The blog YTD2525 contains a collection of clippings news and on telecom network technology.
The Digital Infrastructure, our third mainport, is a driver of the rapidly expanding Online Services sector.
In Europe, the Dutch are among the frontrunners in the area of Digital Infrastructure (Internet connectivity, colocation housing and hosting). In many ways this infrastructure fulfills a gateway function, similar to that of Schiphol Airport and the Rotterdam Harbor. While we all have an idea on how the latter impact our economy, much less is known about the impact of Digital Infrastructure on the Dutch economy. In this report we argue that the Digital Infrastructure, despite its modest size, is a driver of the much larger and rapidly expanding Internet economy, impacting the fortunes of future economic growth in the Netherlands.
Growth and developments in the sector
In 2013 we already concluded that the Dutch have a world class Digital Infrastructure. This year we see that the importance of this sector -inhabited by Internet exchange points, and many housing and hosting parties -is on the rise. Amsterdam based AMS-IX remains the largest Internet exchange point in the world and the colocation housing market, centered around Amsterdam, produces strong growth rates. The Dutch also rank among Europe’s elite in hosting.
Significance for the Dutch economy
The high ranking of the Netherlands Digital Infrastructure is an interesting observation, but how do we benefit from it? Our research shows that the direct economic impact of the sector itself in terms of employment, and the indirect effects of the sector on e.g. suppliers, construction companies and workforce spending, is limited related to our total GDP. The real value of the Digital Infrastructure sector, however, lies in its significant impact on the much larger Internet economy and broader digital society. The picture emerges that Digital Infrastructure cannot be separated from a successful digital society, placing the Dutch in a favorable position to profit from digital growth.
Telco’s are facing a fierce attack from OTT players. They assumed that ignoring them would solve the problem but it’s getting more complicated!
At LTE North America in Dallas this week, a panel featuring Wireless 2020, IBM, Allot Communications and US-based MVNO FreedomPop urged the service provider community to develop more flexible and tailored data bundles for customers.
During a discussion focused on future revenue generation opportunities, conversation moved towards the current landscape which is seeing telcos lose ground to over the top content providers. Ken Jackson from IBM Now Factory believes that moving to specific and tailored, content-based services is a feasible opportunity for operators to monetise services in new ways.
“Let’s look at the example of a service called NFL Now, a friend of mine can watch as much NFL as he wants, and doesn’t pay for the data he uses, he pays to watch football,” he said. “We have to return the value proposition to the customer, find out what it is they want to do, and offer it to them. Make everything customer centric, and orchestrate your business around what they need”
Haig Sarkissian from Wireless 2020 concurred with Jackson, and urged the service provider community to move away from basic all-you-can-eat data plans.
“5% of the heaviest users consume 40-50% of the network, and they pay the same as the majority,” he said. “That’s why unlimited data plans are unfair, because the majority are subsidising the data usage of the minority. Operators find that this is no longer scalable because if you eat more you have to invest more into capacity. I don’t see it changing any time in the future, unless there’s a fair way of using these “dumb pipe” plans. Is there hope for SP differentiation outside of these unlimited data plans?”
Allot Communications’ John Priest said service delivery is becoming far more personalised and tailored than in the past, suggesting operators should have a think about how they allow users to access the information and the content they want.
“I think we need things like VAS for the customer to make them feel in control of what they need. It’s not just the volume, it’s about the content they want and delivering that to them. Users want to know what they’re consuming, so the SP has to know what they’re consuming and how they’re consuming it, so that you can be more proactive in the customer care and guarantee a higher quality of service.”
“But here are a couple of examples of opportunities for SPs to generate revenue aside from traditional voice and data pricing models. Sponsored data solutions, for example, sees the user get free data if they’re going to certain sites, which is a partnership between the SP and the content provider. Similarly to music streaming services, SPs can strike up a partnership with advertisers.”
US MVNO FreedomPop’s Mauricio Sastre suggested there are opportunities for partnerships between carriers, app developers and content providers, help users consume new applications for reduced costs, or for free.
“In an effort to get their app out there, the app developers are considering paying for the data that their app consumes, so there can be a subsidised way for users to consume their application.”
Of course, when debating content services over service provider networks, we naturally reach the inevitable pain point of net neutrality, Wireless 2020’s Sarkissian rounded of the discussion on such a note.
“When do we get into the net neutrality debate, the big elephant in the room? Do you decide to charge more for content from Netflix, or NFL Now, or WebRTC services?” he said. “In my opinion, any resource that’s finite, and has the potential to be fully consumed, should be left alone from regulation. Otherwise you jeopardise the investment into, and the competition of, all of these services.”
