Cluster Competitiveness in 6G Ecosystems

Finland’s academic, commercial and government connections can inspire other 6G clusters

3GPP’s December 2023 announcement, committing to develop the specifications for 6G, resolved one market uncertainty about 6G. 3GPP offers a proven governance framework for open, consensual and international technical standardization. It is also a globally recognized institution due to its track record and regional standardization partners.

There are, however, other technical and socio-technical aspects of 6G that are likely to alter 3GPP standardization. For example, there will be new frontiers to address as the scope of mobile networks extends to distributed communications and computing systems. In the socio-economic arena too, new expectations are taking shape. These touch on resource sustainability, capabilities to ensure resilience and trust, and socio-technical issues arising from digital world applications that go beyond purely human and machine communications.

2022 in Review: A Sudden Shock of Realism

Amazon opened 2022 with announcements targeting the smart home community that is forming around the Matter protocol and opportunities for IoT in non-residential sectors. These two initiatives are examples of how some large organizations are trying to have a “finger in many pies” to make the most of the variety and scope of IoT opportunities. 

2022 closed with a flurry of Matter-compliant product launches from a range of large and small businesses. The year-long journey and commitment to an industry-alliance model point to a degree of realism about the IoT market. Behind the technology fanfare, they highlight how businesses and getting to grips with commercial market-development and the technical challenges associated with interoperability, both of which are needed for scale. Meaningful collaboration seems to be taking hold compared to “go-it-alone” strategies. 

Business Reengineering and Twitter

The recent and abrupt change in Twitter’s governance model has large businesses scaling back their advertising spend on the platform. Anecdotally, advertisers spend a small proportion of their budgets on Twitter compared to larger scale platforms such as Facebook and YouTube. As a result, advertisers can disengage gradually without completely losing touch with the public.

IoT is Dead; Long Live IoT!

Copenhagen Business School recently hosted an expert panel [1] to explore how algorithms and data shape competition in the context of platforms. These might be e-commerce or social media platforms that exploit consumer data for advertising and behavioral-nudging purposes. The dynamics of this market are changing, partly due to privacy regulations. Competitive strategies, such as Apple’s App Tracking Transparency (ATT) offering, are another factor [2]. 

Among the economic, competitive strategy and technology topics under discussion, the discussion around data seemed particularly relevant to how the Internet of Things (IoT) market is developing. 

IoT Day: Strategy and Competitive Advantage

Over the past few years, the World IoT Day movement [1] has drawn considerable attention to the opportunities presented by IoT technologies. As the industry scales up, strategists will want to study long term and structural changes that will shape the market in years to come. This is important, both for organizations intending to adopt IoT and solution providers hoping to strike it big. 

Late in 2021, the strategy consultancy McKinsey updated its 2015 study and concluded that the IoT was coming of age [2]. If nothing else, the investment in making this update sends a signal that IoT is firmly on the corporate agenda. Firms need to treat IoT as essential to future business prospects. IoT is no longer a headline grabber, a discretionary investment, or a niche application. 

IoT Platforms and Digital Regulation

A couple of recent and seemingly unconnected publications provide food for strategic thought on the topic of IoT platforms. 

Platforms are an important topic for the following reasons. As businesses deploy Internet of Things applications, many will turn to the service provider market for affordable, feature-rich, and well-engineered platforms. Platforms also represent an important topic for the large Cloud-providers, such as Amazon Web Services, Google Cloud and Microsoft Azure, who understand the importance of platform strategies and data. 

The first publication that caught my attention is a short article on the IoT Agenda site. It outlines that issues of IoT technology fragmentation and discusses the trend towards concentration in the IoT platform market [1]. The second is a study by a group of economists with an expertise in platform economics and competition policy. They studied the EU’s Digital Markets Act (DMA) and its regulatory implications for large and dominant digital platforms [2]. 

Opportunities to Apply AI and ML in IoT Systems

My last article [1] introduced a framework to explain the basic elements of an IoT system with the aim of highlighting where Artificial Intelligence (AI), Machine Learning (ML) and Digital Twin (DT) components are typically added. 

The aim of this article is to explore the longer-term opportunities for AI/ML technologies and how these will shape mobile operator and technology provider business strategies. There are two developments to consider in drawing out this roadmap. One is the tighter integration of IoT and AI/ML technologies vertically along the technology stack. Think of this as a way of improving how well different components interact to improve reliability and service quality. The second concerns a new set of requirements that users and regulatory agencies will expect from AI/ML systems. As an illustrative example, consider an AI application that issues an alarm that a machine is about to fail with some probabilistic context such as “greater than 75% chance of failure in the next month”. Is it enough to stop a production line based on this read out? In practice, there is likely to be a higher-level requirement that determines the trustworthiness of this alarm based on its performance over time. Like the boy who cried ‘wolf’, does a sequence of alarms point to a deteriorating piece of equipment or a faulty sensor? The judgement required here involves a different set of data and potentially the involvement of other, supervisory AI/ML sub-systems.

