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In a previous piece from September, I examined how subscription-based business models could shape Communications Service Providers (CSPs) and suggested that the Internet of Things (IoT) presents some of the largest future opportunities. Here, I’ll take a closer look at the IoT side to clarify those possibilities.
First, what exactly is the IoT? Definitions vary, but a consistent theme is that the IoT connects “things” rather than people. Whether a device is attached to an individual is less important than the fact that the person is not actively participating in the device’s communications. Common examples include telemetry sensors, wearable gadgets, and household appliances such as smart refrigerators.
More significant than individual devices are the ecosystems they form. In most cases, IoT implies vertically integrated ecosystems. Sectors like telemetry, logistics, public safety, and healthcare commonly use vertically integrated approaches, often for valid reasons related to regulation, reliability, and specialized workflows. Consumer wearables, by contrast, are more likely to follow a loosely coupled model where many different devices and services interoperate.
For CSPs that want to take part, this reality has two key implications. First, CSPs will rarely be the primary controlling party within most IoT ecosystems. Instead, they will support major industry players in each vertical by providing connectivity and related services. Second, CSP revenue models are unlikely to rely on metered access. Rather, IoT ecosystem operators typically buy connectivity in bulk and allocate it to individual end points according to their own commercial models.
Much like the relationship between telecom operators and over-the-top (OTT) services in consumer markets, the IoT seems to favor collaboration over control.
This procurement pattern resembles how corporations purchase services from CSPs today, but with an important twist: many leading IoT ecosystems are international and require global reach. That creates opportunities for aggregation and partnerships—roles that CSPs can play effectively.
To avoid a race to the bottom on connectivity pricing and maintain relevance, local CSPs must offer more than raw access. Their additional value should leverage their core competencies around connectivity, network operations, and related services, rather than trying to control entire ecosystems.
Device management will become critically important. Handling millions of often-unattended devices requires deep visibility into device state and network behavior. Security is a prime example: Dark Reading recently highlighted the challenge of keeping unattended devices patched and secure. A large population of poorly maintained, rarely updated internet-connected devices is an attractive target for botnets and other malicious actors.
CSPs are well positioned to manage and monitor these device fleets. By combining traffic management with behavioral analytics, they can detect anomalies that signal device malfunction or security compromise. Fortunately, many of the analytics platforms CSPs are already deploying for consumer services are well suited to this type of behavioral monitoring for IoT devices as well.
Again, the pattern mirrors the OTT story in consumer markets: IoT is largely a collaborative landscape. CSPs retain control of access—one of the most valuable assets in a connected ecosystem. The path to creating lasting value lies in building services adjacent to that core asset—device management, security monitoring, aggregation, and international connectivity—rather than attempting to diversify into unrelated areas in search of control.
Read more: By subscription only: The future of traditional telecoms services?