The document discusses the challenges and opportunities faced by Communication Service Providers (CSPs) in the evolving digital landscape, particularly due to the impact of Over-The-Top (OTT) players and the rise of the Internet of Things (IoT). As traditional telecom growth stagnates, CSPs are exploring partnerships and new revenue streams in non-traditional markets, with predictions indicating significant growth in IoT devices and applications. The document also highlights the necessity for CSPs to adapt their strategies and invest in technology to capture value in the rapidly changing IoT ecosystem.

1. In Search of New Streams Parviz Iskhakov
March, 2016
The Digital Telecom Internet of Things

2. SMS and OTT Messages
• Growth in traditional telecom in developed and
developing markets is stagnant with declining ARPU and
prices.
• The OTT players are long affecting CSPs by substituting
voice and messaging services, placing significant strain on
the CSP data networks and grabbing consumer mind
share, and thus weakening the CSPs’ relationship with
their user communities.
• Thus, CSPs find themselves under increasing pressure, they
not only want to protect their core business and their
relationship with consumers, but have to seek new revenue
opportunities in nontraditional markets.
• CSPs are beginning to partner with alternative partner types
to fill gaps in their service portfolios and accelerate the time
to market of new services. In contrast to aggressive,
competitive and alienating tactics to address OTT vendor
threats, CSPs can benefit substantially from pursuing these
more collaborative approaches.

3. New Digital Domains CSPs are Focusing on
• Overall, Berg Insight predicted that the number
of cellular IoT devices will grow at a CAGR of 20.1
per cent from 2015 to reach 239.7 million units in
2020.
• Separate research by IDATE predicted the
broader number of IoT objects will grow from 42
billion in 2015 to 155 billion in 2015, the
equivalent to annual growth of 14 per cent.
• The research company said objects currently
account for 80 per cent of the overall IoT market,
due to widespread adoption by a number of
sectors and the very low cost of tags.
• Connected information devices is the second-
largest sector in IDATE's analysis, accounting for
13 per cent of the market. The company
predicted this sector would enjoy growth of 13
per cent each year through 2025.
The figure is approximate and is
based on Gartner’s research
- Market trends: Eight
innovative CSPs embark on
digital service
transformation
- CSPs’ market trends and
digital transformation
strategy

4. IoT is at the Peak of the Gartner’s Hype
Cycle 2 years in a row
Other
emerging
technologies
related to IoT
• Internet of Things
Authentication
• Digital Security
• Licensing and Entitlement
Management
• Energy Harvesting
• IoT-Enabled ERP
• IoT Business Solutions
• Things as Customers
• Wearable User Interface in
Logistics
• Operational Intelligence
Platforms
• Connected Home
• IoT Platform
• Real-Time Analytics
• Embedded Software and Systems Security
• Wide-Area IoT Networks
• Event Stream Processing
• IoT Architecture
• Quantified Self
• IT/OT Integration
• iBeacons and Bluetooth Beacons
• Internet of Things
• Predictive Analytics
• Smart Transportation
• Wearables
• Low-Cost Development Boards
• Home Energy Management/Consumer Energy Management
• IT/OT Alignment
IoT Technologies
On the Rise
IoT Technologies
At the Peak
Peaking
On the rise

5. 5-10 лет 5-10 лет 5-10 лет
Personified Application
Today We are in the First Wave of
Development of Internet of Things
Internet of
Everything
Personified
Application
Industrial
Application
We are
somewhere
here as of
2016
• Industry 4.0 or smart manufacturing is the
fourth industrial revolution brought by the
Industrial Internet of Things, IIoT. It is the newest
tectonic change since the progress of the first
industrial revolution in the 18th century, the
changes brought by the assembly line in the
19th century, and the efficiencies brought by
electronics and automation in the 20th century.
• Industry 4.0 symbolizes a turnaround from intra-
plant to inter-plant as a result of businesses
becoming more intelligent and connected.
• Data will be able to be shared throughout the
enterprise from all sensors available, than it is
dispatched to analytic platforms, processed and
gives predictive analytics as the output. This is
sent to actuators or wearables of workers to
make use of that information with the potential
to streamline processes, optimize supply and
demand, speed time to market of new products,
reduce inventories, and more.
Industrial Internet of Thing

6. People
Computers
Controllers
Identifiable objects
Virtual digital objects
• Future growth of devices
connected to the network is
basically based on “things”
• And number of “things” at
people’s disposal has already
begun exploding
Number of Things has Long Outgrown
Number of People
Source: Ericsson

