How can the IoT move to a subscription-only model? October 2015

Back in September I explored the possibilities of subscription-based business models in the CSP environment and hinted at some very large future opportunities in the Internet of Things (IoT) space. So let’s look at that side of things a bit more closely to understand what I’m talking about.

Firstly, let’s try and understand what the IoT actually is. Definitions vary depending on who you ask, but one common denominator to all of them is that we are looking at connecting things. Not people, but things. The fact that these things may or may not be attached to an actual person is less important than why said person is generally not actively involved in the communication performed by that thing. Often quoted examples include various telemetry devices, wearable items and household appliances, like of course, your fridge.

More important than the devices themselves, however, are the ecosystems they participate in. In most instances, the IoT implies a vertically integrated ecosystem. Telemetry, logistics, public safety and medical are all areas where vertical integration remains the prevalent mode of operation, and often for a good reason. Wearables, on the other hand, are likely to follow a more traditional loosely coupled model, at least where a broad variety of consumer devices are concerned.

For a CSP wanting to paticipate, this means a couple of things; The CSP is unlikely to be the controlling party in most of the IoT ecosystems. Rather, CSPs will find roles in supporting the major players in each vertical with connectivity and other related services, which we will discuss later. Secondly, the business model for CSPs is unlikely to be based on metered access. Instead, the IoT ecosystem players purchase access in bulk, distributing it to the individual users according to their own business demands.

Much like in the case of OTT services for the consumer space, the IoT appears to be more of a game of collaboration than one of control

As a model, this is not terribly far removed from how corporates procure services from CSPs today. The main difference is that many, if not most, of the major IoT ecosystems are driven by international players offering international reach. Aggregation, therefore will again become a viable business.

In order to avoid a race to the bottom in access pricing and to stay relevant in this enviroment, a local CSP must therefore be able to offer services beyond just access, while acknowledging that in most cases their value-add must somehow center around their core competence in just that.

One thing that is going to be massively important is device management in all of its forms. Maintaining the tens of millions of unattended devices in their network is going to require some deep insight into what is happening in the network. Take security, for example.  Dark Reading recently wrote about one of the biggest problems facing unattended devices, that of keeping them up to date against security vulnerabilities. This massive pool of poorly maintained and infrequently updated internet-connected devices is a large benefit to botnet operators, offering them an almost unlimited supply of machines to use for their sinister purposes.

So, in combination with managing these traffic pools, CSPs are well placed to monitor the behaviour of connected devices for any anomalies hinting at misbehaviour – either a malfunction or a security compromise. The good news is that from a pure implementation point of view, the very same analytical capabilities that the CSPs are bringing in for their consumer portfolios are actually quite well suited to this type of behavioural analysis as well.

Much like in the case of OTT services for the consumer space, the IoT appears to be more of a game of collaboration than one of control. CSPs continue to hold a grip on access  – one of the most important assets in the connected ecosystem. The secret to creating value would appear to be in finding areas close to that core asset, instead of diversifying all over the place in search of ecosystems to control.  

Timo Ahomäki, CTO, Tecnotree

This article was originally published in TelecomsTech.

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