VOLUME IV

opportunities for IoT telecoms operators Contents

Introduction p 3

Enterprise survey 2017: A lack of awareness of IoT is holding back its adoption more than technology issues p 4

IoT platform contracts tracker: Actility is winning a high share of telco deals p 6

Operators are racing to enable IoT applications, but a winning approach is yet pto 8

LPWA: challenger operators could benefit from using a different technology to that of the market leader p10

Autonomous vehicles: entertaining passengers may be the big opportunity for telecoms operators p12

Vodafone and Orange’s moves in consumer IoT are encouraging, but cautious, p14 first steps

Analysys Mason’s expertise in IoT and M2M p16

About Analysys Mason p17 Introduction Operators face a range of issues when addressing the IoT market, from building awareness to building advanced solutions.

Welcome to our fourth selection of • IoT platform and technology deals. articles examining how telecoms A small number of new vendors, operators are addressing the Internet such as Actility, are winning a of Things (IoT). notable share of these deals. As this article describes, the market is As with our previous collections, this getting more difficult for vendors to edition is designed to give you a enter because most large operators flavour of our thinking on IoT. Analysys already have multiple providers. Mason helps clients in all geographies New competitors will need strong and parts of the value chain to develop differentiators. TOM REBBECK their approach to IoT. Our Research Director, Enterprise and IoT [email protected] assignments range from rapid reviews • Operator approaches to IoT security. of existing plans to full strategy Adding higher levels of security may development. not directly increase revenue, but does provide a crucial differentiator. • Orange and Vodafone launched new The articles in this collection reflect We discuss how operators will need consumer IoT products in the diversity of areas that telecoms to expand their security portfolio as November 2017. The initial launches operators are facing with IoT – from they move along the value chain. are interesting, but are only a first horizontal issues such as technology step. Success in the longer term platforms to domain-specific issues • The choice of LPWA technology for will depend on what operators can such as autonomous vehicles. challenger operators. For most learn from these early products. However, as we discuss in our first operators in the past 10 years, article, operators should take care not network upgrades have been more As ever, we welcome your feedback to ignore the basics – general a matter of when than what. With and comments. awareness of IoT and how it can be IoT, operators have the option to used remains low. This creates a take a different direction (for barrier to adoption, but one that example, investing in LTE-M when smart operators will help to competitors are opting for NB-IoT). overcome. This article explores the benefits of these different options. The following topics are covered in this edition. • The impact of autonomous vehicles on telecoms operators. Autonomous • Our survey of 1600 enterprises. vehicles will not need wide-area While IoT suppliers focus on networks for real-time connectivity, technology, most enterprises do not and their requirements for non- understand the potential benefits. real-time connectivity are unclear. This article argues that service We argue that entertaining providers that understand how to passengers may be the larger explain the benefits will be well opportunity for telecoms operators placed to succeed.

3 Enterprise survey 2017: A lack of awareness of IoT is holding back its adoption more than technology issues

It may be incorrect to assume that the take-up of

IoT is being held back by competing technology TOM REBBECK “standards, an uncertain business case or security Research Director, Enterprise and IoT concerns.”

Despite all the attention that IoT has The number of SMEs that are unaware of In our survey of 1600 IT and telecoms received across multiple” industry IoT – or have no interest in it – is four decision makers in enterprises verticals, a significant percentage of times greater than those with worldwide, we asked whether they had enterprises have either not heard of IoT operational solutions heard of IoT and, if so, whether they had (29% of SMEs, 18% of large enterprises) any plans to deploy IoT solutions. The It may be incorrect to assume that the or have no interest in adopting it (23% of results revealed that a small percentage take-up of IoT is being held back by all enterprises).1 of firms already had an operational competing technology standards, an solution: 12% of SMEs and 18% of large More work is required by solutions uncertain business case or security enterprises (see Figure 1). More striking, providers to explain to enterprises what concerns: enterprises would need to have though, is the share of enterprises that IoT is and why it should be implemented explored IoT to understand any of these was unaware of IoT or not interested in it: This is especially important for smaller issues. Indeed, IoT may be restrained by a combined, this group of respondents was enterprises. This article discusses some more basic problem of awareness. There made up 52% of SMEs and over 40% of of our enterprise survey results in more is a positive message to take from this: large enterprises. detail to highlight the significance of the there is still a massive, untapped market market opportunity for IoT solutions for IoT solutions providers that get their One of the assumptions behind the large providers. product and messaging right. forecast numbers for IoT, including Analysys Mason’s own forecasts, is that most companies or sectors will have 100% some use for IoT solutions. However, 14% 90% 22% while this may prove to be accurate in the long term, this perception is not shared 80% by most enterprise firms today. ses 18% 70% Operational solutions terpri 29%

en 60% Interested in IoT 23% of Not interested in IoT 50% ge Unaware of IoT ta 40% en 23% Unsure rc 27%

