field and having a good way to manage the SIMs would be a big advantage.
IoT is a business opportunity for telecom companies. However, there are also many opportunities for telecom companies to leverage IoT as a business advantage.
For example, telecom companies that have deployed a large number of cell towers can use IoT to monitor them remotely and also do preventive maintenance. The solutions can predict failures and they can fix them before a breakdown.
Consider the case of LimeMicro, which makes a mobile base station that is completely software-defined. Instead of all the intelligence in the hardware, they use Software Defined Radio (SDR). With SDR, migrating from 3G to 4G to 5G is just an app. Adding new protocols like LoRa or setting up a Wi-Fi hotspot are all just apps that you add to the mobile base station.
This is critical in an agile environment, where customers demand a lot of new services from their service providers and they are expected to provide the same immediately. The shorter the deployment time for service providers, the faster the investments start generating revenues.
Another area where lots of interesting companies are coming along is setting up temporary mobile base stations. These can be deployed in areas where coverage may otherwise be a challenge—large exhibition halls, for instance. These can also be deployed to test coverage in an area before investing in the capex to deploy a permanent base station.
Telecom companies can also offer cloud services for the IoT devices to connect to. Since the user is already on their network, if the device is sending the data to their own data centre, it is going to be a lot faster experience and easier for the customer as well.
The customer premises equipment (CPE) are also getting smarter. They no longer need to be a plain vanilla Wi-Fi router; they can act as local cloud storage and offer IoT gateway services as well. Data can be backed up to the local cloud storage and the equipment can back up the data to the cloud when the network is free at night.
The business of the telecom companies can be highly commoditized. If they only focus on providing connectivity, they can easily be replaced by someone who is offering the same service cheaper.
One way for them to mitigate this risk is by offering bundled services and devices. This ensures that the service provider is deeply entrenched into the customer business and displacing them becomes more difficult.
For instance, telcos are already bundling handsets and MiFi (brand name to describe a wireless router that acts as mobile Wi-Fi hotspot) and some are already going to bundle various IoT devices.
If the service provider can provide end-to-end IoT services right from telematics to home automation, their services will no longer be a commodity. This can also help them increase their average revenue per user (ARPU).
This article initially appeared in Livemeant. For the original article, click here.