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Harnessing the Power of IoT

The growing ubiquity of the Internet of Things (IoT) is fueling strong interest from telecommunications companies (telcos) to look at data analytics as a source of new revenue streams. This topic was a key focus at the CommunicAsia conference, held 31 May-3 June in Singapore.

Apart from maximising revenues from developed markets, connecting the unconnected billions around the world – particularly those in Asia – was also high on the agenda, as well as the question of how to deliver greater bandwidth for data-hungry users.

"Digital transformation requires a change to business models,” said Gerd Leonhard, Chief Executive of The Futures Agency, a Switzerland-based technology think-tank.

Value-added Services

“In the case of the auto industry, for instance, its future will not be about selling more cars, largely because we will be sharing more cars. Instead of selling cars, the industry will be selling mobility. In the same way, telcos can no longer solely sell traditional telecoms services. While the provision of networks and developing infrastructure was once a good business model, the future will be about adding value via services, experiences and platforms."

Mr Leonhard warned that traditional broadcast media will also need to seek new business models to avoid becoming irrelevant.

"TV is a societal event and will remain a key platform for delivering live sports and political events,” he said. “Thanks to increasingly ubiquitous high-speed, low-cost Internet, however, everything else can be delivered by other players."

Gary McLaren, Chief Technology Officer of the Hong Kong Broadband Network, echoed similar sentiments: "Unless broadcast TV changes its business model, it will die off within 10 years."

Growth Leader

Providing secure networks – as well as the required services and solutions – for the widely-predicted digital transformation of the IoT is another development that telcos see themselves driving. According to Darren Hubert, Chief Architect for Microsoft Services APAC, there will be 50 billion connected devices by 2020, representing a global market worth at least US$1.7 trillion. Significantly, he also sees Asia leading this growth. Generally, he sees IoT being driven by four key concerns: What happened? Why did it happen? What will happen? What should I do?

“The real promise of IoT is in tying that data together with insight and intelligent action.”

"While capturing data is cool, the real promise of IoT is in tying that data together with insight and intelligent action,” said Mr Hubert. “The cloud stores and processes data, the data provides insight, with that insight ultimately leading to intelligent action. IoT is really all about large, complex data, which in turn enables new types of insight and new business opportunities."

Mr Hubert believes that the IoT is on the verge of becoming truly mass market. His advice to companies is clear: "Start by connecting devices you already have. Use services and the cloud. Combine the data you already have rather than store it in silos. Then start generating new insights, which will ultimately create new business value."

Actionable Analysis

France: one of the 102 territories attending
France: one of the 102 territories attending
Broadcast: an industry facing change
Broadcast: an industry facing change

Putting perspective on how big Big Data is influencing business was Ong Geok Chwee, Vice-President of Emerging Businesses for Starhub, a Singapore-based multi-platform communications company. "Every day, we generate enough data to fill 10 million Blu-Ray disks. How can we make sense of all of this data? For us, as a traditional telco and cable services provider, it's no longer about connectivity. It's about providing user-directed content, services and solutions.

"One such service is outcome-driven analytics. We now provide actionable analysis to a number of clients. In the case of retail malls, for instance, we help them to better understand the needs, behaviour and traits of their customers."

Monetising IoT

According to Sue Bryant, Director of South Pacific Solutions Marketing for the Chinese telcom technology giant Huawei, several factors are driving IoT growth, with the most significant being falling device costs, widening connectivity and improving industry standards. "If telcos do not have a strategy, then someone else will come in and monetise IoT, using the networks built by the telcos. This will be very similar to the way that certain services providers – notably Netflix and Spotify – have done with existing digital networks."

Ms Bryant cited one company already achieving some success in this sector. "Telefonica, the Spanish telecoms operator, rolled out smart home solutions four years ago. It now has more than a million domestic customers in South America. This is the kind of mass-market approach telcos should adopt, one that builds on their existing strengths."

Value Chain

In the smart car sector, she highlighted the success of Zain, a Kuwaiti telecoms group, which has already developed connected car technology, a move that anticipates a surge in demand when driverless cars become mainstream. She also cited another Chinese telecoms giant, Unicom, which is a pioneer in the smart car parking solutions sector.

"Telcos need to ask where they fit in the value chain. They also need to consider the exact nature of their revenue model and identify partners who will help them deliver their solutions.”

Despite the excitement associated with developments in this sector, IoT and data analytics are only relevant to the 50 per cent of the world's population that is currently digitally enfranchised. For many at the show, connecting the other half remained a challenge and priority.

"The number of the unconnected will drop by half to 1.5 billion over the next 20 to 25 years,” said Ulf Ewaldsson, Group Chief Technology Officer for the Swedish telecoms technology company Ericsson. “A key part of this change will be the increased availability of more affordable devices. We believe that when connected devices are available for US$10, we will be able to connect another one billion people."

Private-public Partnership

IoT
The growing ubiquity of IoT is fueling strong interest from telecommunications companies to look at data analytics as a source of new revenue streams

One country seeking to bring itself into the fully-connected age is Australia. "In most countries across the world, the cities have excellent and competitively priced connectivity,” said Bill Morrow, Chief Executive of NBN, the Melbourne-based company tasked with designing, building and operating the country's National Broadband Network. “The rural areas, however, remain poorly connected, especially in a country such as Australia, where the distances between rural communities can be immense.

"Private enterprise cannot tackle this particular issue. The solution – as has been shown in places like Singapore – is a private-public partnership. In line with this model, we hope to connect eight million rural homes by 2020, providing them with speeds of at least 25mbps."

Gustav Grundin, Associate Principal with the New York office of McKinsey & Company, sees a similar challenge facing Asia's smaller cities. "It's costly to deliver connectivity to the low-density, low-rise cities that are common across Asia,” said Mr Grundin. “The way forward is to maximise frequency spectrum allocation, using what's available more efficiently.

"The higher spectrums – 3G, LTE and the like – are much more efficient and cost-effective when it comes to data transmission, with some spectrum currently allocated to radio arguably better utilised by such services.

"Overall, it's comparable to building a better highway and ensuring that highway is well-used. The opportunity for doing so is greatest in Asia, with its huge, young, increasingly affluent and tech-savvy population all keen to move to the cities."

Craig Thomas, Senior Director, International Marketing for Calix, a Californian telecoms equipment manufacturer, however, sees another way forward for telcos. "We have been great at competing on price and speed, but that model is not sustainable,” said Mr Thomas. “In truth, we've overdone it. We have provided fibre to the home, and high speed Wi-Fi, but the bandwidth is too high for many older devices to make proper use of. As a result, customers complain that they are not getting the speeds they expect. In fact, our data shows that 63 per cent of customer complaints are about their home Wi-Fi.

"We need to work out how to meet their requirement in a more effective manner. Telcos also need to identify profitable niches – such as gamers – and sell properly tailored packages."

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Content provided by Hong Kong Trade Development Council
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