Regulation and Competitive Advantage

A couple of years ago, I was in conversation with a group of technologists and investors at the annual meeting of the Transportation Research Board. This gathering takes place every January in Washington DC. Think of it as the transportation industry's equivalent of Mobile World Congress. 

Our group was discussing the then emerging market for connected cars. I threw in a question about the impact of regulation on their business strategies. Regulation matters in relation to safety, liability and insurance solutions, and data management. Factors such as these matter more to commercial viability than technical innovations. The need to factor regulation into technology choices and business models was evident even then. The universal response I got from the group was that innovators needed to be given the leeway to develop the technology and novel services. Putting it explicitly, regulators needed to stay well out of the way.

The same issues are apparent as new markets develop on top of the foundations of mobile communications. One example is the sharing of consumer data derived from mobile phones [1]. Another is Facebook's difficulties in launching its Libra currency and payments initiative, ahead of regulatory buy-in.

Telcos and Smart Cities

Earlier this month, the publications team from Mobile Europe hosted their Smart IoT Connect event in London [1]. This is one in a regular series that examines the role of the telecoms ecosystem against

a backdrop of opportunities across the Internet of Things (IoT) industry. I was fortunate to attend and here are a few highlights from this year’s event which focused on the smart cities sector.

In broad terms, the supply-side of the industry is maturing. Businesses are focusing on the practicalities of closing commercial deals in contrast to launching exploratory pilot projects. There is a realization that the smart city proposition and sales process spans a wider set of parameters than telco connectivity. Telcos are talking about new commercial models and service solutions, such as data management, that map to higher levels of the IoT solutions stack and above the connectivity layer. However, based on what was presented it is going to take time to translate strategy into execution, at scale, and commercial success. The number of local government representatives attending the event reflected positively on the demand side of the equation. It validates a key theme throughout the event about the need to bridge the public-sector-to-telco knowledge gap.

Looking up the IoT Value Chain

People are so preoccupied with everyday tasks that they often miss out on what is around them.

Walking down the street, how often do you catch people looking up at the features of old buildings or roof-level signage? The same is true in business life. Let’s consider how this plays out in the IoT market.

Recently, I heard a telco executive explain why mobile network operators (MNOs) focus on connectivity. He pointed to two factors. One is that connections and data connectivity are straightforward things to measure, with a well-established legacy from mobile phone sales. In effect, businesses manage what they can measure. The second is that it is easy to look down at the network from the MNO’s vantage point in the IoT technology stack. It takes an effort to lift one’s head and look up. That’s much like missing out on the architectural features and art work when we walk head-down (even without the excuse of a smartphone) along a street.

Occasionally, however, it makes sense to look up, not just to appreciate your surroundings but also to get a sense of whether the world is changing and how you might need to adapt.

Rumelt on 3G: Lessons for 5G and IoT

The consultancy McKinsey recently republished a 2007 interview with Richard Rumelt [1], professor of strategy at UCLA’s Anderson School of Management. Rumelt opened his commentary on strategy by noting that most corporate strategic plans have little to do with strategy. Instead, they typically end up being “three-year or five-year rolling resource budgets and some sort of market share projection”.

What senior managers want out of the strategy process, according to Rumelt, is a pathway to substantially higher performance. That can happen in one of two ways. A firm can either invent its way to success or, it can quickly and skillfully exploit some change in the environment. Examples of such change include technology, consumer taste, resource price or competitive behavior factors.

The telecoms industry finds itself at the intersection of many such changes. On the supply side, the arrival of 5G networks and the standardization of low-power IoT devices provide two industry transition opportunities. These developments will usher in new service concepts and business opportunities.

Who is setting the IoT agenda?

Several weeks ago, I was in a briefing call with a panelist who was preparing for an event on privacy and security challenges in the IoT market. This was in the context of possible guidelines emanating from the US government.

There was the usual discussion about the pros and cons of light-touch and self-regulatory approaches, in keeping with the conditions that fostered innovation and investment in the Internet.

However, the world has moved on since the late-90s; it is worth spending time to reflect on today's conditions and what new approaches are warranted. And, to what extent will US agencies set the future direction?

IoT Complications for MNO Business Units

Mobile operators, it would appear, remain captivated by connectivity solutions. Most recently, low-power technologies (e.g. LoRA, NB-IoT, SigFox etc.) have dominated the industry agenda. This outlook is slowly starting to change. Ian Huh, SVP of SK Telecom’s (SKT) IoT business described fees on its LoRA network as amounting to just 10 per cent of those on 3G/4G networks [1]. He pointed out that this would need at least a tenfold increase in the number of connected devices in highlighting the potentially destructive impact on revenues.

SKT’s comments are timely and show that the debate is shifting from shiny new technology to earning commercial returns. MNOs need to do something, over and above the sale of SIMs and connectivity, to capitalize on the wider IoT business opportunity.

