Monetizing Digital Services: Where’s the Profit?

There are 4 main reasons why telcos are that NOT interested in IOT:

The growth of M2M is not as fast as expected. The idea of connecting the machines are not new. Most operators have started offering vehicle tracking and remote meter reading more than ten years ago. The M2M ARPU (Average revenue per user) is low. Probably 4-10 times lower than the normal 3G/4G broadband ARPU. M2M devices (with Sim cards) are difficult to manage. And most of these devices are left unattended. Operational costs can be high. Undecided how and where the telco can add the value. Will it be end-to-end (which is not their core expertise) or only provide connectivity.

When I wrote that points, it was in early 2015. But maybe things have changed now.

Three reasons some telcos start to enter the IOT business.

Price war – many telcos offered bundled packages and some with unlimited Data, SMS, and Calls IOT starts to grow and become more matured in certain market verticals – although the hype is still on-going, IOT starts to move from “Monitoring” to “Controlling” and “Optimisation” phases. In these phases, data analytics are key to trigger and make better decision making. The ecosystem is growing – many new players, startups are onboard. Bigger and incumbent players also seek the opportunity. Jump start their business by acquiring the smaller but innovative IOT companies.

But maybe the toughest part will be the business model. The question remained – should the telco provide an end-to-end solution or only part of them? Should they manage the customers or not?

Monetizing the IOT Data

As we moved our sensor data to the IOT Cloud, we can manipulate the data for useful applications. In many countries, the government has already started their smart cities projects. However, solely dependent on the government alone can be slow and at times faced with many bureaucratic challenges Thus, the need for a third-party such as IOT service providers to take the lead. These are business entities who deploy and manage sensors by themselves by keeping ownership. They earn by publishing the sensors and sensor data they own through sensor publishers.

We will be able to use the term “Sensing-as-a-Service” meaning that they can provide a free or chargeable service to any person who wishes to view or manipulate the data. It’s also possible to combine different multiple sensor data sources and create many innovative applications such as mixing between parking sensor data and public transport data, between environmental data and flood detection data, between river quality data and fertility of soil data.

An IOT service provider can provide such services, and thus, it will help to open up many other opportunities to generate new ways of monitoring and managing our valuable assets. A new business model can be created by way of monetising the new cloud service called “Sensing-as-a-Service.”

But then, IOT is not all about making new revenue streams. It will start with simple cost reduction and increase productivity. When they have plug the so-called leakages in the processes and resources, only then telcos will be able to help companies to:

Generate new revenue streams by developing new innovative products, Better customer experience by making the process more seamless and autonomous, Better retention by understanding the client’s behavior.

What we are seeing is only the tip of the iceberg. IOT offers a vast amount of opportunities that has not been discovered yet. Many companies are still struggling to find the best business model, how to monetize the data and convince the end-users.

Who will win the game? That’s a one billion dollar question and everyone’s guess at the moment.

About the Author

Dr. Mazlan Abbas is an IOT Evangelist, Thought Leader and CEO of REDtone IOT. He is ranked No. 20th Thought Leader in IOT by 2014 Onalytics Report – “The Internet of Things – Top 100 Thought Leaders”, ranked Top 10 in IoT Top 100 Influencers by Postscapes 2016/2017, ranked Top 100 in Smart Cities Top Experts by Agilience Authority Index May 2016. You can reach him on LinkedIn or Twitter. Check all his presentation slides HERE.

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