7. IoT vs M2M in Telecommunication.
Definition
• Machine-to-Machine (M2M) technology connects machines, devices and appliances wirelessly to
each other and the Internet, turning them into intelligent assets.
• The Internet of Things (IoT) has almost the same idea behind, a system of interrelated computing
devices, mechanical and digital machines, objects, animals or people that are provided with
unique identifiers (an IP Address) and the ability to transfer data over a network.
• Remote device access is a basic differentiator of IoT and M2M. If in M2M it is typically point-to-
point communications using embedded hardware modules and either cellular or wired networks,
in IoT solutions “things” rely on IP-based networks to interface device data to a cloud or
middleware platform.
• Integration of device and sensor data with big data, analytics and other enterprise applications is
a core concept behind the emerging Internet of Things.
Source: GSMA Association, as of 2014
Internet of
Things
M2M
• M2M is an integral part of
the Internet of Things.
• Broadly requires IP-based
networks to interface device
data to a cloud or middleware
platform in order to integrate
sensor data with big data,
analytics and other enterprise
applications
Launched M2M Services Across CSPs Around the Globe

8. CSP’s foothold in Internet of Things is
growing gradually
Internet of
Things
M2M
• Fixed Network
• Short-range
• Powerline
• Satellite
23 billion
10 billion
• LPWA
• Cellular
1.4 billion
1 billion
Percentage of
Total M2M
Connections*
Internet of Things connections,
average of industry estimates*
Cellular M2MLPWA Non-cellular M2M
Cellular M2M
LPWA
Non-cellular M2M
Connected devices
• Share of cellular is moderate due to power consumption and cost
efficiency issues
• Development of LPWA in networks and roll-out of Narrow Band IoT
in LTE will impact CSP’s foothold dramatically till 2020
• LPWA is characterized with low data transmission that consumes
less data, provides good coverage and has low unit sensor cost
Source: GSMA Intelligence

9. Current Use Split of Cellular Standards in
IoT
Source: Ericsson Mobility Report, June 2014
• Even though 3G is becoming the most utilized standard in the world with growing
share of LTE networks, 2G networks are the most used for M2M
• Research company Berg Insight recently noted that the bulk of today's cellular
IoT deployments utilise GPRS (2G) technology due to the cost advantages the
technology currently offers. The company forecast that 3G will be largely
overlooked in future developments, with LTE set to become the dominant
technology by 2019.
Radio capability
distribution of M2M
devices in measured
mobile networks
World
population
coverage by
technology

10. IoT Scope of Interconnection Technologies
Personal Area
Network
PAN, 802.15
Local Area
Network
LAN, 802.11
Metropolitan
Area Network
MAN, 802.16
Wide Area
Network
WAN, 802.20
Internetworks
Communication

11. IoT. Current Challenges
• GPRS is the leading technology in cellular Internet of Things (IoT) due to the cost advantages. However LTE set to become the leading
technology for cellular IoT devices in 2019 thanks to LTE Cat-0 and the upcoming LTE-M standard.
• 3GPP's recent move to define a new Narrowband radio technology for IoT (NB-IoT) along with Extended Coverage GSM (EC-GSM) will
significantly change the IoT economics adding better coverage, stable connection and devices power efficiency.
• Gartner predicts that low-power short-range networks will dominate wireless IoT connectivity through 2025, far outnumbering connections
using wide-area IoT networks.
• Traditional cellular networks don’t deliver a proper combination of technical features and operational cost for those IoT applications that
need wide-area coverage combined with relatively low bandwidth, good battery life, low hardware and operating cost, and high connection
density.
• By 2020, addressing compromises in IoT security will have increased security costs to 20% of annual security budgets, from less than one
percent in 2015, Gartner says.
• The ubiquitous nature of the IoT and associated devices will lead to the emergence of new security threats and attacks. Huawei
• By 2018, 66% of networks will have an IoT security breach. By 2020, 10% of all attacks will target IoT systems. IDC
• 77 percent of U.S. IT and cybersecurity professionals say manufacturers are not implementing sufficient security in IoT devices. More than
20 percent of enterprises will have digital security services devoted to protecting business initiatives using devices and services in IoT by
year-end 2017.
• IoT Device Management – The challenges of enabling technologies that are context, location, and state-aware while at the same time
consistent with data and knowledge taxonomies is an area Gartner believes will see significant innovation in the next few years.
• IoT Device Management will most likely break the boundaries of traditional data management and create data structures capable of
learning and flexing to unique inbound data requirements over time.
Communication
standards
Security
Things and Services
Management

