Posted on 15/Dec/2014
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By 2020, we are expected to have 50 billion connected devices. Will European Telecoms firms monetize the explosive growth of Internet of Things? The next five years will be critical. In the long term, much may depend on the development of 5G technology.

Like many memes which originate in the web domain (for example Web 2.0), Big Data has an impact on the Telecoms industry. However, unlike Web 2.0 (which is mostly based on the advertising business model), Big Data has wider implications for many domains (for example healthcare, transportation etc).

The term Big Data is now (2014) quite mature. But its impact is yet to be felt across many verticals over the next few years. While Telecoms is also a vertical, it is also an enabler of value for many industries. Hence, there are many areas where Telecoms will interplay with Big Data.

Based on my teaching at Oxford University and the City Sciences program at UPM – Technical University of Madrid – Universidad Politécnica de Madrid, I propose that the value of Big Data for Telecoms lies in IoT (Internet of Things)

IoT is huge, but how huge?

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To put in context: The first commercial citywide cellular network was launched in Japan by NTT in 1979. The milestone of 1 billion mobile phone connections was reached in 2002. The 2 billion mobile phone connections milestone was reached in 2005. The 3 billion mobile phone connections milestone was reached in 2007. The 4 billion mobile phone connections milestone was reached in February 2009.

So, 50 billion by 2020 is a massive number, and no one doubts that number any more. But IoT is really all about Data and that makes it very interesting for the Telcos. Data is important, but increasingly it is also freely available.

Customers are willing to share data. Cities are adopting Open Data initiatives. Big Data itself is based on the increasing availability of Data. IoT is expected to add a huge amount of data too.

But, who will benefit from it and how?

There is a phrase variously attributed to Oil Magnate J Paul Getty – ‘The meek shall inherit the earth, but not its mining rights’. In other words, Data will be free, available and Open, but someone will make money out of it. No doubt, the web players and various start-ups will all monetize this data. But how will Telecoms?

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Here’s why. IoT connectivity will come in two forms: Local area connectivity and Wide area connectivity. Bluetooth 4.0 and iBeacon will provide the local area connectivity. We can expect that from 2015 onwards – most devices retailers will support Bluetooth 4.0.

But the wide area connectivity will still need 5G deployment, which is also the most logical candidate for wide area IoT connectivity. And therein lies the value and business case for Big Data for Telecoms: 5G will be needed to connect the ‘IoT islands’ over the next years.

Will Telecoms monetize IoT ?

Time will tell. Specifically the next five years since most analysts predict that 5G deployments will take place in 2020 and beyond.