Growing the Bones of the IoT

Illustration by The Heads of State In the United States, smart water sensors are slowing the flow of precious resources, and apps are tapping satellite and sensor data to make parking easier for commuters. Open infrastructure platforms for the Internet of Things are supporting a range of smart, connected equipment that does everything from running elevators to tracking health to letting television viewers control the screen with their voices.

Low-cost technologies are enabling conversations between machines, spurring development in smaller markets. Revenue from all of that relies on data. And all of that data puts a tremendous strain on communication networks, the bones of the IoT. As Flex’s president of Communications and Enterprise Computing Caroline Dowling told INTELLIGENCE in our April 2015 issue, “The need for more services and bandwidth is accelerating.” Her group helps design and manufacture communication equipment for such companies as Cisco Systems, Ericsson, Huawei, and others. “There will be a 400% increase in traffic in the next five years,” Dowling said. “Video will grow by 700% in five years. To keep up, we need to increase broadband by five times in five years.”

Telecommunication providers such as AT&T, China Mobile, Vodafone, and equipment maker Huawei are working on the Internet of Things because customers of cellular, cable and other related service providers demand bandwidth to let all of their devices communicate with one another. The telcos are sitting on considerable R&D experience that could be activated with relatively few institutional challenges.

Equally important, they also have relationships with potential clients lined up from their other enterprise offerings, and possess the know-how to make sure the IoT will work. The question is how they’ll bite off a piece of the profit up for grabs—the McKinsey Global Institute estimates that the IoT’s impact on the world economy might be as high as $6.2 trillion by 2025—without stifling the access that increasingly tech-savvy consumers and manufacturers demand.

Telcos want to make sure they will serve as the operators of the data pipeline—as well as the manufacturers of engaging new IoT products that will make a lot of money. They’re already taking steps to get ready for it. “The industry is going through a paradigm shift, the likes of which we have not seen since the acceleration of the PC back in the 1980s,” Dowling said. “The big trend we are seeing is a convergence of infrastructure: Servers, storage, and networking are coming together through software in one box.”

Essentially, telcos are the bridge between connected people, products, and businesses. They help small businesses leverage the Internet of Things; they help product developers ensure their items have access to the bandwidth they need; they can improve subscribers’ quality of life and offer them access to new technologies. Because they simultaneously serve as gatekeepers and software developers, they play a crucial role in the emerging IoT infrastructure.

AT&T learned one of its most meaningful lessons about the Internet of Things in 2007, the year Apple released the very first iPhones for sale in the United States. As the exclusive service provider, AT&T collaborated extensively with Apple on the iPhone’s launch, and because it was the first smartphone to achieve mass popularity, that meant a record amount of traffic was traveling through the telco’s mobile pipeline—even more than AT&T’s experts anticipated. Even so, customers loved their iPhones; Apple says it sold more than a million of them in the last quarter of 2007 alone.

As late as 2009, though, Jenna Wortham of The New York Times described how data demands from iPhone users put AT&T’s network under incredible strain. Calls would suddenly drop, 3G was difficult to access at peak times, and data could sometimes be punishingly slow. In the short term, AT&T announced an infrastructure-boosting blitz that included creating more than 2,000 additional cell towers and upgrading existing ones. The issue was eventually fixed, but the brand took a bigger hit: For a while, whenever your iPhone worked, you loved Apple; when it didn’t, you blamed AT&T. In 2016, AT&T is putting bandwidth at the center of its R&D efforts for the Internet of Things.

Mobeen Khan, a product manager for IoT-related projects at AT&T, says the company is working on connectivity, platform, and Internet solutions for the industry. One key focus is figuring out new ways to adapt network infrastructure to the IoT. “We offer an LTE Network and a global SIM on the world stage,” he says, “which allows customers to connect assets to networks worldwide and get a single bill or contract for 500 carriers in more than 150 countries.

There are also other kinds of connectivities, such as satellite, Wi-Fi, or custom networks, which are especially important in the context of smart cities. Connecting assets such as smart water meters, fire hydrants, streetlights, or parking meters mean you can’t have a SIM connected in every asset.”  

Khan adds that the company is looking at hub-and-spoke models with mesh networks and other solutions for IoT infrastructure in urban areas. AT&T isn’t the only telco that learned from early bandwidth challenges. Verizon’s 5G testing in the United States is also very much focused on the Internet of Things and the impending barrage of bandwidth demands. Although the company hasn’t shared many details publicly, it has proceeded with plans to test 5G this year. Some initial reports indicate 5G could be as fast as fiber Internet. However, 5G is aimed less at home consumers looking for fast Netflix buffering than at industrial clients.

Nokia, a major investor in the technology, says 5G is primarily designed to create an infrastructure for the Internet of Things, making the case for non-telcos experimenting in this space. “Cross-industry collaboration with key players is an ideal vehicle for defining the right use cases and requirements for 5G,” wrote Volker Held, head of Innovation Marketing, Nokia Networks, in a December 2015 post on its blog. Vodafone is also investing in bandwidth and infrastructure.

According to Machina Research, the company is now the world’s largest machine-to-machine communication provider based on SIM cards. By supplying SIM cards, Vodafone hopes to be a major behind-the-scenes vendor of the IoT.