12. Communication Service Providers’ Current
IoT Products
Smart car navigation
systems
Emergency and
breakdown call
services
In-car infotainment
Engine monitoring
Lost and stolen
vehicle tracking
Insurance telematics
services
Smart metering
Smart grid
Remote monitoring and
diagnostics
Patient data record
management
Medical imaging services
Comm&collab for medical staff
Asset, staff and fleet
management
In-patient services, bedside
care
Invoicing and fraud
management
Health and wellness apps
Asset management
Fleet management and
routing
Intelligent transport
systems
Driver monitoring
Vehicle diagnostics
Insurance reporting for
businesses
Personal navigation
devices
E-readers
Home appliances
Digital cameras
Photo frames
Equipment
supervision
Process
automation
Remote
updates and
maintenance
Connected ATMs and
vending machines
Digital kiosks
Connected POS devices
Digital signage

13. The Overall Value of CSPs in IoT Value
Split
SOURCE: Industry interviews; McKinsey Global Institute analysis The Internet Of
Things: Mapping The Value Beyond The Hype
• Today’s CSP networks are not well equipped to handle the demands of
the Internet of Things. IoT applications require not only a great deal of
data capacity, but also need it to be less expensive than current mobile
voice or data service.
• So to capture a disproportionate share of IoT value, telecom providers
have to go beyond their horizontal platform roots by investing in other
levels of technology and developing vertical knowledge to create
solutions.
• There would be a choice for many CSPs to put into play a specific vertical
niche strategy or to provide a broad horizontal platform to expand market
share and to partake in further value distribution
• The second will require huge investment and out-of-the-comfort-zone
activities never taken by majority of CSPs
• Simply providing communications
services is likely to become a
commodity business promising very
limited revenue streams

14. IntegratorAggregatorConnectivity
IoT Value Chain and Possible CSPs
Business Models in the Market
Data Acquisition Data Transport Service Enablement
Hardware Connectivity Service Production
Components Smart Objects
Network
Operator
Service
Enabler
Service
Integrator
Service
Provider
Distribution
• Embedded chips
• Modules Sensors
and cameras
• Routers
• Antennas
• Smart Bins
• Meters
• ATM/POS
• Cameras and
Security
• Spectrum allocation
• Network infrastructure
• Connectivity
• QoS
• Billing
• Customer care
• Software
• Infrastructure
• Consulting
• Solution design
• Wireless
network design
• Interfaces
• Enterprise system
integration
• Application
Development
• Security
• Data management
• Hardware
• Installation
• Analytics
• App management
• Access control
• Data management
• Device management
• QoS
• Packaging
• Service provisioning
• Application hosting
• Product distribution
• Reselling
• Supply chain and
fulfilment
Product Sale
Service
Provider/Reseller
Traditional CSP Role CSP Role – Current Trend CSP Role in Digital Era
Build
Implementation
Models
Build
Buy
Build
Buy
Partner

15. The IoT Will Be Primarily an Enterprise
Market
• In 2018, the IoT installed base will be split 70% in the
enterprise and 30% in the consumer market, but
enterprises will account for 90% of the spending (IDC).
• Business-to-business applications will probably capture
more value—nearly 70 percent of it—than consumer
uses.
• Although consumer applications, such as fitness
monitors and self-driving cars, attract the most
attention and can create significant value, too (MGI).
90%
B2B Spendings
70%
B2B Market

16. One Stop Shop,
Ultimate CSPs Enterprise Integration Approach
Hardware
Marketplace
/ Apps
Architecture
IoT
Security
Customization
Bundling and Solutionizing
Integration
services
Consulting

17. IoT cases in Telecommunication, DT
The Port of Hamburg has been one of the largest logistics
players taking advantage of the Internet of Things. As the
2nd largest port in Europe, the port handles 140 million tons
of goods in 9 million containers each year. Up to 40,000
trucks arrive daily and it’s the port authority’s job to ensure
that truck and ship movement is as smooth as possible. With
traffic expected to double by 2030, the port needs to handle
increasing freight each day with a limited amount of space,
as it’s located right in the middle of Hamburg.
With space limited, the only way to grow was increased
efficiency through technology. The port authority worked
with SAP and Deutsche Telekom on a joint project called
Smart Port Logistics to connect the port’s varied
stakeholders through a mobile business cloud. Every
component in the harbor – ships, trucks, people, bridges,
cranes – is connected with everything else and providing
business insight.