IoT and Smart-building opportunities

What are the important industry dynamics in the smart buildings sector and is there a role for the IoT? Last week, I attended the 6th Building Energy Summit [1] to hear from building owners, building operators, real-estate portfolio managers and corporate-sector tenants.

As in all other industrial sectors, much of the discussion highlighted the established processes and the conservative nature of this sector. Most notably, procurement and architectural design processes make it difficult to introduce truly innovative construction ideas into the sector. In existing buildings, the challenge is to introduce new technologies and working practices in a highly cost conscious environment. The sector is however becoming more technology-friendly and data driven in its decision making.

There is growing acceptance of the idea that IoT is the way to improve decision making and deliver innovative services. Among the IoT use cases discussed, successful projects typically received approval, after considerable financial scrutiny, and realized a return on investment within a period of 1-2 years.

Making an Impact with IoT and Digital Transformation

A few weeks ago [1], I wrote about the potential for telcos to take advantage of digital transformation opportunities to boost industry growth. At present, much of what passes as digital transformation in the telco sector focuses on new technology (NFV, SDN, 5G etc.). This is understandable given the desire for innovators and vendors to sell new technologies that help service providers adopt more agile and flexible operational models.

However, these ideas do not correspond to transformation in the sense of entering new markets or, of driving revenue growth in new service categories. NFV, SDN and 5G are more likely to lead to juggling between CapEx and OpEx budgets which will have an impact on profitability and depreciation financial metrics rather than driving top-line revenue growth. The Internet of Things (IoT) does have the potential to open up new growth markets and is starting to be recognized as an enabler for digital transformation.

So, is there much evidence that will encourage telcos to enter completely new markets and drive meaningful revenue growth? What characterizes such opportunities and how should telcos approach them?

Will digital transformation save the telco industry?

Over the past few weeks, McKinsey [1] and the World Economic Forum (WEF) [2] have weighed in on the debate about long term growth prospects in the telecommunications sector. They have valid concerns which arise from projections for low revenue growth and shrinking margins for telecommunications service providers. The near term prospects for many telcos involves the sale ever increasing volumes of data and cloud services to consumer and business customers on the assumption that price elasticity effects will work in their favor and not undermine top-line, revenue growth.

The McKinsey and WEF ideas rely on optimizing the core business and building at the periphery to support digital services and enhanced customer experiences. These approaches take a narrow view of the market for telcos and one and define competition in terms of other telco service providers. Is that really the right way to address the strategic challenge that faces the industry?

SK Telecom’s IoT strategy looks beyond Connected Devices

Over the summer, Korea’s SK Telecom outlined its strategy to capitalize on the IoT opportunity. From a networking standpoint, SK Telecom has invested in a nationwide LoRa network. It plans to offer a hybrid offering in parallel with LTE-M over its conventional mobile network. This combination allows SK Telecom to span a wider spectrum of coverage and cost-structure alternatives. Its technology choices use licensed and unlicensed spectrum, support differing data-rates, and, offer a broad range of embedded module costs to deal with barriers to adoption in low price-point (or low perceived value) devices.

A tweet to IoT’s low-power, wide-area networking proponents

It’s amazing to think that Twitter recently turned ten years old. This milestone came on the heels of a rumored, CEO-level assessment [1] of whether to relax its longstanding 140-character limit on tweets. Some of the reaction to this development questions how Twitter, a major influencer of condensed, bite-sized communications, could pull the rug from under its core proposition.

There’s a timely lesson in Twitter’s evolution for the rapidly growing band of companies developing low-power, wide-area and small payload IoT applications.

2015 in Review: The strategic balance between IoT scale and value

Corporate activity in the M2M/IoT market continues to grow in line with the roughly 30% growth rate that many market analysts forecast for connected devices. Acquisition and investment activity grew at a much faster rate over the past few years and reflects a positive corporate attitude to this important market.

Mobile network operators (MNOs) were very active especially in the low-power, wide-area networking (LPWAN) arena which is positive in terms of driving industry scale. Companies in the platform services segment were even more active highlighting the scope for value creation higher up the industry value chain. The industry dynamics between MNOs and platform service providers will set up an interesting strategic challenge – that of scale vs. value – which will affect all market participants over the coming years.

Co-opetition in Digital and IoT markets

Several news stories have circulated over the past few weeks in connection with the potential acquisition of Nokia’s mapping business, HERE. The most recent stories have a group of German auto-manufacturers winning out over Uber although there has been no formal announcement to this effect.

HERE is an important enabler for mobile value-added services. One element of its technology captures location content such as road networks, buildings and traffic patterns. Other businesses then purchase or license this mapping data along with navigation services from HERE. Smartphone Apps, to make use of mapping data, form a part of its technology portfolio.

The potential acquisition of HERE by three German car makers – BMW, Daimler and Audi – is relevant to the telecoms industry for several reasons.