Japanese kit maker optimistic that this time round, operators won’t be relegated to the role of connectivity providers.

NEC this week emphasised the importance for telcos to avoid allowing over-the-top (OTT) service providers to elbow their way to the top of the value chain when it comes to the IoT.

In the traditional communications market, telcos have been relegated to connectivity providers, while OTTs make use of the underlying network infrastructure to generate revenues from voice, video, and messaging apps.

When it comes to the IoT, OTTs like Google and Amazon have developed cloud-based IoT platforms that communicate with, and collect and process data from, connected devices. That capability forms the basis for new IoT apps and services for enterprises and consumers alike. In this scenario, telcos again play the role of connectivity provider.

"Telcos must not allow another over-the-top in the IoT age," Shinya Kukita, chief engineer of NEC’s global business unit, told Total Telecom on Monday. "They don’t want to offer the free lunch anymore."

Fortunately for telcos, Kukita believes they have some significant advantages.

One is the emergence of network slicing, he said, which enables a single physical network to be partitioned into multiple virtual networks, each one tailored to address the differing requirements of various services and customers.

"There is a big reserve of new business waiting for the availability of this end-to-end network slice," Kukita said. "Once telcos have built this end-to-end network slice, they will see a large increase in businesses enabled for the first time by these new capabilities."

IoT services are also more network-oriented compared to traditional communications services, he said, which is an area where "operators have much better knowledge and experience" compared to OTTs.

Telcos also have advantages over OTTs in certain specific areas of the IoT, namely smart cities, or the social IoT, as Kukita calls it.

Building a smart city platform requires local, or at most, national knowledge and expertise, which lends itself more towards the operating model of telcos rather than more globally-focused OTTs.

Smart cities are "a very good match with the strengths and nature of the telecoms model," he argued.

Furthermore, telcos also have time on their side.

"By hearing of one IoT use case here, and another IoT use case there, telcos might feel uncomfortable – like they might be losing the opportunity," Kukita said. "But I say that the IoT is still in a very early stage. Those IoT use cases are often isolated or in closed ecosystems, or are dedicated to a single enterprise customer."

So, with all this in mind, will telcos avoid a repeat of letting OTTs enjoy another free lunch in the IoT market?

"Telcos should have learned their lesson," Kukita said, "We shall see."