The promise of IoT has heralded a bold new era where major technology corporations are no longer afraid to increase the market size forecasts with increments of 10s of billions. But what does that really mean when they talk about billions of connected devices, what will the majority of those devices look like and most importantly how can operators monetize this phenomenal growth?
Today the mind-set of most operators is based on “terminals”. Fundamentally this terminology is directly translated into where the operators responsibility “terminated”. In mobile these are mobile terminals which can be a handset, a hotspot, for wherever the SIM card is found. For wireline operators this typically refers to the gateway or modem (DOCSIS, xDSL, ONT, etc.). This thinking has been based on years of modelling of OPEX costs vs. CAPEX costs, where a simple phone call for troubleshooting can cost an operator in the west at least $25 a pop. Therefore, there is a strong incentive to draw the line at this control point.
However on the flip side operators are also sitting on a huge infrastructure asset which is almost impossible for start-ups to recreate which is the home installers and the very same support infrastructure which maintains the network. How many non-tech savvy users could install a Nest Thermostat on their own? I consider myself tech savvy, early adopter, but I chose to pay an installer to come and install my Nest! Why you ask? Well setting up WiFi on devices, pairing Bluetooth no problem, but the instruction manual talking about 4 wire and 2 wire connections to the furnace was more than enough to scare me off – for fear the wrong connection could turn my furnace into overdrive.
How many other devices do we have in the home that could have a similar concerns for consumers? How can operators leverage their expertise to monetize this infrastructure?
The Digital Home market today is on the verge of a sea change in the role which operators play with the consumer. Although operators are aware of and know how to compete with the traditional operator competitors, the real threat to operators is coming from the flanking competitors who are leveraging sexy OTT consumer electronic devices with snazzy UIs to capture the eyeballs and loyalty of end-consumers e.g. Nest.
This shift is identical to how the advent of Smartphones disrupted the mobile carrier landscape by shifting loyalty from the carrier to the handset platform vendor, leaving the carriers with minimal room for differentiation and little access to incremental revenues generated by smartphone services such as apps and content.
The number of connected devices which dominate the Digital Home landscape are growing by the day and evolving rapidly with several players offering connected thermostats, CO2 detectors, front door locks, remote cameras, appliances, sensors, door openers, motion detectors, etc. As these devices become offered in retail as over the top services, the platform providers behind these services are feverishly working to increase the number of devices/sensors offered. Although their offering may not yet still not compare to the aggregation of these services by an operator, consumers are increasingly becoming interested in using these devices for the lack of monthly recurring revenues, which could be monetized through alternate means such as advertising.
The expectation from end users has increased dramatically over the years, not only do they demand ease of use, trouble-free experience, but also they have come to expect many services free of charge. As a consequence operators are scrambling solutions to deploy devices such as Gateways and sensors plus IoT devices in the home that can not only be deployed very quickly, but also be produced and evolved cost effectively, leveraging a large dynamic community of developers. History has shown that disruptive business models around advertising can have a profound impact on established service revenues.
At the 2014 cable show in Los Angeles, we shared the story of how small, low-cost, microcontrollers based on ARM Cortex-M were used as the building blocks of the Internet of Things. Combined with highly disruptive and ultra-accessible developer tools for Cortex-M based boards such as ARM mbed – a new breed of IoT developers could take a concept and bring that to reality in a matter of hours with nothing more than a board & a web browser. We also talked about the opportunity which MSOs have in taking the lead in IoT standards and enabling a broad ecosystem of interoperate IoT devices both inside the home and outside the home, leveraging industry standard protocols for constrained IoT devices such as CoAP, eDTLS, and 6loWPAN.
We demonstrated an example of the potential of combining a modern IoT development platform together with such standards. The demo, created by Carey Sonsino at CableLabs, was built using an EBIF application on a Set-Top Box which connected via the cloud using ARM Sensinode to an ARM Cortex-M3 mbed board based on an NXP LPC1768 SoC. The application illustrated how IoT could enhance an end users VOD movie viewing experience by controlling the lights based on VOD events, for example – starting a movie would cause lights to gradually dim and turn off, pausing a movie would make lights gradually dim on to about 50% brightness, stopping the movie would cause the rights to turn on at full brightness giving a “movie theater” like effect.
Also on the CableLabs booth in the CableNET area we demonstrated how CoAP standards could be leveraged for IoT applications outside the home to leverage big data to send little data. The demo was as follows, CableLabs had developed a proof of concept application which took public data feeds on earthquakes and fed that into a iPad application which could track where an earthquake was occurring. The concept which ARM showed was that this data could then in turn be used to automatically alert emergency services. This was demonstrated by a demo created by samgrove using a Lego Ambulance and Police Station connected to the cloud via ARM mbed microcontrollers (Same ones based on NXP LPC1768) where alerts could be sent from a cloud server to automatically turn on the lights and “siren” on an ambulance and station.
The surprising disclosure for both of these demos is that they were literally developed in a matter of days. This emphasizes the massive potential for disruption set to occur in this market. Operators, by owning the gateway at the end of a broadband pipe, have a golden opportunity to play a pivotal role in defining leading the industry on defining the radios and standards for IoT. Building these into the WAN gateway provides the potential for hardware cost savings vs. an external gateway and the opportunity monetize services on top of this in the future. One thing is for certain hardware is back and is the new “app”.