Pe 30%

20% 15%

10% 18% 12% 0% SMEs Large enterprises

FIGURE 1: PERCENTAGE OF ENTERPRISES AT EACH STAGE OF IOT DEVELOPMENT, 2017 2 [SOURCE: ANALYSYS MASON, 2017]

4 Also notable from these results is the China is behind in adoption today, but stark difference between large and small may catch up quickly enterprises, both in terms of the share of Our survey has revealed significant firms with operational solutions, as well regional variation in the levels of interest as those that are interested in IoT (27% of in, and adoption of, IoT solutions. large enterprises and just 15% of SMEs). Overcoming a lack of awareness in IoT is The USA has the highest levels of Much of this can be explained simply by more important than technology issues adoption of IoT solutions. It is likely to size - large enterprises have more maintain this position as a large share of projects (of all types) than SMEs and will For telecoms operators, or any other enterprises that have not yet deployed therefore be more likely to have an IoT provider trying to sell IoT solutions, these solutions are interested in doing so (20% project. Large enterprises may also have figures should act as another reminder of SMEs and 30% of large enterprises). 100more% resources to explore new areas and that IoT is still in its very early phases. Any IoT plan will need to have long time ideas such as IoT. Conversely, SMEs may14 % Western European enterprises are more 90% 22% horizons. It is also a reminder that the not be willing or able to commit likely than Chinese firms to have an technical issues facing IoT – in terms of 80%resources to IoT projects, especially if operational IoT solution in place, but ses 18% standards and security – are secondary to they are experimental and come with Chinese companies are expressing a the more-basic issue of helping 70%uncertain returns. strong interestOper inat IoTiona andl so mayluti onwells close terpri enterprises to understand the potential 29% this regional gap. In Western Europe, the en 60%For organisations that are hoping to sell Interested in IoT 23% benefits of IoT.

of difference between the results for SMEs IoT solutions, these results suggest that Not interested in IoT 50% and large enterprises is also greater than The results also mean that, for a provider ge there is an untapped opportunity to Unaware of IoT ta elsewhere, possibly because IoT providers that gets its product and marketing right, 40%provide IoT solutions to the lower end of en 23% are focusingUn mostsure of their attention on there is a significant market that remains rc the market (assuming that IoT is equally 27% large enterprises. largely unaddressed. Pe 30%applicable to small, as well as large, organisations). However, few companies The interest in IoT suggests that Chinese 20% 15% have the necessary skills to sell, deploy providers, including mobile operators, are Questions? 10%and support IoT solutions for the majority18 % doing a better job of raising awareness of Please feel free to contact 12% of SMEs and there is a lack of ‘off-the- IoT than those in Europe. Tom Rebbeck, Research Director, at 0% shelf’ solutions that address the needs of [email protected] these organisations.SMEs Large enterprises

s 30% rise 24% terp 20% 21% USA en

of 17% Western Europe

ge 10% 12% China ta 9% en 6%

Perc 0% SMEs Large enterprises

FIGURE 2: PERCENTAGE OF ENTERPRISES WITH OPERATIONAL IOT SOLUTIONS, BY COUNTRY/ REGION, 2017 [SOURCE: ANALYSYS MASON, 2017]

1 In February 2017, Analysys Mason interviewed 1600 enterprises across eight countries (Australia, China, France, Germany, Malaysia, UAE, UK and the USA) about their usage, providers and satisfactions levels of various telecoms and ICT products. For more information, see Analysys Mason’s Enterprise survey 2017: enterprise interest in, and adoption of, IoT. 2 Question: “Which of the following applies to your business when it comes to the Internet of Things?”; n = 1091 SMEs less than 250 employees), 509 large enterprises (greater than 249 employees), (1600 enterprises in total). 5 IoT platform contracts tracker: Actility is winning a high share of telco deals

