If you’re like most Americans, you probably upgrade your phone to a new one every two and a half years or so. Maybe it’s not quite as simple as flicking on a light switch, but telecommunications companies have fine-tuned this transaction into a fairly mundane ritual.
But that’s just your phone, circa 2017. What about a biotech company that needs to transfer the data of connected lab systems while securing sensitive or proprietary information? Or a car factory that needs to upgrade hundreds of sensor-equipped robots while minimizing costly downtime? Or a hospital that needs to protect patient data as it updates monitoring equipment?
Just as no one thinks about the electric company until the power goes out, early exuberance for the Internet of Things (IoT) — an umbrella term for devices that use sensors to connect and communicate with the Internet and each other — has focused more on new products and possibilities, and less on the inevitable tedium of managing, maintaining and replacing IoT-enabled devices when they break down at the end of their useful life span.
Simply put, the world is not prepared for the onslaught of complexity that will result from 50 billion powerful devices in homes, offices, factories and cities that will eventually break or suffer connectivity issues. Companies and industrial users, which are bringing IoT technology to everything from jet engines to mining equipment, have particularly complex needs.
However, telecommunication companies — with their long-standing ability to connect millions of devices to complex networks — are in a unique position to serve as active partners to commercial IoT customers, whom we expect to propel the IoT market to $470 billion. We see three big opportunities for telcos that know how to target and serve business customers:
Connectivity: Accustomed to navigating all manner of compliance and regulatory schemes, only telcos have the experience needed to keep a full-scale, global IoT industry tethered at the center—where billions of devices must interconnect with analytics engines and data centers. Telcos have an edge here, with the hard experience and capabilities needed to keep the Internet of Things connected and humming along, as well as the trust of most businesses, consumers and governments to do so.
Life cycle management: Meanwhile, established telcos know what it takes to manage the millions of phones, tablets and other devices on their networks — from initial activation to secure decommission. And by 2020, everything from home thermostats to factory controllers may need the same type of managed upgrade as a smartphone, amounting to a $28 billion market globally. That’s another huge opportunity for telecommunications companies to expand on something they’re already good at. No other player in the IoT ecosystem has more life cycle-management experience than telecommunication companies. Their chance to seize that advantage is now, before others fill the emerging need for device-management solutions.
Vertical platforms: Finally, telcos are in a position to create powerful platforms that companies could use to manage their devices or improve their data use and analysis. Telcos could operate the directory and registration of devices, while also taking care of maintenance, upgrades and decommissioning for consumer or industrial companies.
To position telcos for success, their leaders will need to think more broadly about where they should play and how they could win in this large IoT opportunity. Concentrating on the first two areas — connectivity and life cycle management — is a natural starting point that will aid in successful platform development down the line. But telecom executives should first assess their relative strengths and map them to the opportunities most closely aligned with their capabilities, without overextending themselves, lest they risk damaging their industry credibility and trust.