ABI Research: Carrier Path To Higher-Value Offerings Goes Through Standards-Based Solutions
June 13 2018 - 3:30AM
While carriers are keen to play a leading role in the Internet of
Things (IoT) and smart cities markets, they may be bypassed by
other market players if they do not act. And while a new
white paper from ABI Research urges carriers to adopt new
strategies to establish their position within the IoT and remain
competitive, one conclusion is highlighted: in order to deliver
higher-value strategies beyond simple connectivity, the adoption of
industry-wide standards is a must.
According to the white paper: “The deployment of
open standards-based platforms, solutions, and approaches is the
only way to unlock more value faster from IoT markets and, at the
same time, allows adopting new business models, opening up new
roles for carriers, such as aggregators and orchestrators of IoT
ecosystems and market places.”
The report, ‘Role of carriers in smart cities
and IoT,’ which was commissioned by InterDigital on behalf of its
Smart Cities-focused business, ChordantÔ, outlines the core
strategies for carriers to successfully maximize the opportunities
presented by the IoT and smart cities. For over a decade, carriers
have been exploring the opportunities that exist for them in these
markets and the role they can play beyond connectivity services.
But there are questions around the carriers’ expertise,
capabilities and operational flexibility.
One of the key decisions for carriers is whether
to develop IoT and smart cities platform capabilities in-house, or
whether to source them from specialized vendors. According to ABI
Research, there are four strategies that carriers can adopt:
- Build: Developing smart cities and/or IoT
platform capabilities in-house allows carriers to customize
technology and optimize integration, but requires high development
costs (OPEX/CAPEX) as well as expertise.
- Buy or, more specifically, source from
partners: Carriers opting to source IoT technology face a
bewildering array of choices from hundreds of IoT platforms. While
this gives carriers flexibility and doesn’t require upfront
investment, selection is complex, and may require revenue sharing
with chosen partners.
- Vertical integration: Carriers can either
offer end-to-end services, or take on the role as a technology
service provider, contributing to IoT or smart city services. While
this gives carriers end-to-end control and allows them to capture a
larger value share, it is complex, involves a legacy strategy, and
time to market is much longer.
- Open, standards-based platforms and
marketplaces: Tapping into wider technology and end market
ecosystems, and adopting open source approaches and smart city
standards, would allow carriers to take on aggregator and
orchestrator roles. While this is a forward-looking vision that
supports interoperability and flexibility and is vendor agnostic,
it requires IP protection and involves increased competition.
There are a number of factors that will
influence the strategies that carriers decide to adopt. These
include international footprint, scale, operational flexibility,
time to market, resources, as well as market conditions.
“The advent of 5G makes the IoT and smart cities
a reality – which means carriers need to re-think their approach
beyond just providing connectivity services,” said Jim Nolan,
Executive Vice President, Products, InterDigital. “Carriers are in
a good position to maximize the opportunities presented by the IoT
– they are trusted brands who play a core central role as
connectivity enablers. But to remain relevant, they need to do
more. And choosing whether to make or buy their technology, or
taking on an ‘UnTelco’ role and providing end-to-end vertical
services, will play a key role in their future success.”
The ABI Research report concludes that
successful carriers will take one of the following roles:
- Smart pipe providers: While the core business
of most carriers will remain in building, maintaining and
commercializing cellular connectivity, as 5G becomes mainstream,
commoditizing basic connectivity services towards a range of
premium connectivity services with varying degress of quality of
service to power IoT and smart cities applications will improve
margins and allow carriers to work closer together with other
players in the value chain.
- Aggregators: For more ambitious larger
carriers, an ‘end-game’ role as aggregator and orchestrator of open
IoT and smart cities ecosystems is a long-term opportunity for
carriers to capitalize on their central role of enhanced
connectivity services while leveraging their position as a neutral
and trusted partner.
There is a big question as to whether there is a
future for carriers beyond connectivity, and whether they can go
the ‘UnTelco’ role alone. And while some carriers are pursuing
vertical integration strategies, these companies should be seen as
exceptions, and an open-ended, standards-based approach will be
much more relevant. Ultimately, in the future, no single brand or
supplier will be able to control and manage the end-to-end value
and supply chain in IoT and smart cities environment.
“The future role of carriers in the
transformative IoT and smart cities markets remains
controversial. While carriers have long aspired to moving up the
value chain, they are now facing hard choices with the arrival of
5G which will fundamentally disrupt connectivity paradigms across
verticals,” said Dominique Bonte, Vice Presidents Verticals, ABI
Research. “Mobile operators will need to adapt fast to capture
value in an increasingly complex IoT ecosystem dominated by new
collaborative business models ”
The ABI Research report, ‘Role of carriers in
smart cities and IoT’, is available to download here.
About
InterDigital®InterDigital develops mobile
technologies that are at the core of devices, networks, and
services worldwide. We solve many of the industry's most critical
and complex technical challenges, inventing solutions for more
efficient broadband networks and a richer multimedia experience
years ahead of market deployment. InterDigital has licenses and
strategic relationships with many of the world's leading wireless
companies. Founded in 1972, InterDigital is listed on NASDAQ and is
included in the S&P MidCap 400® index.
InterDigital is a registered trademark of
InterDigital, Inc. Chordant is a trademark of InterDigital.
For more information, visit:
www.interdigital.com.
About Chordant™
Chordant, an InterDigital business, is part of a global company
passionate about innovation and a standards-based approach that
stimulates thriving global ecosystems. Solutions powered by the
Chordant platform address the fundamental challenges in Smart City
deployments. Like a perfect chord of musical notes, the Chordant
platform brings harmony to diverse devices, data and services. We
have created one of the largest Smart City deployments, integrating
hundreds of transport data sources into a transport data
marketplace. Our Smart City solutions have also been recognized by
leading analyst firms and organizations. For more information,
visit: www.chordant.io.
InterDigital
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