IoT : The Internet of Things
Connected objects were everywhere and IoT is now becoming the Internet of everything.
Connected cars attracted a lot of attention with connected vehicles on most of equipment manufacturers’ and MNOs’ booths.
Renault’s CEO made a keynote where he presented the timetable for assisted driving. According to Mr. Carlos Ghosn, despite their numerous initiatives and some acquisition rumours, Internet giants are not rivals to car manufacturers but allies, as they consider electric cars and they help car makers to promote electric cars.
Ford had even its own booth presenting the electric vehicles (both passenger and entreprise cars) with dedicated solutions. In the meantime, Vodafone presented a Porsche Panamera model equipped with its new Telematics solution since the Cobra acquisition.
Smart is also getting traction in the IoT space. In the “innovation city” hall (space dedicated to the connected objects), through the AT&T offering (Digital life) where the home could control through the smartphone and even through the connected car (equipped with an AT&T SIM card). When approaching the home, the car can trigger the opening of gate by itself for instance (pre-programmed distance).
While 5G is already in the tracks, very low throughput network technologies are also under the spotlights. After the recent release of its 100 MEUR fundraising campaign among telecom operators, Sigfox was also on everyone’s lips at the MWC. Among the main new shareholders, Telefonica confirmed its strategic investment and its willingness to integrate the technology into its portfolio to address additional verticals and applications.
The GMA (Global M2M Association) also announced a strategic collaboration with Gemalto and Ericsson to provide a Multi-Domestic Service based on a single SIM (using the eUICC technology) helping global enterprises (chiefly from the automotive and consumer electronics segments) capitalize on the growth of connected devices.
Growing market but still key challenges though
During his keynote, if AT&T Wireless CEO predicted that the smart phone will be the remote control of everything in the next few years, he also pointed out the key challenges to address in order to make the IoT market grow significantly:
• Privacy concerns
• Effortless (ease of use)
Data about devices and their users is generated in real-time, often by default and without the user being aware or having choice (especially for free apps). There is a need for a different approach to giving users transparency, choice and control over their data and privacy.
Generally user has a single choice : accept or not using the service, there should be gradual approach (like sharing some id attributes but not all of them).
Privacy could be a competitive stick for service providers, as users are becoming more aware of privacy.
Facebook in emerging countries
• Airtel: “Operators and Facebook are like the beauty and the beast, but the beast (facebook) is becoming more human nowadays”. Airtel was reluctant to introduce Facebook because of VoIP threat. Is looking at it like the “boiling milk”.
• Millicom, Telenor: have seen ARPU rise thanks to facebook launching, very promising for them.
• Wikipedia has the same approach of “Wikipedia zero”, dealing with operator to provide data access for free.
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In a matter of days we have seen several moves get under way that will no doubt have a profound impact on the face of the US mobile market.
It is a market that has been defined most recently by the overwhelming domination of Verizon Wireless (36% market share incomes: 55% Verizon, 45% Vodafone) and AT&T (33% market share), especially when postpaid subscribers, with their higher ARPU and much lower attrition rate, are counted. The top carriers also have a strong lead in LTE rollouts (+10 million subscribers for Verizon and 35% of its traffic).
Behind these two juggernauts lie:
- Sprint (16% market share) mired since its acquisition of Nextel in August 2005 in the migration of its subscribers to the iDen standard and struggling to return to profitability at a time when it must increase its capex in order to obtain a 4G network to compete with the market leaders
- T-Mobile USA (10% market share), subsidiary of Deutsche Telekom
- A gaggle of companies with more limited coverage, though two stand out: MetroPCS (3% market share) and Leap (2%).
This market structure came close to shifting when AT&T and T-Mobile announced a plan to merge in 2011, but the FTC and FCC put the nix on the transaction in December of the same year.
In late September 2012, T-Mobile and MetroPCS announced plans to merge. Sprint, which had more than once expressed an interest in M&A, was expected to respond by taking over Leap or outbidding T-Mobile for MetroPCS, or perhaps waiting until the two operators merged to snap them up together.
But ultimately the bump came from Japan, with Masayoshi Son’s bold investment (+ USD 20 milliards) through Softbank to take control of Sprint. The recapitalization of Sprint will allow it to ramp up its 4G rollout more quickly and increase its stake in Clearwire, which it just did by purchasing Eagle River Holding (MCaw)’s 1.5%, bringing Sprint’s share to 51%. The company (1% US mobile market share) made a name for itself by building a WiMax network at a time when the standard seemed like it could be a viable option to meet the needs of mobile and on-the-go Web users. Sprint, the big cable companies, Intel and Google had all invested in it. But the company has since had to acknowledge the failure of WiMax and the rise of LTE (driven by Verizon Wireless). Despite its debt, the operator had refocused on LTE, opting for TD-LTE technology (which is fairly close to WiMax) to use the 150 MHz it holds in the 2.5 GHz spectrum in many metropolitan areas. With a spectrum crunch looming, this will definitely be another asset for the new Sprint. Note that Softbank is also a proponent of TD-LTE for 4G.
This is a pretty bold move considering the premium Softbank paid, the increase in its debt and the difficult situation Sprint is in. But if it succeeds, it could deal a blow to the near-duopoly of Verizon and AT&T. Their ARPUs—which have been high and remarkably stable over recent years, as rising data revenues offset the erosion of voice income—could take a nosedive, shrinking margins for the two operators.
In the meantime, Deutsche Telekom can continue to bemoan the lost opportunity for its subsidiary to be purchased by AT&T in 2011, for the benefit of the synergies expected in the merger with MetroPCS seems meager indeed compared to the ambition of the new Sprint.
Over the medium term, it will be interesting to see if these new circumstances prove auspicious for the Verizon spinoff some investors would like to see: separating the landline and business services (formerly MCI) from the pure mobile player, which could then be combined with the European leader Vodafone.
But we’re not there yet. In the meantime, revenues from mobile services continue to grow at a rate of 5% to 6% YOY in the US, while in Europe we’re closer to -4%.
Yves GASSOT, CEO