Vendors that are trying to sell IoT solutions to AHMED ALI “operators are facing a rapidly maturing market. Senior Analyst, Research Operators and vendors are keeping a close • The market is relatively mature – a few • connectivity management watch on contracts for IoT solutions. vendors are dominating each section” of • device and data management Analysys Mason has gathered the details the market. For example, Cisco Jasper, of 280 deals in our recently published IoT Ericsson and Vodafone have won around • application enablement. platform contracts tracker. The key two-thirds of the publicly announced trends we have identified in this data are contracts for connectivity management. Analysys Mason’s new IoT platform as follows. Cumulocity and PTC/ThingWorx have contracts tracker focuses on operators’ won around half the contracts for deployments and lists the public contracts • Vendors have an opportunity to do deals application enablement. that they have with platform and with large operators, but solutions need middleware providers. It includes more to be targeted (for example, towards • Established telecoms vendors are than 70 operator groups and 50 IoT specific vertical markets) or offering solutions that are close to vendors, and covers deals in 95 countries differentiated from those of established connectivity, but new vendors have across 8 regions. It also highlights the vendors. Big advanced operators, such opportunities in this area – for example, main features of the deployed solutions. In as AT&T and Vodafone, have already Actility has taken a strong position in the total, it covers 280 deals. signed deals for solutions across the low-power, wide-area (LPWA) network value chain. space. We have analysed the contracts between operators and vendors to assess where • Smaller operators (such as Telecom Our analysis reveals that AT&T, Deutsche most of the activity is happening (see Italia and TELUS) have suppliers for Telekom, SoftBank and Vodafone are well Figure 1). Vendors are categorised based connectivity management but will need advanced with their IoT solutions on their main features, and operators are support if they are to compete in other categorised based on the number of IoT The IoT software stack has components aspects of the value chain (for example, platforms that they have implemented. that can be grouped into three basic data management and application layers: enablement).

6 The number of publicly announced Actility is one of a small number of contracts tells us how advanced each start-ups to win a significant number of operator is in developing its IoT solution. contracts The operators with the lowest number of The tracker also tells us which vendors deals (categories 3 and 4) are generally at are most successful. Vendors with the early stages of their IoT roadmaps and are mainly for connectivity and device highest number of deals are Cisco Jasper looking to enable connectivity and device management solutions. Cloud and (60 contracts), Ericsson (21), Gemalto (26) management capabilities. These are business solution providers such as AWS, and Vodafone (31, of which 7 are for third mainly operators in regions where IoT IBM and Microsoft Azure are also not high parties). All these vendors provide markets are relatively underdeveloped and on the operators’ supplier list for IoT but connectivity management tools primarily. the drivers to invest in IoT platform they offer cloud-hosting solutions. Actility is one of the few start-ups that has features beyond those of basic managed to capture a new opportunity in management are few. On the other hand, As operators gain strength in the IoT the connectivity market by enabling LPWA operators with multiple platform market, their IoT goals shift from providing networks, while established vendors deployments (categories 1 and 2), such as basic coverage to improving the quality continue to deliver cellular management AT&T, Deutsche Telekom and Vodafone, and range of services. Tracking these solutions. are more advanced with respect to their goals and how they change will help platform vendors understand and optimise IoT roadmaps and operations are Cumulocity and PTC have the highest their solutions to meet the operators’ competing in more demanding markets. number of application enablement varying requirements. These operators continue to tighten their platform deals. However, telecoms control over the IoT network with multiple vendors are absent from this market connectivity and device management despite having launched similar solutions. Questions? platforms while exploring different For example, Nokia introduced its IMPACT Please feel free to contact monetisation approaches and use cases platform but is yet to announce any public Ahmed Ali, Senior Analyst, at through application enablement platforms. deployments. Huawei, NEC and ZTE have a [email protected] limited number of public deals, which are

Operator category Connectivity Device and data Application Operator group (based on the management (for management enablement number of example, Cisco and platforms (for platforms deployments each Ericsson) example, HPE and (for example, operator has) nTels) Cumulocity and PTC)

1 (Each operator Examples: has five platform AT&T; Deutsche deployments or A A A Telekom; more, with at least SoftBank; one solution for each layer)

2 (Each operator Examples: has between 3 and Bell; KDDI; 4 platforms with at NTT Docomo; least one platform A B B Telefónica for the connectivity management layer)

3 (Each operator Examples: has only two China Telecom; platforms with at Telecom Italia; least one platform A C C Telstra; TELUS for the connectivity management layer)

4 (Each operator Examples: only has a America Móvil; connectivity Ooredoo; management A D D SmarTone platform)

FIGURE 1: OPERATORS’ IOT DEALS AND SELECTED EXAMPLES, 2Q 2017 [SOURCE: ANALYSYS MASON’S IOT PLATFORM CONTRACTS TRACKER] 7 Operators should match their IoT security strategies with their ambitions in the

IoT market MICHELE MACKENZIE Principal Analyst, Research

It is unlikely that IoT security will generate a significant new revenue stream, but it will be “critical in winning new business and differentiating operators’ services from those of competitors.

