Just a few weeks ago Machina Research published the 2015 iteration of its M2M Communications Service Provider Benchmarking Report, looking at the strategies of 17 CSPs around the world in M2M/IoT. One of the most striking things about the findings was just how diverse the approach of the various operators has been. In a recent series of Research Notes we have been exploring some of these themes.
One of the first most obvious distinctions is between those operators that have chosen to take a more horizontal (i.e. focusing just on selling connectivity) approach, versus those who have chosen to be more vertical (i.e. developing specific products for particular verticals). No CSP is completely one thing or the other. Vodafone, for instance, has married a broad-based approach to supporting connectivity with lots of horizontal initiatives from licensing GDSP to pushing for Cellular IoT deployment, with a very focused vertical approach which included the bold move of acquiring Cobra Automotive. At the other end of the spectrum is Tele2, which would historically have been considered the most horizontal of CSPs, focusing on low cost reliable connectivity, but even it has some vertical leanings too. So for any CSP it is no so much a choice of either/or but a combination of the two. Ultimately there is no inherently right or wrong strategy with regard to pursuing a strategy that is more vertical or horizontally focused. The correct approach should seek to take advantage of whichever assets that CSP has, such as a large enterprise base or acquisitions in particular verticals. Judicious use of Application Enablement Platforms and/or Connectivity Support Platforms can help to enhance a horizontal approach.
Another issue we consider in quite some depth is the deployment of Low Power Wide Area (LPWA) network technologies such as Narrowband Cellular IoT, Sigfox and LoRa. Again, there is little consistency of approach by CSPs. Some are already embracing the opportunity, others are itching to get started but haven’t yet made their move, and others still are content to sit on the sidelines relying on existing cellular networks or waiting for standards to arise either within 3GPP or outside. On a side note, on the 17th September 3GPP a decision was made to standardise “Narrowband-IoT“, which may well prove a stimulus to those CSPs who have been a bit reticent to get involved up until now.
Approaches to platforms also differ somewhat between operators. We have always had the build vs buy dichotomy, with Vodafone developing its own GDSP while most other operators in the world opted to license Ericsson’s DCP or Jasper’s Control Center platforms. However, in the last 12 months this landscape has become more complex, with more diversity. Some CSPs have launched multiple platforms. Sometimes this has involved multiple ‘bought’ as in the case of Telenor which recently adopted Jasper to sit alongside DCP. In other cases it has involved a ‘built’ platform as a complement. A further complicating factor going forwards is the push by Vodafone to license the GDSP platform to other operators, effectively providing yet another platform option for CSPs.
Then, there is the question of Systems Integration capability. Some CSPs, including Deutsche Telekom and Telefonica have systems integration (SI) subsidiaries as part of their groups. Others, notably Vodafone and AT&T, do not have these capabilities. Machina Research has been vocal about how this is a valuable asset that can be exploited to generate additional revenue and margin in IoT. It is also a useful tool for getting in the door with enterprises at a more strategic level helping to developing the overarching enterprise IoT strategy and hold the hand of the enterprise as it develops its IoT thinking.
The bottom line is that CSPs will, and should, adopt strategies that are appropriate to them and accentuate their particular assets. In some cases scale or having a particular asset give a particular push in a direction.