18. Case: AT&T’s Digital Life and Smart and
Safe Home Solutions
• AT&T’s Digital Life service - a security and home automation offering
managed through a smartphone app
• It is available across the U.S.
• AT&T said Digital Life had 140,000 subscribers at the end of the third
quarter of 2014, with more than half representing additions in the most
recent two quarters.
• At its pre-event Developer Summit, AT&T announced that it would open
up the Digital Life platform for third party developers, such as Qualcomm
Life, Lutro, LG and Samsung.
• Telefónica, which has licensed the Digital Life platform, began
a trial service in late 2014 in Europe.
• In France, Orange has launched its Homelive service, which
allows users to manage a range of connected devices.
• The connected home and connected car were major themes
at the Consumer Electronics Show in January 2015. Google
announced an expansion of its ‘Work with Nest’ developer
programme with 15 new partners.
Sensors
and Alerts
Remote
Locks
24/7
Monitoring
Home
Safeguard
Solution
Global Examples

19. IoT Cases in China
Thus, not surprisingly, all three of China’s
mobile operators are developing
sophisticated M2M service propositions that
go far beyond the provision of basic
connectivity. China Mobile portfolio shows
proliferation of services available for both
consumers and businesses.
includes “Greenhouse
Manager”, “Smart Drip
Irrigation System” and a
“Crop Status and
Environment Monitoring
System”.
in-home monitoring of the
condition of post-surgery
patients with alerts on certain
cases.
shares patient data with
emergency dispatching
centres, which are then able
to retrieve medical record
and emergency contact
information immediately.
system that can
automatically collect
noise data to monitor
construction sites.
the system enables managers to
locate the position of personnel
and access real-time operational
information, such as gas
densitysignificantly improving
the safety of coal mines.
allows to conduct quick
analysis, diagnose
irregularities, provide
instructions remotely,
and achieve automated
control.
application which connects
to police systems to track a
vehicle’s location, send
safety warnings and monitor
travel routes.
The Chinese central government
identified the IoT as a key sector
early in 2010. The same year a
National IoT Centre was
established. This initiative
allowed the IoT sector to grow
across all the industries.
Vendors
Industry Companies IoT activities
Huawei, ZTE Sensors, Devices,
Platforms, Standards
Search Engine Baidu Devices (Baidu Eye),
Algorithms, Car Automation
Handset
Manufacture
Xiaomi
Devices, Home and
Health Solutions
Messengers WeChat Device management and
remote control
Smart
forestry
to monitor fire hazards in
real-time and collect data
on the weather and
temperature.
Smart
Oilfield
Emergency
Rescue
Safe
travel
Noise
Monitoring
Smart
Agriculture
Smart
Mining
Health
monitoring

20. CSPs IoT Implementation Models are
Heavily Dependent on Partnerships
Partnership
Build
Acquisition
Technology partners
Module chipset
OEMs
Applications
Operational partners
Platform
Professional services
Billing
Go-to-market partners
Car manufacturers
Healthcare providers, retailers, OEMs
Professional
and managed
services
Verizon – nPhase
Huges Telematics
Vodafone Cobra Orange OCEAN
M2M
Platform

21. IoT. Challenges Going Forward
• Value is shifting from M2M data delivery to data intelligence
• IoT will create massive volumes of time-series data and IoT analytics will become a specialized category and discipline. Forrester
• Corrective analytics—a security option to apply automated corrective measures based on actual real-time outcomes rather than
predicted or prescriptive actions—will emerge as a fail-safe approach across a range of sectors. Machina Research
• By 2019, 45% of IoT-created data will be stored, processed, analyzed and acted upon close to, or at the edge, of the network.
• Currently, most IoT data are not used. For example, on an oil rig that has 30,000 sensors, only 1 percent of the data are
examined. That’s because this information is used mostly to detect and control anomalies—not for optimization and
prediction, which provide the greatest value. McKinsey
• Minimal and small footprint operating systems will gain momentum in IoT through 2020 as traditional large-scale operating systems
including Windows and iOS are too complex and resource-intensive for the majority of IoT applications.
• IoT Platforms integrate infrastructure components of an IoT system into a single product. They include low-level device control and
operations such as communications, device monitoring and management, security, and firmware updates; IoT data acquisition,
transformation and management; and IoT application development, including event-driven logic, application programming,
visualization, analytics and adapters to connect to enterprise systems.
• Interoperability between IoT systems is critical. Of the total potential economic value the IoT enables, interoperability is required for
40 percent on average and for nearly 60 percent in some settings. McKinsey
• Through 2018, there will be no dominant IoT ecosystem platform; IT leaders will still need to compose solutions from multiple
providers. This is further complicated by the lack of dominant technology service providers in the IoT. Gartner
IoT Intelligence
Operation System
Platforms

22. In Search of New Streams
Thank you!
Should you have any questions or feedback please contact me,
Parviz.Iskhakov@gmail.com
In Search of New Streams
The Digital Telecom Internet of Things