By Patrice Slupowski, VP Digital Innovation at Orange
Whether visible or not, technology is increasingly enabling commonplace objects to become more and more connected.
By 2020, the ownership of Connected Objects is expected to reach 15 items per person – a number that is likely to include applications that are yet to be invented.
While this presents new opportunities for a vast array of vertical businesses, it will also bring about new monetisation challenges for operators.
Connected objects are in a critical phase of the hype cycle, where the conversation needs to move beyond just discussing potential towards outlining clear plans for revenue generation.
For Orange, this is one of our focus areas and as part of our new strategic plan, Essentials2020, we outlined the goal to generate €600 million in revenues from connected objects by 2018.
In order to reach this target, we need to adapt and restructure our business models to help identify and capitalise on value-creating mechanisms in this space. The same goes for other operators.
The distribution of connected objects from existing retail channels is a natural evolution of an operator’s business model.
In addition to handsets, the sale of connected hardware will represent a consistent source of revenue.
The same applies for connectivity and data plans, due to the sheer volumes of traffic that will flow through the exponential rise of internet-powered ‘things’.
Web users are no longer the only ones consuming bandwidth.
By 2025, we estimate that half of all data sent through our networks will have been generated from connected objects and the IoT.
To manage and support this influx, operators will need to ensure the efficient use of spectrum and infrastructure.
This will be aided by increasingly powerful connections, with more widespread 4G connectivity and fibre connections helping to facilitate an enhanced user experience.
To supplement the cellular networks at Orange, we’ve recently broadened our connectivity offer by investing in a dedicated narrow-band network based on LoRa technology to gradually open from the first quarter of 2016 in metropolitan France.
For operators, it will be how they go above and beyond distribution and connectivity that will create the greatest growth.
For instance, the addition of another ‘connected’ service wrapped under a single contract allows operators to move beyond quad-play and become an even more central component in the lives of customers.
This is particularly pertinent for the health and wellbeing field or in connected homes, where consumers can add to their existing bundles with ease and integration.
For example, we launched Homelive in France last year which is a solution that links the consumer to the connected objects (thermostats, light switches, smoke detectors etc.) in their home, allowing them to manage appliances remotely.
As an operator, this was an important move, a step from offering a more classic fixed broadband to a new field of services and advice to the customer.
However, it is not just the B2C play that operators need to consider, the B2B market for connected objects presents a big revenue opportunity.
While businesses – both large and small - may have different motivations in a more connected world, they will continue to seek sources of innovation and cost-savings and it is data that will be the driving forces behind these endeavours – but only if it is used correctly.
With such large volumes of information, it requires rethinking collection, storage and security methods for the big data involved.
Our Datavenue platform, for example, offers a collated infrastructure to make sense of data from various sources in a robust and secured environment.
Its objective is to create an ecosystem that gives partners actionable insight from their data.
This is why there are also ‘horizontal’ market plays here for operators.
For instance, anonymous data sources can be analysed and combined with connected data to enhance processes, boost distribution, save costs and create new services via specialist third parties.
With this kind of platform, object manufacturers and start-ups can focus on the design and production of their object, relying on a scalable, trusted and nimble platforms for all common data management tasks.
Operators, such as ourselves, may look to enter commercial agreements with other industries, which are able to make greater sense of the plethora of data in order to develop new solutions that are unconnected to telecoms – such as the utilities and energy sectors.
All of this must be done while remaining a trusted partner to existing primary customers.
At Orange, we commit to protecting personal data and privacy, which means providing total data control to the customer throughout the relationship.
Of course, the commitment on data protection will be secured by storing data in European data centres.
It is a clear warranty that data storage and management will done with full compliance to the rules and regulations defined by the data protection authorities.
The ownership of data is key and trust relations are going to be reinforced by clear statements such as “users data must belong to users” and what is true for personal data should be the same for enterprises’ data sources.
Finally, security in each atom of the solution is an absolute must and once again one of the main levers of confidence.
Preserving customers’ privacy will always remain a critical priority and this should not change just because new data streams are being created.
Operators have a distinct part to play in the connected objects market.
In many cases, we have been amongst the first to initially ‘connect’ our customers through the rise of smartphones and data plans. However, the biggest opportunity for operators is to think more creatively about how to better serve their customers and engage in the appetite for connected objects.
It will be those that can add the greatest value to the customer’s evolving connected world that can reap the monetary rewards.