We forecast that 6.4 billion IoT projects. Telecoms operators, as IoT connections worldwide will use fixed, service providers, need to develop” their SHERRIE HUANG mobile and low-power wide-area (LPWA) IoT security capabilities with relevant Senior Analyst, Research networks by 2025. As the IoT market products and skills to match their IoT grows, so does the security risk. The strategy and ambition. discussions on how to secure the IoT are solutions. Security requirements such as Telecoms operators need to develop increasingly the focus of attention. An secure transmission, safe data and user security offerings to match their IoT end-to-end IoT project consists of authentication have been fused into the proposition multiple, often diverse, devices, various operator networks for decades and cellular networks are generally viewed as platforms, layers, and interfaces, creating Operators have a strong legacy in secure and reliable. many dimensions to secure. Security has securing the connectivity layer with moved up the list of priorities for IoT carrier-grade, embedded security However, in the IoT market, operators increasingly address components beyond connectivity to capture a larger share of Premium revenue. Moving up the value chain end-to-end requires more specialist security 100% solutions expertise, which CSPs do not always 14% Complex security have. Operators will increasingly need to 90% 22% requirements do the following. 80% • Map their security offerings closely to ses 18% Vertical-specific the IoT components of the value chain platforms 70% that they provide, such as the Operational solutions Tailored security application, device and enabling terpri requirements 29% capabilities like hosting. Providing en 60% Interested in IoT 23% enhanced security for devices beyond of Not interested in IoT 50% Generic platforms SIM authentication may not be familiar ge Unaware of IoT (including device management, territory. ta 40% cloud, security and AEP) en 23% Unsure rc 27%

Pe 30% Basic connectivity 20% 15% (embedded network security/SIM) Operator role in security Operator role in the value cahin 10% 18% 12% 0% 4.8 billion mobile and LPWA devices in 2025 SMEs Large enterprises

FIGURE 1: THE OPERATOR’S ROLE IN IOT SECURITY MUST MATCH THE OPERATOR’S ROLE IN THE IOT VALUE CHAIN [SOURCE: ANALYSYS MASON, 2017)

s 30% 8 rise 24% terp 20% 21% USA en

of 17% Western Europe ge 10% 12% China ta 9% en 6%

Perc 0% SMEs Large enterprises • Tailor the security offering for their their networks. Operators have been slow target verticals. This will require an to promote the value of embedded understanding of the technical standardised security in their cellular component of the offering but also networks (although the real value of regulatory compliance and business security may have only recently come to models. Those operating in the EU will the fore). Providing additional security need to understand GDPR compliance, layers by design from the outset of the for example. project will likely add some additional upfront costs but will reduce the overall Operators will need to partner or invest to costs of delivering security for the align their security offering with their IoT lifecycle of the project. For example, proposition. Operators that already building in extra layers to secure and benefit from an internal cybersecurity update the connected devices. unit, like Telefónica and Vodafone, may have the necessary skills to build their Operators could position security as a own solutions but most will still need to core differentiator to their LPWA partner for some or all solutions. A few proposition and: operators, primarily those that have • promote the embedded security invested heavily in specific sector attributes of the network and the SIM expertise, may make strategic and market the capabilities of their investments or acquisitions to bolster connectivity and device management their offering. Bold moves such as this platforms in detecting anomalies and will send a clear message to the market mitigating the consequences – for about their intentions and role in the example quarantining devices, OTA value chain. Interestingly, this bold updates etc. approach is not confined to the large global operators such as Telefónica or • develop new capabilities internally or Singtel. Smaller national and regional- through partnerships to provide focused operators with strong IoT additional, value-added security layers business units, such as KPN and Tele2, that are cost effective for LPWA have acquired to strengthen their security solutions – for example, some Questions? credentials. operators are exploring the idea of Please feel free to contact Michele offering additional security in the SIM Mackenzie, Principal Analyst, at Despite the significant effort and [email protected] investment required, it is unlikely that • ensure that their security offering and Sherrie Huang, Senior Analyst, at security will generate a significant new addresses each component of the value [email protected] revenue stream in its own right. However, chain where they provide solutions and it will be critical in winning new business leverage professional services and and potentially differentiating the cybersecurity business units to advise operator’s service from that of on and implement security solutions. competitors. IoT security could be an important Security can help operators differentiate differentiator and strengthen their LPWA service Selling IoT security solutions will not By 2025, more than half of the total necessarily generate substantial revenue wide-area IoT connections globally will be for operators. Security at the connectivity on LPWA networks. This will bring new layer is embedded but should be a feature and different challenges. Many of the that could bolster the value of the devices connected to an LPWA network connectivity offering. Security for other will be low-power devices with limited components of the value chain will be a computing power, factors that will restrict premium service but is unlikely to security options. generate significant revenue. However, IoT security will be a critical factor in Operators using 3GPP standards (NB-IoT winning IoT business with the potential to and LTE-M) have a clear opportunity in differentiate the operator’s service from the early phase of LPWA market its competitors. development to differentiate their offering from the proprietary networks by marketing the inherent secure nature of

9 LPWA: challenger operators could benefit from using a different technology to that

of the market leader MICHELE MACKENZIE Principal Analyst, Research

The case for challenger operators to deploy an alternative technology to market leaders is “compelling because it may provide opportunities to differentiate on more than price and target different use cases to market leaders.

