Telecom leaders sell IoT services to increasingly savvy market

Over the past year, there has been a key change in the Internet of Things (IoT) market, as customers have become more aware of the technology and what it can do for them, according to officials from Canadian telecom companies. Eric Simmons, general manager of Rogers Communications Inc.'s machine-to-machine (M2M) division, said he's noticed more customers coming in with fully developed ideas about how they want to harness the technology to improve their business. "A lot of the conversations we've had in the past were helping to explain the industry, helping to explain what the value and benefits are of IoT," he said in an interview. But now, about a quarter of customers come in with their own strategy on how to use IoT, Simmons said. Another 10 per cent have an understanding of how IoT can help their companies, though they need someone from Rogers to explain it to their bosses, he added. The remaining 65 per cent are still unclear on how, exactly, IoT is going to help them, Simmons said — though this isn't a problem. "If you focus on core things that are within your strategy today, whether you want to reach customers in a different way, whether you want to achieve cost savings ... we can help you guys figure out where IoT will benefit," he said. Shawn Sanderson, vice-president of Telus Corp.'s Internet of Things division, also cited a growing sophistication among his customers. "There's a better understanding of what IoT is and there's also been a better delineation between what consumer IoT is and what business enterprise covers," he said in a phone interview. Ron Styles, CEO of Saskatchewan Telecommunications Holding Corp., also talked about dealing with a market that is more knowledgeable about what IoT has to offer. "It's that realization of what the opportunities are that are out there," Styles said in a phone interview. "People are very tech-savvy in this day and age, and you've got some generational churn starting to happen now as well." The bulk of what telecom companies currently offer in IoT is still for the business market rather than for consumers. Sanderson said some of the most popular IoT products Telus is providing are in the retail and restaurant sectors, like an application used by a drugstore chain that helped it discover that hair conditioner was selling better on rainy and humid days, giving it an opportunity to better place such products. Late last year, Telus launched what it called Canada's "first Internet of Things marketplace," meant to give developers of IoT technology "an instant sales channel," with marketing and billing support from Telus. Simmons said much of what Rogers provides in the IoT field is straight connectivity between devices and the applications. However, it also provides some end-to-end solutions, such as a system for monitoring food safety in restaurants and one for managing bank machines. Styles said most of what SaskTel does in IoT involves taking care of the connectivity between various devices while partnering with companies that offer applications targeted for specific industries, whether it's construction companies looking to automate operations for certain machinery or those in agriculture seeking easier ways to monitor things such as moisture in grain bins. "I think in the long term you'll probably see us gravitate to providing a full-range service to a company," Styles said. "That's really the next step in the evolution; you start to move yourself up the value chain." International Data Corp. said earlier this year that the core market for IoT products and services in Canada would more than double from about $2.88 billion in 2013 to $6.5 billion by 2018, representing average annual growth of around 18 per cent. Sanderson said those numbers generally reflect the kind of growth he's been seeing. Although Telus does not disclose financial numbers specific to its IoT business, he said: "We are definitely seeing that or more for growth in the IoT space." Simmons said Rogers's IoT growth is ahead of that pace, gaining about 24 per cent between 2013 and 2014. A Berg Insight AB report shows Rogers had a 60 per cent market share in the M2M-connectivity market in Canada in 2014, with 1.2 million subscribers. It said BCE Inc. was second with a 35 per cent market share, or 700,000 subscribers. Telus was third with 100,000 subscribers, or five per cent of the market, according to Berg. The report said Rogers benefits from the quality of its mobile network and its close relationship with AT&T in the U.S., while it also noted that Rogers is the only North American member of the M2M World Alliance. The report also said Rogers is aiming to derive $100 million from M2M operations this year, a figure Rogers would not confirm. Sanderson said Telus "has a strong leadership position" in IoT in areas such as building out the infrastructure needed to support such technology and helping to create an "ecosystem" among IoT innovators with its IoT marketplace. Styles said SaskTel's machine-to-machine (M2M) connections have approximately doubled in the last three years, though he's not sure if growth, particularly in his provincial market, will meet the projections. "It is growing," he said. "These things seem to have an inflection point, usually, where all of sudden they take off and growth shoots up and grows very, very fast. I don't think we're quite at that inflection point, but we're definitely down that path a fair ways." Simmons said it's still early days in the world of IoT, though it will eventually become as big a factor in society as smartphones are today. He said he can envision a day when we can use our phones to cue our cars to pull up to a convenient location so we can get in. Or we will be informed on the way home from work that someone has just finished the last of the milk, then given some convenient options about where to get more on the way. "It's going to be everywhere," Simmons said. "It really is going to impact our society in ways people haven't even imagined today, and I think it really is going to become very ubiquitous." Sanderson predicted that IoT will soon make a breakthrough in the consumer market. He described a future scenario in which wearable devices are sending data about one's fitness and health diagnostics into a medical database, resulting in phone calls to you when something about that data indicates you should have a checkup. He said much of the work Telus is doing regarding IoT is to solidify the infrastructure needed to allow some of these futuristic scenarios to happen. "There are great companies investing strongly in this space," Sanderson said, mentioning the likes of Apple Inc. and Google Inc. "And there are also a lot companies like Telus that are worried about the underlying infrastructure to increase the adoption." Styles agreed that a mainstream embrace of IoT by consumers is not far off. "I expect it's just around the corner," he said. "From some of the shows we've been to, some of the companies we're talking to, we're seeing smart electronics being put into now everything from fridges, stoves — things like that — and the home is now becoming a very automated, interconnected place for people live in. And we do expect that over time that will transform itself into an M2M package that will probably operate through the type of platform that we have here right now." Styles said he can foresee IoT applications becoming a more common way to diagnose problems with mechanical things like automobiles and boats. At the same time, there will be innovations using IoT that we can't foresee, he said, noting that it would have been hard to imagine, before Netflix Inc. launched in Canada in 2010, that within five years it would account for 35 to 40 per cent of Internet traffic, as it does now, he said. Sanderson said the goal in IoT is to create an environment where a person can walk into a store "and buy four random things and go home, plug them into the wall or turn the batteries on, and to have, within a 10- to 15-minute experience, all these things actually working." He said adoption of the technology will happen “a lot faster” at that point. "I don't think it's the cost of the technology pieces that they're buying" that discourages the technology's mass appeal, he said. "I think that fact is that they buy them and one thing doesn't work and they just give up." With this emerging technology will come new issues around personal privacy. The Office of the Privacy Commissioner said in its annual report released this month that it would issue papers over the summer that deal with privacy issues related to IoT. Simmons said he is not surprised this is on the commissioner's radar, adding that the security of information and personal privacy are priorities for Rogers. "I think the trick really is the err on the side of caution and err on the side of what your customer base is comfortable with and provide solutions that protect their data so that it can't be used in any way that they're not comfortable with," Simmons said. On the privacy implications of IoT, Styles said: "Any time you can accumulate large volumes of data, you have the ability, essentially — if you can identify who the data belongs to —to really dissect and understand somebody's life, their behaviours, living patterns, things like that. ... I think it's a valid area to look into and examine." Styles said he doesn't anticipate the privacy commissioner's interest in IoT will result in significant operational burdens for his company. Sanderson said he agrees measures need to be taken to prevent privacy breaches in IoT, though he urged an approach that does not scare people away from the technology. He said creators of IoT products and services need to design them securely, and people should be educated about the security risks involved. "But it doesn't mean everything is bad and everything is dangerous," he added. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Telecom leaders sell IoT services to increasingly savvy market

News | June 29, 2015

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