Three Ways CSPs Can Monetize IoT

Internet of everything

For communications service providers reeling from losses in their traditional lines of business, the Internet of Things provides tantalizing opportunities to reverse their fortunes. At first glance, you’d think monetizing IoT would be a slam-dunk for the comms industry. After all, they control the networks that IoT devices must traverse. But if CSPs are to reap millions in profits from billions of connected smart objects, charging for connectivity alone won’t cut it. They’ll have to provide much more than commoditized “dumb pipes” to monetize IoT. Here are three ways CSPs can move beyond connectivity to maximize recurring revenues from IoT.

IoT Connectivity Platforms

Make no mistake. CSPs will surely generate revenue from the IoT data they carry. But in order to make the most of them, they’ll need to speed adoption of IoT products and services in the first place and forge partnerships with the IoT device makers and application providers that can sustain IoT growth over the long haul.

With that in mind, most of the world’s largest CSPs already offer their own connectivity platforms for IoT. Telefónica and Vodafone in Europe, and AT&T, Verizon, Sprint and T-Mobile in the U.S. each offer platforms for IoT device development, deployment, and integration. In October 2016, Comcast became the latest to join the fray with the launch of machineQ, its IoT platform based on low cost, low power, wide area WiFi.

IoT platforms provide CSPs with several monetization opportunities. To begin with, they help create an install base of IoT devices that rely on their networks. For example, devices built with AT&T’s IoT Starter Kit are designed to make the company the default carrier once those devices are deployed.

In addition, CSPs can monetize their IoT platforms by charging usage-based fees for access to their APIs and API calls. They can also offer their platforms, and individual services within them, to product makers and application developers on a subscription or consumption basis. Examples include Verizon’s ThingSpace and Telefónica’s Thinking Things. For instance, with Thinking Things, customers can access a full range of IoT enablement services, including managed connectivity, device connectivity, and IoT business advisory services.

When it comes to IoT development, CSPs still have a lot of catching up to do to compete with the likes of Google, Amazon, and Apple. Having skin in the game with their IoT platforms won’t ensure their success, but it’s a vital first step.

IoT Data Storage and Analytics

IoT’s billions of connected smart sensors and devices will leave truly massive amounts of data in their wake. One type of data, customer usage, would seem ideal for monetization. But the revenue picture from customer data is murky at best as privacy protections continue to grow more restrictive.

Fortunately for CSPs, there are other ways to monetize IoT data. Take data storage, for instance. All of those zettabytes of IoT data have to be stored in someone’s cloud. This is a ripe opportunity for telcos and cable providers. And yet it’s one that most have been slow to seize.

Telefónica is a notable exception. Its Smart Business Control service provides not only IoT and big data storage but also application integration and real-time analytics. AT&T offers similar services. Thus far, however, most CSPs have yet to acquire strong cloud capabilities. They’d be wise to do so, and as soon as possible. The revenue potential from IoT data handling and analytics is simply too vast to pass up.

Industry-Specific IoT Solutions

A number of communications providers intend to grow revenue streams by providing connectivity solutions for key industries. One of the hottest markets at the moment is the connected car. Forward-looking CSPs are partnering with automakers on revolutionary improvements in voice commands and navigation, remote diagnostics, automated safety, personalization, vehicle tracking, autonomous driving, and streaming infotainment.With its deep pockets and global footprint, AT&T is currently the clear leader in the connected car space. With fifty percent market share, its solutions power the connected vehicle offerings of Audi, BMW, GM, Ford, Nissan, Subaru, Tesla, and Volvo. It even offers a development platform,

With its deep pockets and global footprint, AT&T is currently the clear leader in the connected car space. With fifty percent market share, its solutions power the connected vehicle offerings of Audi, BMW, GM, Ford, Nissan, Subaru, Tesla, and Volvo. It even offers a development platform, AT&T Drive, specifically for in-car infotainment services.

In a distant second is Verizon, which provides IoT solutions for new Mercedes-Benz and Volkswagen cars through its Verizon Telematics service. But the telco has also set its sights on a much larger potential customer base. Last year it introduced hum, a subscription service that can bring the benefits of wireless IoT connectivity to more than 150 million older cars already on the road. The service plugs into the OBDII diagnostic port built into every U.S. car since 1996 and it delivers a host of cloud-connected features, including advanced diagnostics, automated roadside assistance notification, GPS navigation and teen driver monitoring.

Savvy thinking like that shown by Verizon is what’s needed if CSPs are to win in the investment-heavy connected car market. The same is true across virtually all of the other IoT-enabled industries CSPs could potentially serve. Thus far, however, only a few communications providers have managed to establish robust IoT practices in areas such as smart homes, smart cities, healthcare, retail, and manufacturing. The laggards will need to up their game if they want to compete.

Navigating a highly connected landscape

CSPs may be the connectivity kings. But it remains to be seen whether they can master the business connections with device makers, OEMs, content providers, application developers, systems integrators and the thousands of other players it takes to generate lasting revenues from IoT. More pressing still, will they have the digital capabilities to manage the intricacies of customer acquisition, service delivery and revenue sharing in multi-partner IoT engagements? Will they be able to innovate at IoT speed? These are the obstacles CSPs will have to overcome in order to seize IoT monetization opportunities. Developing a solid digital foundation in their core operating and business systems is crucial to any revenue ambitions they wish to achieve with IoT.