Telecom operators sat back as the new over-the-top (OTT) service providers, internet and tech companies slowly ate away at their business, particularly in the B2C space. A combination of institutional laziness and poor execution on promising initiatives gave these new entrants the time to jump in and snatch away customers. At the moment, the future doesn’t look too bright either with a worldwide CAGR put at 0.7 percent through to 2020.
For the time being, wooing back B2C customers is a losing battle. While OTTs use telecom operators to deliver their services, these companies can’t muscle out the competition since public support for net neutrality is remarkably strong.
Fortunately for them, it’s not an entirely hopeless situation. Telecom operators have an opportunity to rethink their business model, transform their organization, and execute on competitive ideas. This is especially true in the B2B space where telecom operators can use their existing infrastructure to offer premium network solutions for large enterprises, particularly when it comes to the Internet of Things (IoT).
The Exploding IoT Market Offers Huge Opportunities for Telcos
Connecting millions of devices across long distances is a telecom company’s reason for being. Not only do they have an enormous amount of experience connecting devices, they understand the security, privacy, and customer service components of connectivity as well.
The growing Internet of Things (soon to become the Internet of Everything) enabled by upcoming 5G presents an exciting web of connected devices. But as Bain Insights explains in Forbes, we’re so busy talking about all these cool devices, that we haven’t spent enough time thinking about how exactly we’re going to manage, protect, and store the immense data they produce. According to Bain, telecom companies are uniquely positioned to assist businesses with:
- Connectivity and Compliance: Telecom companies have experience and systems in place for keeping devices connected while also complying with the regulatory requirements of multiple governments.
- Life Cycle Management: Think of how effortlessly we set up and upgrade our smartphones. Telecom companies have experience with managing products from beginning to end, and this experience will be essential for managing and upgrading the tremendous amount of connected devices in the IoT.
- Vertical Platforms: Telecom operators can offer platforms and turnkey solutions for companies who need help with device management, data storage, and data analysis.
This entire project of turning the IoT into long-term business growth for telecom operators rests on one big factor: Security
Why Telcos Will Profit From Aligning IoT Security Strategies with IoT Market Ambitions
With great connectivity comes great responsibility.
For all its exciting applications, the IoT poses many security challenges, privacy challenges, and even safety challenges. There are significantly more devices to protect beyond our computers and smartphones. If manufacturers aren’t diligent about updates, users will fall victim to hackers who discover and exploit vulnerabilities. On the privacy side, companies will be able to collect even more data on their customers and employees, and without proper oversight these individuals will have little to no say on how that data is used.
What all of this means is that there will be a need for IoT services that are tied to IoT security solutions.
IoT Business News argues that while prioritizing IoT security will be a market differentiator for telecom operators, it won’t amount to a significant revenue stream.
This isn’t entirely true. As we discussed earlier, the key qualifier for telecom operators to dominate the IoT market comes from their experience with network management and security. IoT security capabilities should be more than just a differentiating factor. They have to be central to their service offering.
To successfully offer those services we discussed earlier – connectivity and compliance, lifecycle management, vertical platforms – IoT security solutions must be an integral component. Moreover, telecom operators who prioritize security will be able to build off of this to develop even more revenue streams.
Real-time analytics is one of the more compelling value propositions of the Internet of Things. When it comes to problem solving, sooner is better than later. But oftentimes, no one notices a problem until much later when ample money’s already been spent or the problem has worsened.
The IoT and (close to) real-time analytics go hand in hand. Data collected by this multitude of devices can be quickly analyzed and shot back for automated actioning, or to humans who can make decisions with seconds-old information.
Offering the infrastructure and services to make such fast analytics possible and secure is one huge opportunity for telecom operators. That said, close-to-real-time analytics from the myriad devices spread out over wide geographical areas will require fog computing capabilities.
This is another way that telecom operators are poised to profit off of IoT security solutions: They already have the infrastructure in place to give them a head start on becoming the leading facilitators of fog computing.
Fog Computing Presents a Clear Way Forward For Telecom Companies Pursuing IoT
At present, IoT devices often rely on a centralized, cloud-based system. That’s all well and good for now, but as IoT moves towards offering realer-time analytics and insight on data generated from objects all over the place, there needs to be computing power closer to where these objects are (aka “the edge”).
This is where fog computing – also known as edge computing – comes in. While cloud computing works well in most situations, it isn’t as effective in scenarios where time is of the essence like for example autonomous vehicles. There’s also the security implications of transmitting large amounts of data, not to mention the complicated regulatory considerations of data being generated in one jurisdiction and being analyzed in another.
We’re stuck then with IoT devices that aren’t powerful enough and cloud servers that are certainly powerful, but too far away. This is where fog computing offers a middle ground by mimicking cloud capabilities.
So, where do telecom companies come in?
Presently, traditional cloud computing providers like Amazon, Google, Microsoft, or IBM deliver their famous services from large data centers, which means it will take time to develop the infrastructure needed to offer fog computing services.
On the other hand, telecom operators have networks that more closely echo this need for “small data centers” that exist at the level of a city block. They can repurpose their existing properties and infrastructure to meet what will be a growing demand for computing at the edge.
Telecom Operators Can Take a Bite Out of the IoT Market — They Just Need The Teeth
Telecom operators are close enough to take a bite out of the IoT market. What they’re missing are the teeth and the determination. While the legacy tools and procedures exist to allow telecom operators to be the leading providers of IoT services and security solutions, it will take an organizational shift to make such a strategy successful. By doing this, telecom operators will not only make money, they’ll secure their future in the presence of ambitious OTT competitors.
For over 30 years, Marin Ivezic has been protecting people, critical infrastructure, enterprises, and the environment against cyber-caused physical damage. He brings together cybersecurity, cyber-physical systems security, operational resilience, and safety approaches to comprehensively address such cyber-kinetic risk.
Marin leads Industrial and IoT Security and 5G Security at PwC. Previously he held multiple interim CISO and technology leadership roles in Global 2000 companies. He advised over a dozen countries on national-level cybersecurity strategies.
Luka Ivezic is an independent consultant and author exploring geopolitical and socioeconomic implications of emerging technologies such as 5G, Artificial Intelligence (AI) and Internet of Things (IoT). To better observe policy discussions and societal attitudes towards early adoptions of emerging technologies, Luka spent last five years living between US, UK, Denmark, Singapore, Japan and Canada. This has given him a unique perspective on how emerging technologies shape different societies, and how different cultures determine technological development.