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A select group of Communications Services Providers (CSPs) and value added resellers (VARs) are positioning themselves to more aggressively target the global IoT opportunity rather than limit themselves to their ‘home’ markets. While they are adopting different approaches, the trend is clear: facilities-based footprint should be no barrier to ambitions. Over the years Machina Research has helped Communications Service Providers (CSPs) develop their IoT strategies. One element of that support is our annual Benchmarking Report, which compares strategies of CSPs and VARs in IoT. As well as profiling capabilities and examining best practice inevitably the preparation of this report, along with the other work we do with CSPs around the world, throws up some interesting trends. This year, one emerging trend was a new set of moves, often quite diversely executed, by a group of service providers to be much more aggressive in targeting the international opportunity. This article provides a brief overview of some of the initiatives, inevitably focused predominantly on the cellular connected element of IoT.

IoT (and ‘M2M’ before that) has always been a very international opportunity. Connected devices are generally no respecters of international borders. Historically IoT dealt with these requirements through roaming. In that respect IoT always has been something of an ‘over-the-top’ play with CSPs and VARs providing services typically over someone else’s network with little interaction with the network providers. The motivation for this was obvious. No single operator covers the globe, or even the majority of it, and so any multi-country deployment always required an approach to connectivity that embraced both the CSP’s own networks and use of those of third parties.
In the last few years a number of alliances have been introduced to enable multiple CSPs to collaborate to provide seamless connectivity across multiple territories. While still patchy, these initiatives, such as the Global M2M Association and the M2M World Alliance, were heralded as the great hope for international connectivity. While laudable, these alliances have so far failed to deliver the goods in terms of significant contracts. Most CSPs have recognised that a different approach is necessary.

The approaches taken have varied. One has seen those CSPs with a more sophisticated offering reaching out to smaller CSPs around the world to almost outsource the CSP IoT offering. The IoT offering in most countries around the world is relatively unsophisticated, and given the scarcity of resources at most tier 2 operators in emerging markets, that is unlikely to change much. The typical IoT ‘strategy’ for most smaller global operators is to sign up with Ericsson or Jasper and have a person or two with an M2M/IoT remit; which is never going to be sufficient to meet the opportunity. As such these players are crying out for help and support. We expect other variations on this type of model in the coming few years, with experienced CSPs providing products, support and technical capabilities to smaller local operators. So we expect the leading global CSPs such as Vodafone, AT&T, Telefonica and Deutsche Telekom to reach out around the world with their offerings. And this is happening already: Vodafone with its Partner Programme and licensing of GDSP, and AT&T licensing Digital Life are just the start. We can anticipate other CSPs looking to export in areas where they are strong, e.g. Telefonica in retail or smart cities. This thinking is not limited to CSPs. Value added resellers also have a great potential opportunity here. One example is provided by Aeris, which in July 2016 announced a joint venture with Softbank in Japan.

Another approach is characterised by Tele2, which is one of our CSPs to watch for the coming year. The strategy there is a horizontal one to focus on providing connectivity and partnering with third parties for the value-added element of the proposition. The corporate thinking is not to be limited to the facilities-based footprint; if anything quite the reverse. As such the strategy is moving away from being predicated on being a ‘Swedish’ (or anywhere else) operator. In fact much of what they are doing is reminiscent of VARs.
For many years we have been of the opinion that IoT business units within CSPs would be better served as independent units unwedded to a particular access technology or network. Gradually through some of these developments CSPs seem to be making this move.

The author of this blog is Matt Hatton, Founder & CEO, Machina Research