By Adrian Baschnonga, Global Telecoms Lead at EY
The Internet of Things is maturing rapidly as a widening ecosystem of carriers, technology providers and start-ups look to take advantage of the world of connected devices.
This year’s Mobile World Congress saw a slew of announcements, with operator initiatives very much in focus as they refine their strategies and extend their partnering frameworks.
According to figures from the GSMA, M2M connections already total nearly 250 million worldwide and are seen reaching nearly one billion by the end of the decade.
Meanwhile, Ericsson has outlined that the average number of connected devices per household in the US stood at 5.2 last year, and this metric is expected to grow substantially in years to come.
In this light, operators are overhauling their business models in a bid to widen addressable markets.
Established carriers are looking at translating strong domestic market positions into international IoT footprints, at the same time weighing up which use cases and industry verticals offer the best long-term growth opportunities.
To this end, Deutsche Telekom has revealed plans to take its Qivicon platform for smart home to the Netherlands and the UK later this year, with OTT players as much a feature of the potential partnering landscape as other operators themselves.
Such initiatives signal a new fluidity of approach, with a growing focus on B2B opportunities as operators consider new value chain positions.
Elsewhere, research suggests that consumers may prefer DIY solutions for home monitoring with no monthly fee over a subscription-based service.
Looking ahead, such attitudes may ask questions of those who see smart home services moving effortlessly into residential bundle packages, for example.
The competitive landscape in the IoT is also widening. Samsung and others have significant ambitions in the smart home market, backed by acquisitions.
Many OTT players are also broadening their ecosystem engagement. In-car services are a case in point, with Spotify last year striking a deal with BMW shortly after announcing a tie-up with Uber that allows taxi customers to build playlists for their journeys.
All told, the pace of innovation in the IoT is quickening, and operators are tapping new sources of value creation as a result.
Incubator initiatives that can leverage start-up expertise are moving into focus, with Deutsche Telekom announcing a joint IoT accelerator with technology providers in Barcelona aimed at startups in Europe, Middle East and Africa.
Access to carrier and supplier corporate assets can help IoT specialists speed product development and globalise their propositions, and such moves are becoming a more prominent feature of a widening IoT ecosystem.
While the partnering landscape for M2M connectivity platforms is now mature, operator tie-ups with application platform providers are on the horizon and vendor choices here will reveal much about where carriers see the most fruitful IoT opportunities in the long-term.
On the networks side, the varying performance demands of different IoT use cases mean a range of supporting technologies are required, from various iterations of mobile to short-range wireless technologies such as Wi-Fi, Bluetooth and Zigbee.
MWC 2015 saw a more visible presence from low power wide area network providers, whose solutions are well suited to applications such as smart metering that have low bandwidth, low cost module and long battery life requirements.
In the run-up to MWC, SIGFOX announced a US$115 million round of funding while Vodafone became the first operator to agree to deploy Huawei’s LPWA technology.
It is likely that LPWA will feature more heavily in the technology mix in years to come, although which particular forms of the technology will predominate is as yet unclear.
5G proved a major talking point in Barcelona, and while commercial deployments are still some years off, many see the improved data throughput and reduced latency it promises supporting the evolution of IoT.
Driverless cars, connected healthcare and virtual reality services have all been cited as areas where 5G can act as a game-changer.
Despite plenty of recent news flow in terms of partnerships and technology choices, plenty of challenges still need to be addressed if the IoT is to deliver on its promises.
Standardisation is an area where more work needs to be done, although there have been some promising developments of late.
For one, operator members of global alliances – accounting for two-thirds of operators providing M2M – have committed to the GSMA Embedded SIM specification for remote provisioning.
Meanwhile, operators are helping to position Fiware as the defacto standard for IoT application development, while Thread – a wireless networking protocol that can securely connect over 250 devices in a wireless mesh network – is also gaining traction.
Even so, fears persist that the IoT market remains fragmented. Allied to this, the security credentials of emerging IoT ecosystems are firmly in the spotlight, particularly as start-ups play an increasingly prominent role in service innovation.
Looking ahead, operators should consider how best to repurpose existing technical security requirements for devices and cloud services within an IoT environment.
At the same time, revisiting existing organisational structures and engaging proactively with established players in other industries will prove vital to carriers’ long-term ambitions.