TOM REBBECK Mobile operators have a significant to deploy different technologies to the Research Director, Enterprise and IoT opportunity to offer LPWA solutions (see market leaders. This” article, based on our data in Analysys Mason’s DataHub), but detailed report on approaches to LPWA, competition will be intense. The leaders examines the options they face and the willing to take a risk on an alternative have decided which technology to support factors that will affect their decisions. strategy from the leaders. This article – for example, AT&T has opted for LTE-M, examines the options they face and the For the traditional mass-market Orange uses LoRa and LTE-M and factors that will affect their decisions. smartphone opportunity, the technology Vodafone has gone for NB-IoT. Many upgrade path, through flavours of 2G, 3G other operators, especially smaller ones, Operators have three main approaches and 4G, was clear. IoT is a new market have yet to make a firm commitment, but to LPWA technology choice and the old rules do not always apply. some challenger operators are planning There are clear benefits for operators Mobile operators have three main options to consider when choosing an LPWA technology. They are as follows. • Follow the leader: The challenger operator chooses the same technology as the market leader. For example, if the leading operator is launching LTE-M then the challenger would do the same. • Choose an alternative to the leader: The challenger operator chooses a different technology to that of the market leader. For example, if the leader chooses LTE-M then the challenger will deploy NB-IoT. • Wait and see: The challenger operator waits for a winning technology to emerge before committing.

FIGURE 1: SELECTED OPERATOR/MARKETS LPWA TECHNOLOGY CHOICES [SOURCE: ANALYSYS MASON] 10 With LPWA, challenger operators have an technology options should put some enterprise base is limited and NB-IoT or opportunity to differentiate. Figure 1 limits on this price competition, which LTE-M are relatively quick to deploy. illustrates some of the technology may benefit all operators. However, operators with ambitions to play choices that leading and challenger a role in IoT risk foregoing a valuable • The operator may be in a better operators have made. There is currently learning experience in the early LPWA position to support multi-country no clear trend on the approach that market and the opportunity to capture contracts. Deutsche Telekom will be challenger operators are taking; some some of the early demand. Bouygues able to offer NB-IoT connectivity across follow the leader, others do not. Telecom, KPN and Swisscom all gained all its countries, while Orange can offer valuable expertise by entering the market Despite the risk, adopting an alternative LTE-M everywhere it is present. This early with LoRa, which should help them technology has obvious advantages would not be possible if the operator when developing 3GPP IoT networks. followed the market leader in each Some of the advantages for challenger country it is present. Large operator Challenger operators should consider a operators to deploy a different LPWA groups, like Vodafone, may also fresh approach to LPWA technologies technology are as follows. generate some cost synergies from Challenger operators that are developing • The alternative technology will be deploying the same technology in all strategies to enter the LPWA market better suited to particular use cases. It countries. should carefully evaluate the benefits of is uncertain how large the differences A strategy that involves selecting an adopting a different technology to the between NB-IoT and LTE-M will be in alternative technology also has market leaders. Differentiation in the terms of price and performance, but if disadvantages for challenger operators: LPWA market will be critical given low NB-IoT does have clear price connectivity revenue and heightened advantages or longer battery life than • advantages may only last a short time competition from proprietary LPWA LTE-M, it will be more attractive for because it is relatively inexpensive and players. This may require a bold strategy some applications such as metering. quick for competitors to upgrade their but could pay dividends by differentiating This could benefit T-Mobile USA. existing infrastructure to support the the proposition and allowing challenger Moreover, challenger operators could same technology operators to compete on more than benefit enormously if their chosen • big opportunities may be missed, for just price. technology is used for a mass-market example, if the strongest area of proposition. For example, if LTE-M is demand is for NB-IoT-based solutions used by a future Apple Watch, KPN and they only offer LTE-M Questions? would be in a strong position in the Please feel free to contact Dutch market compared with its • local developers may focus on the Tom Rebbeck, Research Director, at competitors, T-Mobile and Vodafone, technologies offered by the leading [email protected] and which are focused on NB-IoT. players Michele Mackenzie, Principal Analyst, at [email protected] • An alternative technology could open • they may end up supporting a up the enterprise market. Most redundant technology. challenger operators have a limited presence in the enterprise market. An Naturally, these disadvantages are alternative technology with clearly inverted if the challenging operator differentiated performance could help chooses a different technology from that open new enterprise opportunities. offered by the leading operator. • It should reduce competition based Should LPWA operators wait and see? purely on price. If all three/four Operators also need to consider the operators offer the same network consequences of being late to market if technology and coverage, strong price they adopt a wait-and-see approach. The competition will be inevitable. Different appeal of waiting is clear: the existing

