The internet of things - a network that is long on promise - now has to confront the stark realities of operation. The challenges surrounding security, standardisation, interoperability and profitability serve to remind market stakeholders that they must recognize their own strengths and weaknesses. Similarly, for consumers and businesses to adopt this network, a relationship of trust needs to be established.
The internet of things, a network long on promise
Several studies have identified what it is that consumers hope for from new technologies. In fact, the promises held out by the internet of things (IoT) are often seen as the continuation of major transformations in how we use the internet generally: predictability, empowerment, disintermediation, effectiveness, etc.
The IoT is presented as the next Eldorado in our everyday lives as individuals and also for business competitiveness. Yet, in spite of this commonly held belief, obstacles do lie in the way of wider adoption of IoT technology by industry leaders and consumers alike. Indeed, the IOT can appear expensive and daunting, and its growth has already hit several snags.
... but struggling to become established
Increasingly the promises of the IoT are resulting in genuine innovation and experimentation, as well as a specific sales offer. However, technical, political and economic questions are already being raised: multiple standards, specific use cases, widely varying business models, vulnerable systems, data ownership, as well as support and maintenance issues.
Once the fad has passed, the return to reality is sometimes harsh. Connected objects are the focus of several press controversies that are hindering their adoption. Nevertheless, fixed and mobile phone operators have gained the trust of their customers through time, whether in terms of their equipment reselling, their service quality guarantee or their pricing models. In only 15 years, they have achieved global penetration rates of nearly 95%! The challenge is that the connected objects will eventually outnumber us and, therefore, operators must enhance the trusted relationship they currently enjoy in order to extend their position along the IoT value chain.
System security: An issue of acceptability
Without a doubt, one of the most prominent curbs on the adoption of new usages will be our loss of confidence in the underlying technologies.
From CCTV cameras to television sets, the number of internet-connected objects has already increased exponentially in the last 10 years, and with it the risk of misappropriation.
In late September 2016, OVH, a European giant in web hosting, was hit with a massive flood of traffic. 145,000 connected objects, all hacked and controlled without their owner’s knowledge, totally compromised the OVH servers.
Manufacturers of connected objects have very diverse profiles. Depending on the sector, matters of security can be of lower or higher priority: essential for a manufacturer of connected self-driven cars, but only of secondary importance to a manufacturer of small cameras costing just a few euros a piece.
The 2016 Accenture Digital Consumer Survey which polled 28,000 consumers in 28 countries on their use of technology found that security was no longer just a nagging problem, but had become a barrier that is blocking purchases.
In every case, an operator has to cover themselves by certifying the objects they are distributing to their customers, since the latter will blame operators directly for any failures. Some operators like Orange offer an IoT device catalogue to help their customers find the offer that is right for them from the plethora of connected objects available.
Operations Support Services (OSS): Standardization and roaming in progress
The internet as we know it would not have become so successful at the beginning of this millennium if clearly defined communication protocols had not been adopted, such as TCP/IP, SMTP, HTTP, etc.
Without the same work on standardization, the IOT could be reduced to a patchwork of proprietary and incompatible networks, each dedicated to a particular application or a specific group of users.
And it would be detrimental for operators to view the IoT as a list of verticals considered in isolation. That would mark a failure to deal with the issue of interoperability between systems and networks. If they are to enable international usage, operators will need to improve their coverage through sharing, using extensions and by concentrating their network.
This roaming will also facilitate new strategies for network construction. For example, a local operator will be able to add significant value to a new entrant to the IoT market, or to a national operator who wants to quickly expand their coverage. Additionally, by allowing roaming on their infrastructure, private network owners will have a new source of revenue for their networks.
Business Support Systems (BSS):
A difficult choice
BSS are another key element of the IoT. Each stakeholder in the ecosystem, whether an MNO, MNVO, CSP or a publisher, has to be able to provide solutions, platforms and business models that are keeping pace with this rapidly growing sector.
The first generation of IOT connectivity management platforms introduced by mobile operators was essentially a modified version of the existing billing and contract management systems that had originally been designed to manage voice traffic and data. Some mobile operators went further and developed dedicated IoT service platforms. Several leading operators, including Vodafone, Deutsche Telekom, Telefónica, Orange and Verizon have proprietary IOT connectivity platforms to serve all or part of their customer base. Cisco Jasper launched the first IOT connectivity platform in 2009, followed by Ericsson in 2011. These two providers have achieved broad international coverage with their respective platforms and have become established as the leaders in this market segment. Already, other open-source stakeholders are offering IoT platforms in SaaS mode or PaaS mode, delivering similar performance to that offered by traditional publishers.
Given this competitive environment, operators are struggling to adopt a sustainable strategy on whether to develop or acquire an IoT platform that suits their needs.
Governance structures in need of modernization
Operators’ traditional governance structures must now decide on the strategy to adopt concerning the IoT value chain, since this market is still in its infancy and is turning existing business models on their heads. There are many who feel unable to grasp the opportunities on offer, either because they lack the necessary processes (management, operations, supervision, processing, etc.) or because they are not suitably organized.
The lack of digital leadership in the digital transformation era has also stifled innovation and the adoption of the IoT, insofar as many operators, when faced with uncertainty, have cautiously awaited the market dynamics.
An innovation strategy is not an investment strategy; it is a desire to achieve an objective. The IoT is shifting the market value of operators more closely towards services and the enhancements that these bring to users. Remember Kodak? It was once the market leader in film photography until digital burst onto the scene and eclipsed its market. Kodak had, however, launched a digital camera and invested in this technology; it had even grasped the idea that photographs would be shared online. Yet in the end, Kodak had not realized that online photo sharing was the new business, rather than simply an extension of photographic prints.
By Ouanès Aïouaz, Innovation Manager, Sofrecom
