Sep 15, 2014
By Haim Kantor
This article first appeared in the Fall/Winter edition of the CCA Voice.
The analyst firm Gartner recently predicted the Internet of Things would include 26 billion connected devices by 2020. Estimates from some technology firms run even higher, far exceeding the 7 billion computers, tablets and smart phones expected to be online by that time.
Consumers and businesses were benefiting from the Internet of Things even before we knew what to call it. We park our cars at connected parking meters, keep our homes comfortable with grid-smart thermostats, and improve our health with activity trackers or pill containers that remind us to take our medications. And that’s just a taste of what’s coming.
This rampaging horde of data-hungry devices represents a huge market opportunity for all kinds of Communications Service Providers (CSPs) – from traditional competitive carriers to new entrants like Google or the hundreds of startups that will sprout to launch new devices and services we’ll quickly find as indispensable as smartphones and search engines.
The rapid shift in how our communications networks are used will also bring new challenges. Connected functionality is set to become a standard offering across a huge range of consumer and business products that don’t fit the billing and customer management paradigms for which current back office systems were designed.
Connected functionality is set to become a standard offering across a huge range of consumer and business products that don’t fit the billing and customer management paradigms for which current back office systems were designed.
For the established telecom players, the breakneck pace of expanded service offerings has already, in many cases, outstripped the ability of service platforms to meet their needs. It takes too long to bring new products to market and it can be difficult to manage them once they’re live. Every shortcut taken just to get things out the door becomes a major source of inefficiency once the product has reached scale.
Battle lines are set to form between the marketing and technology teams over IoT, as the former group sees tremendous market opportunities, while technology teams deal with legacy systems that are difficult to manage, expensive to maintain and hamper innovation.
The good news is that this change is manageable. Providers’ existing systems will remain the engine powering the train. However, their capabilities can be significantly enhanced via technology that will overlay the multiple backend systems (keeping them in place) and offer reduced time to market/revenue, an improved customer experience, and operational efficiency and cost optimization.
To allow providers to launch new offerings quickly and at reduced risk and cost, these services must be agile, configurable and designed with an understanding of where the industry is today – and where it’s headed tomorrow.
On the wholesale side, the seamless interface with third-party systems will become even more important, as connectivity will be re-sold by many smaller, specialized device providers, rather than today’s handful of larger players. Competitive carriers with differentiated offerings can capture a hefty chunk of this revenue opportunity, but profitability from these smaller customers will depend upon self-catering web portals and automation that minimize the wholesaler’s client management costs.
Competitive carriers with differentiated offerings can capture a hefty chunk of this revenue opportunity, but profitability from these smaller customers will depend upon self-catering web portals and automation that minimize the wholesaler’s client management costs.
Startup CSPs and non-Telco companies face different questions, the biggest of which will be finding a service delivery and customer management model that is profitable, provides a high-quality experience and is easily managed. By offloading much of the back-end support, either via cloud-based solutions or outsourcing, these companies can focus on product design and faster expansion into new markets, services or geographic areas.
Once the install base is large enough, providers will also have access to a massive amount of highly granular, informative and segmented (but anonymized) subscriber activity. The relevant information extracted through Big Data must be protected, but it can also be monetized if providers can assuage consumer concerns about their kitchens spying on them. I certainly don’t want the refrigerator admonishing me every time I take out the ice cream, but I would appreciate a smart pantry that told me I was about to run out of coffee and asked if I would like to try a special two-for-one offer from Starbucks’ home delivery-by-drone.
The communications industry has long been one of the fastest adopters of connected devices. The need to conquer the complexities of Big Data, introduce innovative business models and overcome the challenges of legacy systems is clear. For those CSPs that will take the path of successful evolution the opportunities are endless.
Mr. Haim Kantor was the General Manager, Major Accounts at Excelacom. As General Manager of Major Accounts, he managed all aspects of sales and the company’s business development efforts.More about Haim
Innovation meets performance.