1 For more information, see Analysys Mason’s Mobile payments in emerging markets – beyond m-pesa. Available at: www.analysysmason.com/About-Us/News/ Newsletter/mobile-payments-in- emerging-markets-Jan17/ 11 Autonomous vehicles: entertaining passengers may be the big opportunity

TOM REBBECK Self-driving cars will depend much more on Research Director, Enterprise and IoT “on-board processing than on the cloud. While autonomous vehicles are gaining Autonomous cars will turn drivers into mapping information and software huge attention from all sectors, there is passengers, generating” new demand for updates), but bandwidth requirements for little assessment of what they mean for telecoms operators’ services these services may be (relatively) low. the telecoms sector. Based on a series of Autonomous vehicles are unlikely to rely However, autonomous motoring will turn discussions with players in different roles on telecoms networks, despite the drivers into passengers, and potentially in the value chain, and our own analysis, often-made association between 5G and into consumers of video, gaming and audio Analysys Mason believes that, while autonomous driving:1 self-driving cars will content – all of which could generate new autonomous vehicles may have a depend more on on-board processing than demand for telecoms operators’ services. transformative impact on society, their the cloud. Real-time connectivity will be The time frames for these developments impact on the telecoms industry is likely to beneficial, but not essential. this will be long: fully autonomous vehicles be modest. This article is based on our may not form the majority of vehicles until more-detailed report on this topic, Telecoms networks will be used for after 2030, depending on technology Autonomous vehicles: exploring the non-real-time updates to and from the developments, regulation and consumer opportunities for operators. vehicle (such as traffic information, acceptance. Figure 1 summarises the main opportunities for telecoms operators with autonomous cars. Autonomous cars do not need wide-area connectivity Self-driving vehicles rely on information coming from their on-board sensors (for example, radar, lidar, optical) to navigate because cellular services cannot always be guaranteed to be reliable. Information from a wide-area connection will help supplement the on-board data, perhaps giving additional information about the actions and intentions of other vehicles, but the vehicle will never be dependent on that information. This is essentially the way that experimental autonomous cars are working today – information from on-board sensors is combined with highly detailed (up to 10cm) maps. These maps can be updated, in non-real time, using a cellular connection (or via a Wi-Fi connection and fixed broadband).

FIGURE 1: AUTONOMOUS VEHICLE OPPORTUNITIES FOR OPERATORS [SOURCE: ANALYSYS MASON, 2017] 12 Developments in ‘vehicle-to-everything’ locally needs to be uploaded. The 0.1% Development timescales are likely to be (V2X) technology will not change this. The figure could be too low, but illustrates that long information available to the autonomous we should not assume that autonomous All of this will take a long time to develop car will become richer, but will only act as cars will, by their nature, generate and deploy. Full autonomy is unlikely to be a supplement to on-board systems. V2X massive quantities of data for telecoms available before well into the next decade.7 could have other impacts though: unlike operators. In any case, as only anomalous Assuming that autonomous cars replace today’s experimental autonomous cars, data will be uploaded, it will likely only be a traditional cars at a similar replacement which each act as an isolated unit, V2X tiny fraction of the total data processed. rate that we see today (with around 7% of technology could allow different vehicles to Connectivity requirements for cars replaced each year), it may be 2035 act in concert – for example allowing entertainment may be (much) higher than until half the cars on the road are vehicle platooning or smoother traffic for the vehicle itself autonomous. It could happen quicker – for flows in cities. example, through retrofitting vehicles with Autonomous driving will change how we Bandwidth requirements are hard to autonomous capabilities, through spend time in the car.3 Former drivers will calculate, but may be (relatively) low legislation that encourages autonomy (or have more time available than before, and even bans driving), or through autonomous Intel created some interest by suggesting this could generate opportunity for cars replacing multiple traditional cars. All that autonomous cars will generate 4TB of telecoms operators – for streaming video, these are possible, but it would be a bold data per day.2 However, this figure needs to audio, or even augmented reality games4 assumption to expect many autonomous be treated carefully. Based on the inputs that mix the passing environment with cars ahead of 2025. provided by Intel, it seems this figure is game play, such as racing other cars. based on a car driving for at least 15 hours The telecoms industry may be well Again, the exact impact of all of this is a day – reasonable for the average advanced with 6G before autonomous cars difficult to estimate, but could be well over self-driving Uber perhaps, but unlikely for have a major impact. 1GB5 for 30 minutes of video streaming. a typical private car. This could be addressed either by adding a Intel’s 4TB figure must also be treated with vehicle’s existing connection to a data Questions? caution because it is the amount of data plan, through tethering smartphones or Please feel free to contact that needs to be processed, not the through in-car Wi-Fi hotspots that use a Tom Rebbeck, Research Director, at volume of data that will be uploaded to the car’s OBD-II port.6 While there will be [email protected] cloud. Most of the information processed some opportunity to provide connectivity by the vehicle will likely be immediately for cars to self-drive, both from providing discarded – if the car ‘sees’ what it is the bandwidth and any new infrastructure expecting to, and navigates without that could be needed by V2X, entertaining incident, little of the data needs to be the passengers could be the larger retained and only anomalies will be shared opportunity. with the network. Assuming a car is driven (or, more accurately, drives) for an hour a day, the car could generate as little as 250MB if only 0.1% of the data processed

