How telecom operators can harness the IoT to grow revenues and boost loyalty
The world of communications is undergoing a transformation. Amidst increasing competition from over-the-top providers, telecom service providers are facing revenue shrinkage, shrinking margins and growing subscriber churn in their consumer-focused business. In order to ensure relevance & long term sustainability in a fast-evolving marketplace, telcos need to move beyond just providing connectivity and security services. For this, telecom companies need to develop newer business models and revenue streams and monetize their business segments more effectively.
As telecom providers look to leverage various disruptive digital technologies for reinventing their business models, the Internet of Things (IoT) is emerging as a potentially transformative enabler. If designed and implemented the right way, IoT can help deliver innovative, value-added products and services, and end-to-end solutions for enterprises. This in turn can drive diversification of revenue streams, increased market share, and enhanced customer loyalty.
By adding effective IT growth domains to IoT business, enterprises can stay ahead of the competition, and deliver a truly differentiated solution stacks across various domains. These domains include enterprise mobility, machine-to-machine interaction and collaboration, infrastructure, and security and data analytics.
Several opportunities for the IoT in the enterprise segment
Enterprises today require an increased number of mobility solutions, expanded storage capabilities, tighter security and on-demand data services to grow their digital businesses in a sustainable manner. Given the unique role of telecom providers in facilitating enterprise connectivity and networking, this offers a unique opportunity to position themselves as a strategic partner for the B2B clients. The focus needs to be on leveraging various existing enterprise infrastructure assets – including billing and customer relationship management (CRM) systems, data centers, and operational and support systems (OSS/BSS)—to foster innovative B2B services. This is where IoT and various related machine-to-machine (M2M) communications technologies can come in handy.
According to McKinsey, IoT is likely to create close to $11 trillion a year in economic value globally over the coming decade. B2B applications across manufacturing, agriculture, healthcare, mining, oil and gas, construction and office environments are expected to account for almost 70% of this projected value, the consultancy forecasts. Hence, the opportunity for telecom operators to harness a hyper-connected enterprise landscape for sustained revenue and profitability growth is for real!
Realising the IoT’s potential
While aiming to sell new enterprise connectivity products and services built around IoT, telecom providers need to effectively partner with their B2B clients such as manufacturers, automobile suppliers, hospital operators and miners, should also be considered. Equally crucial will be the kind of business model that will be established in the IoT ecosystem. Some of the Potential monetization routes include -
- IoT enabler: One option is to assume the role of the IoT platform provider, provisioning a wide range of services including device management, product catalog handling, rating and billing, and customer care and billing. This takes you one step higher up the value chain.
- Connectivity provider: This can be achieved by occupying the lowest position in the IoT value chain, by merely providing the requisite infrastructure for helping businesses connect their machines and sensors. Here, the customer is not the end user but the IoT service provider.
- IoT provider: Yet another option is to build a direct relationship with the enterprise customers by providing differentiated experience and enhanced value. This can be done through the adoption of a managed services model involving multiple vendors, thus actively managing the IoT platform as well as the underlying devices, data, and services.
Embracing this model can enable telecom providers to provide end-to-end solutions such as fleet management, in turn yielding higher margins, and increasing customer loyalty.
Building the technology backbone
In order to be able to truly capitalize on IoT-related opportunities, companies need the right set of technologies and tools that can enable them effectively manage their networks, devices and data. Specifically, some of the relevant capabilities that providers need to build or enhance include:
- Upgrade their legacy BSS setups, or build real-time systems to ensure quick and hassle free rollout of new services
- Ensure elasticity in storage and computing, as well as at the networking level
- Integrate hardware, software, and distributed computing and storage for effective data management
- Use robust and real-time billing and charging solutions to maximize revenues across various industries
Catering to an increasingly discerning audience
Here are a few specific examples that give an overview of how telecom providers can stay relevant to customers belonging to an uber-networked world.
- Provide access to platforms or markets. For instance, Telefonica’s ‘Thinking Things’ platform, comprising stackable modules, helps companies create new products or services connected by multiple vendors.
- Explore offering data aggregation and storage platforms for various industries, with cloud–based connectivity at the core of your IoT strategy. Examples on this front include AT&T’s ForHealth and Orange’s Datavenue solutions. Telecom Italia also delivers extensions on top of connectivity services, such as a cloud computing solution through a scalable, on-demand data center.
- Provide analytics solutions as a service, enabling enterprises to generate actionable insights from the huge volumes of data aggregated across connected devices. These insights can help businesses optimize operations, and predict relevant trends and possibilities with regard to demand and customer behavior, among other dimensions.
- Offer innovative solutions and services for the healthcare vertical, and boost the top line. As a case in point, you can provide hospital bed monitors, and simultaneously, help care providers manage the entire product lifecycle spanning equipment charging, optimization of business processes, and customer and network management.
- Develop IoT-based software platforms for automotive manufacturers that provision services such as weather and traffic reports, roadside assistance and Internet radio to cars on the road.
- Offer cellular and satellite connectivity services to businesses. US wireless carrier AT&T has partnered with satellite integration company Globecomm to provide unified services. These ensure that a device uses cellular infrastructure whenever possible, and shifts to a satellite in the absence of network signal.
- Play a major role in cultivating ‘smart city’ ecosystems by tying up with real estate developers, utilities, municipalities, system integrators and technology providers to offer value-added solutions. For instance, Verizon has partnered with the city of Boston on a smart city project designed to promote road safety and achieve zero fatalities by 2030. Similarly, AT&T has joined forces with leading technology and industrial companies to build a framework that would let cities remotely monitor road conditions, water systems and traffic lights, among other things.
To generate the maximum return on investments in IoT, providers need to develop the right strategies, focus on select promising verticals, create the right go-to-market and service model for each segment, and craft compelling technical solutions.
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