Telstra switched on the first 150 of its free wi-fi hotspots throughout Australia last Wednesday, and expect a total of 1,000 to be operational before Boxing Day.
The move comes as part of Telstra’s $100m Wifi Nation plan, which pledges to establish two million hotspots across the country over the next five years.
The initial locations are amongst some of Australia’s busiest areas, including Melbourne’s Bourke Street Mall, Sydney’s Hyde Park and Brisbane’s King George Square. Future rollouts are expected to target “the heart of local communities”, as well as existing Telstra retail outlets and exchange buildings. Plans are also in place to follow the lead of other trial services in New York City and New Zealand, and repurpose existing payphone locations as wireless hotspots, with up to 8,000 such sites in mind.
Users will be allotted 30 minutes of access time at these hotspots, with existing Telstra customers able to use their home broadband accounts to access these hotspots indefinitely.
“This trial marks the beginning of our ambition to switch on more than two million hotspots across the nation over 5 years and give customers the best Wi-Fi experience in and out of the home,” Gordon Ballantyne, Executive for Telstra Retail, told Mumbrella. “We want customers to have greater options for connecting when they’re out and about. From browsing the web, streaming videos or sharing photos with friends, we want customers to have a taste of what the network will be like next year when Telstra Wi-Fi members will be able to use their home broadband allowance at the hotspots.”
The hotspot locations to be trialled before Christmas will be in towns and regional hubs traditionally popular during the holiday season, Ballantyne added.
Wireless hotspots in a busy shopping district represent a great opportunity for retailers, allowing them to expand online offerings and implement in-depth omnichannel marketing strategies while also providing potential customers the convenience of free internet access. That said, having the hotspots owned and operated by major telecommunications providers exposes a retailer to the potential of restricted utility and competition for bandwidth.
In a further, arguably more controversial move, Telstra have floated the possibility of allowing home broadband customers the option to open their wireless routers to Telstra’s free wi-fi network, allowing strangers on the street access to their bandwidth. Rolling out this service through new model routers for home broadband users, Telstra expect their wi-fi hotspot network to reach two million within the next five years.
This broad-stroke project is mirrored by the approach of competing telco Optus, who as Power Retail reported last month was consulting with local councils in a more selective, pick-and-choose state of mind.
It’s been estimated that the volume of global monthly mobile data traffic will exceed 15 exabytes by 2018. LTE is already proving to be a major bandwidth hog. While 4G represents only a fraction of mobile connections today, it accounts for at least 30% of mobile data traffic, thanks to a surge in high-bandwidth content such as video calling and music streaming.
Yet, the growth in bandwidth demand is not only about smartphones, tablets and other mobile computing gadgets. The sales of these devices are set to reach 2.4 billion units this year, but other types of connected ‘things’ will require their share of the already stretched networks too. Industry analysts have estimated that the number of wireless connected things will exceed 16 billion in 2014, up 20% from the year before. This growth is set to continue as the Internet of Things gathers pace, with more than double the number of connected devices – 40.9 billion – forecasted for 2020.
As existing 3G and 4G networks struggle to cope with the influx in data traffic, mobile operators are looking at solutions to offload traffic from their current base station networks. Small cells will be their solution of choice – so the number of small cells networks deployed across Europe is going to increase dramatically over the next few years. Small cells that are connected to city-wide superfast fibre networks will be the most economic and scalable way of ensuring that the needs of mobile users for more and more bandwidth are met in the future. Small cells will also be an enabler for the Internet of Things, paving the way for more connections than ever before.
Shortcomings of rooftop base stations
Today’s badly congested 3G and 4G networks rely on rooftop base stations. Many operators have been scrambling to acquire enough rooftop space for LTE, but still 4G networks don’t often meet their bandwidth hungry customers’ expectations, especially in dense urban areas such as pedestrian zones. While filling rooftops with base stations might have been a good solution for 3G, in the LTE era, the cells are becoming smaller, and mobile operators need ten times more base stations to cover the same footprint of a city.
Imagine a situation today where you have five people waiting for a bus, all with a brand new 150 mbps iPhone 6. The existing rooftop base station infrastructure is not able to cope with the sudden surge in bandwidth demand, as all five try to read the news, order groceries or download a restaurant menu, at the same time.
Recognising the need for faster evolution of mobile networks, the European Commission has committed to investing up to €700 million for the developments of ‘ubiquitous 5G communication systems’. This funding is part of a joint public and private sector initiative that aims to overcome today’s data traffic challenges. The ambitious goals of this 5G initiative include increasing wireless area capacity by a factor of 1,000 compared to 2010, creating a high-bandwidth network with 0% downtime, and enabling the roll-out of very dense wireless networks that are able to connect over 7 trillion devices amongst 7 billion people.