1 An automotive/telecoms joint industry body is called or autonomy could result in longer commuting 6 For example, see AT&T’s range of connected car the 5G Automobile Association (5GAA). distances. offerings. 2 Intel Newsroom (15 November 2016), Data is the 4 New York Times (15 June 2017), Envisioning the Car 7 If at all – some are sceptical as to whether it is even New Oil in the Future of Automated Driving. of the Future as a Living Room on Wheels. possible. For example, see Tech Crunch’s Toyota’s Research Institute head says full autonomous driving 3 It is difficult to know what the impact will be on the 5 Netflix uses around 3GB per hour on the “high” data is “not even close”. total amount of time we spend in a vehicle. For usage setting. For further details, see Netflix’s How example, improved traffic flows could increase can I control how much data Netflix uses? average speeds, which may reduce commute times, 13 Vodafone and Orange’s moves in consumer IoT are encouraging, but cautious, first steps

Orange and Vodafone’s success will not depend

on the sales of these devices but on whether the TOM REBBECK “operators can learn from these initial products in Research Director, Enterprise and IoT future iterations.

Vodafone and Orange separately launched The products and pricing offer few ‘V by Vodafone’, it has no unifying theme; a new series of connected consumer” surprises each item will appeal to a different devices on consecutive days in early market. There are positives to this None of the products announced by either November 2017. The new products approach – Vodafone is testing the operator is radically new. suggest different approaches to the appetite for a variety of solutions – but consumer IoT market; Vodafone focusing • Vodafone launched four connected it will make it more challenging to on devices with a separate cellular devices (a camera and trackers for position them in the minds of connection (a niche market so far), bags, cars and pets) as well as a consumers (unlike, say, Nest with its Orange on mass-market gadgets that dedicated SIM for IoT products (the smart home range). connect to a smartphone. The Vodafone ‘V-Sim’). Initially, they are only available • Orange is offering a new version of its strategy should be more defensible, as it to Vodafone’s residential customers but VR headset (the ‘VR2’), a 360-degree has more unique differentiators, although will be available to customers from all camera for Android devices (the ‘Live the Orange approach may have more networks in time. While Vodafone is Cam’), and the Orange Drone. There revenue potential in the short term. using a new brand for these devices,