Cross-industry collaboration with key players is an ideal vehicle for defining the right use cases and requirements for 5G, says Held.

The global telco giant has also developed international SIM cards, designed specifically for connected devices to work in any country without incurring extreme roaming charges, an innovation that greatly reduces costs for product developers.

The Cellular Internet of Things, another new project in which Vodafone collaborated with Huawei, Neul, and U-Blox, will offer an explicitly open standard for developers and telcos worldwide. Eventually, they hope, this will allow developers to roll out devices usable in many countries. Vodafone’s investment in IoT technology, which it refers to as machine-to-machine, or M2M, is largely designed to provide an infrastructure for applications that are both low-cost and globally applicable. Its low-power tools are designed for things like water meters and fire extinguishers—devices that have low individual bandwidth needs but when connected could solve global challenges.

Last fall, Gartner Research put Vodafone in its “magic quadrant” as a leader in M2M services worldwide. “They shape the market, rather than follow it,” the Gartner analysts wrote about the recognition. In June 2015, Vodafone acquired Cobra Automotive Technologies, an Italian provider of connected car services; the telco is also working on test platforms abroad to see how smart devices will be integrated into everyday city and suburban life. Similarly, China Mobile—in addition to working on IoT-derived project solutions for firefighting, construction, logistics, electricity, and finance—is going long on connected vehicles.

In a partnership with Deutsche Telekom, the mobile provider has introduced a new connected car program, what it calls the “Internet of Vehicles,” to China. In this partnership, Deutsche Telekom provides telematics expertise and a platform while China Mobile offers LTE coverage for the cars themselves. In justifying the expansion, Deutsche Telekom cited statistics promising as many as 68 million connected cars in China by 2018. AT&T is interested in this space, too; it is working on a project called AT&T Drive, which is expressly intended to find opportunities to collaborate on IoT tech with automakers and OEMs. Use cases for AT&T Drive include everything from access to NPR’s vast programming options on the road, to one-click roadside assistance, to an app that transmits details about vehicle issues directly to a preferred dealer.

Connected cars are a symbol of the issues companies face with the new IoT machines coming online. These smart devices themselves use little data. But in the aggregate, sensors and wireless products can take up significant chunks of mobile bandwidth. The 68 million connected cars predicted in China are one potential challenge; so are the wave of smart home appliances currently on offer to consumers around the world.

Alongside connected cars, AT&T and other telcos see growth for the Internet of Things in urban infrastructure. AT&T has a dedicated Smart Cities organization that is working on products such as utility meters, street lighting, and energy systems for a variety of stakeholders.

Connecting assets such as smart water meters, fire hydrants, streetlights, or parking meters mean you can’t have a SIM connected in every asset, Khan says.

These projects include novel solutions to old issues. Connected street lighting, for instance, plugs into an app that shows maintenance crews every faulty light in the city. Another smart water project uses acoustic technology and sensors to gather data on water pressure, temperature, and leaks. Projects like these also create new monetization opportunities for AT&T, such as for Stanley Steemer, which uses AT&T’s IoT technology to send real-time information on workflow and status updates from field workers to its home office. AT&T’s Khan notes that the telco giant sees opportunities for the Internet of Things in the home-consumer sphere as well.

The number of available smart consumer devices today, such as watches, wrist accessories, cameras, and even e-readers, are growing and have favorable cost points, he says. But, he adds, “Another category we’ve seen very early signs of are enterprise wearables as part of a safety getup. Categories of employees like utility workers, oil-field workers, folks on machine floors, or anyone who works in places where you need sensors in your vest or helmet.” In the coming years, many more devices will send and receive data via telco pipelines. Verizon, for instance, is collaborating through its Verizon Innovation Program with a number of startups working on wearables. These companies are experimenting with products such as Fusar’s eponymous device that feeds real-time maps and safety data to motorcycle helmets as well as smart devices from Veesag that have personal health monitoring and support.

Additionally, the factory and industrial settings, in general, are a growth area for the Internet of Things even beyond safety issues. Many companies are experimenting with sensor-enabled, IoT-integrated equipment designed to increase productivity and minimize equipment downtime. Verizon’s and Nokia’s experiments with 5G are an indicator of the massive upgrades in network capacity that are beginning to take place in order to make room for the Internet of Things. A major debut of global 5G service is expected to be available at the 2018 Winter Olympic Games, which Korean telco KT has promoted as a point of national pride.

Telecommunication companies are banking on the idea that the Internet of Things will be an essential part of global infrastructure in industrialized countries by the early 2020s. One expert, Linley Gwennap, told attendees of the Linley Group’s annual chip conference last year that he expects the IoT market to surpass the smartphone market in 2023. “Anyplace there is a business case, you’ll see these IoT devices deployed,” he said.

In the meantime, telcos are getting ready for this near-future reality. Juniper Research estimates that the number of IoT-enabled devices will almost triple in the next five years. This means very real and urgent investment in infrastructure and capacity is needed. Telcos will remain the bridge between people, business, technology, and infrastructure when it comes to the Internet of Things—and they are making sure things will stay that way.