Wholesale carriers in quandary about IoT business model
Wholesale ‘taking second place to retail’ in forming IoT business plans, London conference hears
The wholesale carrier business is having considerable issues working out how to make money from the emerging internet of things (IoT) market.
Leading executives on day one of the Capacity Europe event in London complained that retail roaming agreements are making it harder for carriers to develop viable deals – and their telco parents are mainly focused on the retail market, not the wholesale carrier business.
There are considerable opportunities in the IoT, they all said. But the abolition of roaming charges, particularly in the European Union, is making it harder to develop a viable business model.
And throughout the world wholesale is taking second place to retail in the development of IoT business. “We’re still looking at the model, which was developed on the retail side,” said Ivan Mihaljevic, president of BCE Nexxia, at the conference session. “We’re looking to bring it into the wholesale arm, but it’s still in flux right now.”
He accepted that “IoT is going to become more pervasive – but how do you monetise it?”
Martijn Blanken, group managing director of Telstra Enterprise, said one of the challenges was that “the retail side of the business wants to protect itself with differentiators” compared with rivals in the home market. “It’s very difficult to provide a true IoT model that is truly global.”
The EU “has changed the rules of the game” by abolishing roaming charges, said Ignacio Garcia, vice president at Telefónica.
The moderator of the panel, Daniel Prieskel, senior partner at law firm Prieskel & Co, asked him: “What happens when a car that is sold in Spain is moved permanently to France?”
Garcia replied: “That is why we’re here in London [at Capacity Europe] – to make agreements to make this work.”
Türk Telekom does it differently with its arrangement with AT&T to provide connected car services for Volvo cars made in Turkey, said Stuart Evers, group CCO of Türk Telekom International. SIM cards are not installed in cars at the factory, as most go outside Turkey – which in any case is not in the EU.
“But the simple answer to your question about monetisation is, we still haven’t figured it out yet,” said Evers.
Blanken added: “Telcos haven’t figured it out with roaming,” especially smaller operators. “How do we collaborate better?” he asked. He pointed out that if Volvo delivers a BMW to Australia, the connected car facilities will use retail roaming.
Evers asked about IoT: “Are we facilitating it or are we driving it?”