The OneM2M joint standards groups
partition the Internet of Things (IoT) ecosystem by access domain, network domain
and application domain. Within these domains the service providers (SP), specifically
wireless SPs, are in the network domain and are responsible for the operational
and business system services of the devices (OSS/BSS), for example, SIM
provisioning, monitoring and management of the device over the “air,” routing
traffic from the device to backend systems and applications or to other devices
in the network, billing and recording of device activity based on bandwidth
usage or further analytics associated with the application deployed. In a legacy
machine to machine (M2M) scenario the value chain for the SP was clear; however,
with the new IoT ecosystem this and business models have changed. How can SPs
obtain the most value and retain reasonable financial margins within today’s
IoT ecosystem?
Traditional M2M Business Models
Established M2M business models,
which are limited in scope and structured, were quite clear and the revenue
share among the domains was evenly distributed and predictable. Leading SP network
operation field specialists acknowledge that the device provider, network provider
and the application provider each receive one-third of the revenue. A customer would request a defined service,
such as a fleet/asset tracking service, from the service provider who most
likely had a purpose-built solution. Depending on the quantity of assets that
needed to be tracked, the service provider would know precisely how many unintelligent
devices and SIMs to purchase from his device supplier, servers from the network
provider and software packages to order from the applications provider. The SP would
be responsible for provisioning its custom OSS/BSS systems and application
services and provide the management. The customer would pay for the devices and
software licenses upfront and either pay the SP per connection or by bandwidth usage.
The device and software vendors would require a maintenance fee, which the SP
would pass on to the customer. This is now an obsolete business model.
Present M2M/IoT Business Models
In the new M2M/IoT ecosystem SPs’
role and business models have changed. According to Network specialists, the
device vendor gets around 20 percent; the network provider gets 15 percent and
the application provider gets 65 percent. The new enhanced M2M devices have
advanced processors that make them more intelligent, aware and thus more
valuable. Because of enhanced hardware and firmware these devices can be
embedded with antennas that can speak directly to the internet via 3/4G
cellular or via WiFi routers. In most cases the radio access portion of the network
domain has not been upgraded (2G or 3G wireless) so the expense is less. SPs
use OSS/BSS platform partners because the OSS/BSS layer must be enhanced to
accommodate the intelligent access devices. Application layer services are
leveraged between application platform providers’ partnerships. These providers
employ their own device, storage, cloud suppliers and application designers. To
compete SPs have to engage in various business arrangements and complex
strategic alliances with equity interests and exclusivity clauses. The negative
effect is revenue fragmentation; however, providers can charge the customer
more and thus raise the overall average revenue per unit. In this fragmented
and crowded environment, how can the SPs continue to earn their full value?
Service Provider-Centric Use
Cases
To earn their full value in the
M2M/IoT ecosystem, SPs have to select their verticals and use cases very
carefully. What are the characteristics of a monetizable use case for SPs? Service
providers must adopt use cases that require a highly managed infrastructure and
within these verticals should be mission critical and/or life dependent as well
as wireless connectivity. These use cases will warrant more liability and
require more regulatory demands but will enhance the importance of the SP’s
network. The SP will maintain the value in the IoT ecosystem and customers will
pay premium for the enhanced quality service. The following are examples of
service provider-centric vertical use cases:
- Healthcare:
Remote heart/lung/brain monitoring for patients in transit; remote surgical services
(monitoring/surveillance)
- Transportation:
Fleet/Asset tracking services where environmental controls for cargo/livestock
need monitoring; telemetry (driverless vehicles); highly critical vehicle
diagnostic monitoring and proactive resolution services
- Manufacturing:
Airborne robotic devices; off-shore mobile device control and monitoring
services
- Utilities:
SCADA monitoring and proactive purification services for gas, water, soil, etc.
- Government:
Surveillance of mission-critical items; disaster recovery bots
- Telecommunications:
Banking processes and monitoring in remote areas
