Obviously, the world’s biggest telcos are making a few quid; The top 100 together generated €1.33 trillion in re venues last year, according to our . But telecoms conferences tend to be pessimistic affairs that concentrate on thorny issues like the revenues being lost to disruptive players, such as the cheeky OTT scamps that have the audacity to put their services over operator networks.
Not the Great Telco Debate though, which took place in London this week and featured a number of big industry names, the majority of whom were overwhelmingly positive on the future of telecoms. If you believe Telefonica group CIO Phil Jordan, "we’ve got some challenges, but I don’t think we need to worry."
The remark about money came from Machina Research CEO Matt Hatton, who took part in a session designed to debate the relevance of telecoms operators – or lack thereof – in the Internet of Things (IoT) space.
Machina Research predicts that there will be 27 billion connected devices worldwide by 2024 that will bring in US$4.3 trillion in revenues. "The exact number doesn’t matter," Hatton said. The point is, there will be lots of devices generating "lots and lots of money."
Music to the ears of the operator community, surely.
Operators have a raft of assets that could enable them to play a significant role, such as big enterprise customer bases, network assets, channels to market and a degree of trust when it comes to security.
"History is not on their side," Hatton admitted, reminding the audience that the opportunity in mobile content and applications went to third parties rather than to the network operators. "[However], here there is no equivalent of the over-the-top players," he said. "By definition, it’s almost all over the top."
But while it was Hatton’s remit to put the case for the telcos, Graham Wilde, CEO of BWCS, took the opposite side in the debate.
"The future is against them as well," Wilde said, noting that only a small proportion of IoT connections will be made over public networks, with many using short-range wireless technologies like Bluetooth.
"It is IT, it’s not telecoms," Wilde said. "[The telcos are] just carriers of bandwidth and [are] not making very much money."
But network assets mean that "the telco is in there somewhere," Hatton said.
"[The question is] the degree to which there is some jam in that sandwich," he added, a metaphor he immediately regretted but bravely persisted with.
If the top of the sandwich is the providers of applications, the BMWs and the Nests of the world, and the bottom is the connectivity – the mobile data and the SIM card – "what’s the middle area?" Hatton asked.
The delegates in the room had just returned from the lunch break, but still, no obvious answers came to mind. We should probably have just said ‘jam’.
"There are a number of roles within that jam layer," Hatton persisted.
Telcos could take on security and professional services, he suggested. "Enterprises need a lot of handholding…[and] telcos touch them quite a lot," he said. Noone sniggered.
It’s a path being trodden by Vodafone, which is using the experience and relationships it has gained through serving "armies of large enterprises," to make its mark in IoT, according to Phil Skipper, head of M2M business development at the U.K. mobile operator.
A utility company converting to smart meters will be new to the IoT space and will only carry out a project like that once, whereas "we’ve done it loads of times," Skipper said. As such, "[we can be a] trusted outsource partner for these guys…We think we have a very strong position in the IoT."
Skipper went as far as to suggest that it can be the role of the telco to give real value to IoT applications.
A burglar alarm that alerts the customer via his smartphone is of no use to him if he is not in a position to do anything about the break-in, Skipper pointed out. But the telco has the opportunity to add a service layer to help resolve the problem.
For example, Vodafone is providing connected car services to Porsche. If someone tries to steal the car, "we validate the alarm, we call the police," Skipper said. The telco can also set about locating the car and send a breakdown truck, if necessary. "That’s the outcome that people want," he said.
He wasn’t the only one to talk up the role of the telco in this market.
Enterprises need a telco partner to make available its network, service delivery and customer relations assets, said Sanjay Khatri, director of product marketing, M2M, at Jasper.
Further, Jasper’s experience in the sector points to a revenue stream for the telcos willing to open up those assets.
Oft-cited market disruptor Uber uses the Jasper platform. "One third of their operating costs is telco expenses," Khatri pointed out.
At the close of the session the conference room voted on whether or not telecoms operators are relevant to IoT and the verdict was clear: the ayes have it.
And the telcos have IoT.
Let’s see what they can make of the opportunity.