Getting ready for the future
As mobile operators gear themselves up for 5G, many of them realise that they can no longer rely on rooftop base stations. Why would a customer splurge on a 5G contract and a 5G-ready smartphone, if they aren’t able to get superfast download speeds? Instead, they will go to an operator that is able to give them the capacity they crave.
To eliminate the well-known capacity problems with rooftop base stations, future proof their networks and stay competitive, more and more European mobile operators are starting to tap into small cells. They are realising only small cells connected to fibre can bring mobile users the great user experience they expect on their LTE-enabled superfast mobile devices – down at street level where it really matters. When connected to fibre networks, these small cells can collectively deliver up to Gigabytes per second of capacity, making entire cities 5G ready in a cost effective way.
The mobile operator community has been talking about the potential of small cells for a couple of years, but up until recently, the size of the boxes prevented their widespread use. All leading networking vendors have invested in the development of more suitable equipment, so the technology is now ready to allow mobile operators to start planning their roll-outs in earnest.
To be able to roll out faster than their rivals, many European mobile operators are now starting to buy space on lampposts, billboards, bus stops or even public toilets, and equip them with small cells.
Small cells – the only way to 5G
Still in recovery from the substantial investment needed for 4G, some cost-conscious mobile operators might be tempted to tighten the purse strings with small cells to protect their margins.
Yet, they really don’t have a choice but to invest. If they don’t, they will lose customers. It’s as simple as that. Why would a user buy a top of the range LTE-enabled smartphone or smartwatch, if they aren’t able to make the most of its superfast download speeds – unless they are standing on a rooftop? Instead, they will get their device from an operator that is able to give them the capacity they crave.
Other small cells-ready players aren’t the only competitive threat for mobile operators. Street furniture providers might eat into the profits of those mobile operators who drag their heels over small cells too. Through city-wide wifi schemes, street furniture companies are eliminating completely the need for mobile users to use their operator for data in some cases. Why would a mobile user pay a premium for patchy 5G connectivity, if they can get better speeds and coverage with free wifi?
In any way you look at it, 5G will only materialise with small cells connected to existing superfast fibre networks. And all European mobile operators’ competitiveness – and survival – will rely on 5G.
- Traditional connected devices like PCs, smartphones and tablets now account for less than a third of all connected devices in use.
- Emerging categories alone will connect an additional 17.6 billion devices to the internet by 2020.
- The Internet of Things is leading to rapid growth in new categories like M2M, smart objects, smart grid and smart cities.
“Back in 2007 PCs accounted for two thirds of internet devices – now it’s only 10 per cent,” notes David Mercer, Principal Analyst and the report’s joint author. “The impact of the internet on daily lives has increased rapidly in recent years. Huge growth potential still lies ahead, in terms of both the number of devices relying on internet connectivity and its geographic reach.”
“The Internet of Things has already connected five billion devices and we are only at the beginning of this revolution”, says Andrew Brown, Executive Director and the report’s joint author. “Smart cities and smart grid are just two of the ways in which the internet of things will touch everyone’s lives over the coming years and decades.”
- GE estimates that “Industrial Internet” could add $10-$15 trillion to global GDP by 2035.
- Cisco says “Internet of Everything” could add $19 trillion in economic value by 2020.
Consumer adoption rate
- Cisco – 25 billion connected devices by 2015, rising to 50 billion by 2020.
- Gartner – 26 billion IoT devices in use worldwide by 2020.
- Acquity Group – Over two-thirds of consumers plan on buying connected technology for their homes by 2019. For wearables the rate is 50% and for smart thermostats it’s 43%.
- Navigant Research – 1.1 billion smart meters could be in use worldwide by 2022.
- On World – Over 100 million net connected wireless light bulbs worldwide by 2020.
The figures show that IoT has certainly captured the mainstream’s attention and many tech companies are launching IoT devices to gain market share. The biggest problem with IoT devices is not their availability but making applications that solve problems people face in their daily lives.
Develop unique apps that solve problems
Companies that are entering into the IoT market and are planning their own IoT devices need to focus not just on getting the hardware right, but also the software part. There are already many devices in the market in all the main sectors. To make your device standout, think from a consumer POV. Ask yourself these two questions about your IoT device plans.
Why would the consumer prefer your device over your competitor’s?
Does your IoT device just supply data to the consumer’s smartphone or does it provide a solution?