14 are some links between the different well-known brand, greater marketing devices – for example, images from the push and lower pricing it can succeed. 360-degree camera can be viewed on Orange is entering a more competitive the VR headset, as can images from the market. Handset manufacturers, like drone’s onboard camera. Samsung, are bundling in VR headsets The pricing models are also conventional. with new phones and drones can be bought for less than half the price asked • Each Vodafone device comes with an by Orange. The 360-degree camera is a upfront cost (GBP50–GBP339 or relative novelty for now, but competition EUR49–EUR379 depending on the item will intensify. In the near term, Orange’s and country), plus a monthly fee branding may help attract some (GBP3–4 or EUR3–5). The main novelty customers to a new technology. In the is that the monthly fee for all products medium term though, its brand is unlikely is flat with no usage component. to be sufficient to justify premium pricing; Contracts have no minimum length and other differentiators will be needed. connectivity can be ‘paused’ and reconnected later. Even with this Vodafone and Orange will face stiffer flexibility and the flat fee, consumers competition from other operators in may resist paying a monthly fee for a consumer IoT than in enterprise IoT. new type of service. As we have written Enterprise IoT propositions require before, we believe that for consumer vertical market expertise, sales channels, IoT solutions to be successful, the ability to integrate with existing providers may need to move away from systems and so on – all of which provide monthly fees.1 high barriers to entry. Orange and Vodafone, with large enterprise customer • As Orange’s gadgets do not have a bases, were better positioned than most separate SIM, the only cost is the device in enterprise IoT and have capitalised on itself. Prices are EUR50 for the VR this. The consumer IoT market may be headset, EUR80 for the drone and easier to enter for more operators EUR149 for the 360-degree camera – barriers to entry are lower, and most Questions? (EUR99 initially). In some markets, operators have assets they can leverage, Please feel free to contact instalment plans will be available. like a retail presence and a known brand. Tom Rebbeck, Research Director, at Both operators are essentially testing [email protected] Success will depend on the operators demand for new categories. We expect implementing the lessons from initial more innovative products and pricing products models to be offered later. As LPWA devices and networks become more For both operators, the launch of new widely available, we would expect connected devices represents a bold move Vodafone, and possibly Orange, to launch into new areas (or for Orange, a products with only an upfront fee, which continuation of its steps in VR). Whether includes bundled connectivity. these moves are a long-term success will probably depend not on the sales figures The operators are hoping that a for the products launched in November combination of their distribution 2017 but on whether the operators can capabilities, retail presence, trusted learn from these initial products and brand and, for Vodafone, network will develop new versions. Too often in the help them introduce these products to a past, the failure of operators has not been broader audience. to experiment, but to learn from and follow Vodafone has a narrower focus but a through with experiments in new areas. stronger differentiator Vodafone at least recognises this. In its 2Q The obvious difference in approaches is 2017 Vodafone results.2, Vodafone CEO the inclusion of the SIM in Vodafone’s Vittorio Colao said “the reason why we are devices. By focusing on things connected launching consumer IoT in November 2017 to a wide-area network, Vodafone is is not really for what we are going to do in exploring devices that have had limited 2018 or 2019, but it is to prepare a strong market reach to date – for example, platform for the next 10 years,3” indicating products from small firms, like Locca and both the senior-level support and Trax. Vodafone is hoping that with a more long-term thinking behind the project.

1 For more information, see Analysys Mason’s 2 A slide of the earnings presentation was also 3 Source: https://seekingalpha.com/article/4124876- Providers should apply the lessons of prepaid phones dedicated to the consumer IoT proposition.. For more vodafone-group-plc-vod-q2-2018-results-earnings- to consumer IoT. Available at www.analysysmason. information, see www.vodafone.com/content/dam/ call-transcript. com/About-Us/News/Insight/Consumer-IoT-Jan2015. vodafone/investors/financial_results_feeds/half_ year_30september2017/H1_2018_Presentation_ DOWNLOAD.pdf. 15 7,000 +9% 6,000 938 887 5,000 PSBs (including 4,000 2,477 David 2,093 portfolio channels)

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Approximate EBIT margin ~10% <5% 0–30% 0–10% 10% Assessed the regulatory implications and Supported a leading mobile operator Overview of fleet management in five regulatory feasibility of implementing a new IoT to develop its strategy for M2M and South-East Asian countries service in a dozen countries IoT services Indonesia (58%)1 Singapore (18%)1 Hong Kong For a Japanese operator, produced a report on the sales channel for M2M/IoT services and Andrew Researched M2M/IoT the role of MVNOs in Europe international opportunities for a On behalf of a major major European regional operator, operator conducted a workshop 1 (28%) to assist with M2M and Viewing minutes per day, 1UK (2014) Assessed an IoT market IoT strategy (37%) opportunity for a software vendor (16%)

1 Developed a list of over 100 potential 300 partners, with key information for % of total daily minutes each (e.g. details of existing 1 Provided a forecast and assessment of (26%) contracts and partnerships) for an Thailand India competing LPWA technologies (NB-IoT, operator client Traditional TV 81% Sigfox, LoRa, etc.) 250 Produced a global, country by country forecast for the Assisted a tower company to understand DVR 8% entire IoT value chain, from the potential IoT opportunities as part of a devices to applications strategy review Provided procurement Internet and Conducted a research assistance, including supplier On behalf of a major 200 11% study to determine the evaluation, for a global M2M Bangladesh Malaysia other European incumbent Help a consumer electronics firm develop its demand for a satellite M2M connectivity project approach to selling connected products product and determine operator, conducted a market assessment of a end-user requirements for Surveyed end users and operators on their new type of sensor network hardware and software approach to IoT, on behalf of a vendor 150 A Video B IoT projects Other projects IoT client country 1 Note: SingaporeMinutes per day % of country total internationalover internet bandwidth internet Includes Netflix and Examples of recent IoT and M2M client projects, by geography similar, YouTube 100 and similar, sports premuim services 16 like Now TV, and ‘other’

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