There are already over 400 devices in the wearables market alone (which is just a part of the IoT market). There are over 150 lifestyle related wearable devices. If your company is creating a wearable fitness device, it needs to fulfill a niche that no one else has tried so far . Enterprise companies planning to enter into the IoT field need to keep in mind these five points to stand out and be successful.
Devices that just gather data and show it to the user on the smartphone will no longer be enough to get the user’s attention. This means that instead of making an app that simply lets you read the data and adjust the device’s operation remotely; you should focus on creating an app that learns your behavior pattern based on how you use the device. This is what Nest Labs (which was acquired by Google) is doing with its thermostat. After an initial “training period” the smart meter adjusts the temperature throughout the house according to your preferences.
Develop a revenue model based on services
Companies that can develop a subscription based application tied up with an IoT device can create a recurring income stream. Just as there are desktop and mobile applications that operate on a freemium model and a monthly subscription service, IoT devices can also run 99 cent apps. Health apps such as Propeller Health’s asthma tracker work on a monthly paid subscription model. The doctors pay a monthly fee to get their patients on the system. The doctors can then monitor their patients.
Reducing the number of apps
This may seem counter-intuitive when considering the fact that all the IoT device makers are being urged to develop their own apps. But the key fact to remember in IoT is that consumers want a “universal remote control” that can help them access and control all of their linked devices.
Developing a different app for every device is like developing a different app for every contact number in your phone. You would have to launch a different application for calling each number stored in your phone. Can it be done? Yes. Should it be done? No.
The same thing is true for IoT devices and apps. This is where Apple’s HomeKit and HealthKit can be used to simplify the consumer’s life. These two frameworks make accessing multiple devices in one app possible and IoT device makers should take advantage of this opportunity.
The app makers can also collaborate with other companies that have APIs that make connecting multiple devices possible. This will result in true M2M connections among different devices, such as the home security camera being connected to the motion sensors, smart bulbs and thermostats.
This also means that developers have to choose the most widely adopted platform. The two leading ones at the moment are AllJoyn Project backed by Qualcomm and Open Interconnect Consortium backed by Intel. AllJoyn has the lead among all the platforms in terms of members with many OEMs on its roster.
AllJoyn gives developers a framework that makes interoperability possible across all major platforms such as Android, iOS, Windows, and Linux. This ensures that your devices will be able to work with other devices.
Making IoT devices more secure
Companies also need to focus on the security of the apps. From Dec 23, 2013 to Jan 6, 2014, in the first documented attack of its kind, IoT devices were used as part of an attack in which 750,000 spam emails were sent out. A smart fridge was also hacked and used in the attack. There are concerns that IoT device makers, in a rush to be the first in the market, are creating devices that do not even meet basic security features when compared to traditional desktop and even mobile applications.
There are many challenges for creating a “killer IoT device” but enterprises that want to benefit from this Second Industrial Revolution can do it by consulting with the right software development partner.
Cisco, IBM, and Intel presented an IoT Reference Model at the IoT World Forum in Chicago last week. The model is one more piece of evidence that the major industry players are working closely together to move the Internet of Things from the realm of hype to something real. The tone of the presentation which you can replay here was one that emphasized the necessity of an open, standards-based approach. The model is the collaborative effort of the 28 members of the IoT World Forum’s Architecture, Management and Analytics Working Group, with Intel, GE, Itron, SAP, and Oracle among the members participating. You can read a Cisco press release about the event and more about the goals of the IoT Reference Model here.
Jim Green, CTO of Cisco’s Data & Analytics Business Group, kicked off the presentation with a compelling explanation of how the model breaks down the vast IoT concept into seven functional levels, from physical devices and controllers at Level 1 to collaboration and processes at Level 7.
Devices send and receive data interacting with the Network where the data is transmitted, normalized, and filtered using Edge Computing before landing in Data storage / Databases accessible by Applications which process it and provide it to people who will Act and Collaborate.
Cisco’s Green explains that traditional network, compute, application and data management architectures won’t support the critical volume and connectivity needs for The Internet of Things (IoT). The IoT Reference model strives to bridge IT and operations technology and to address edge-to-center data challenges resulting from the integration of data in motion and data at rest in a world of 50 billion connected devices. It is intended as “a decisive first step toward standardizing the concept and terminology surrounding the IoT.”
The reference model provides a common terminology, brings clarity to how information flows and is processed, and progresses towards a unified IoT industry.
It provides practical suggestions for how to address the challenges of scalability, interoperability, agility and legacy compatibility faced by many organizations seeking to deploy IoT systems today.
A goal of the initiative is to define an “Open System” for IoT where multiple companies can contribute different parts and provide a first step toward IoT product interoperability across vendors.