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What Drives Asian Telcos’ Successful IoT Strategies?

Telecoms operators are still unsure of the best approach to IoT, despite the potential benefits it could bring. Sherrie Huang, Head of APAC Research at Analysys Mason, believes that operators must focus on vertical markets that fit both their capabilities and the demands of the local market if they are to excel in IoT. Their strategies should ideally be pursued by dedicated IoT units with sufficient autonomy and resources, backed by alliance and partnership strategies that build on the broader IoT ecosystem. This article highlights some examples of best practice among telecoms operators based on recent research for the emerging Asia–Pacific IoT scorecard.

Reliance in India has benefitted from launching Unlimit – a separate venture focusing solely on IoT

Reliance Group announced the launch of its IoT venture, Unlimit, in November 2016, and provided the new unit with dedicated resources, a team with relevant expertise and a clear growth plan. It had 20 full-time equivalent employees by the end of 2016 and is recruiting to reach a total of 100 employees in 2017, which represents strong but reasonable growth, considering the size of the market.

An IoT business has different requirements to a traditional smartphone one. For example, LPWA devices have lower bandwidth requirements and revenue per connection will be lower, as will overall business revenue (at least in the early stages). Suppliers also require some knowledge of their chosen vertical markets in order to provide end users with suitable IoT solutions. We believe that telecoms operators must have an IoT business unit that operates with a high degree of autonomy from the core business (with reasonable performance metrics) to meet these requirements. However, the IoT business unit must still be able to leverage the resources and brand of the operator, whether as a subsidiary or as a unit within the current organisation.

Indosat’s IoT team enjoys sufficient autonomy as part of the Ooredoo IoT business unit

Setting up a subsidiary (such as Reliance’s Unlimit) is not the only way to build a successful IoT business. Telecoms operators are also building dedicated IoT teams in new or existing business units, while giving these divisions sufficient autonomy. Indosat’s IoT business is supported by a dedicated business unit. This unit has its own profit and loss statement and enjoys sufficient freedom to make decisions on IoT business.

China Telecom and China Unicom have invested heavily in their IoT businesses, which is critical to a successful IoT strategy

A successful IoT strategy must be supported with the necessary resources, especially investments. Large investments can also help convince the market that operators are committed to the business.

Both China Telecom and China Unicom have invested heavily in their IoT businesses. They formed dedicated IoT centres and set up their subsidiaries in 2014 and 2015, respectively. China Unicom announced a 5-year plan in partnership with the Shanghai municipal government in May 2016 to turn Shanghai into a smart city. This includes an expansion and upgrade of the telecoms network, as well as an NB-IoT platform with 3000 base stations, which is to be completed in 2017. China Telecom has an aggressive IoT network investment plan: it plans to extend its NB-IoT network (which currently covers Shanghai) to provide nationwide coverage in 2017. This is an ambitious goal, given the size of China.

Smart and Telkomsel are concentrating their resources on IoT solutions that meet the demands of local markets

Operators and the countries in which they operate vary significantly, and covering many vertical markets may not be desirable. An operator’s vertical focus must be aligned with both the company’s resources and local market opportunities if the strategy is to have a chance of success.

Smart in the Philippines is focusing its resources on developing solutions for the utilities and smart city sectors. The operator is currently trialling 3G SIMs with Meralco, the largest utility provider in metropolitan Manila. Smart is also seeking to take advantage of government legislation in the transport sector.

Telkomsel in Indonesia is focusing exclusively on transport and aftermarket automotive solutions, including fleet management. Its focus will remain on this area (which is a key, growing vertical in Indonesia) for the foreseeable future – it is preparing to offer end-to-end fleet management solutions in 2H 2017.

Maxis has enriched its IoT portfolio and widened coverage, leveraging both the Bridge Alliance and its partnership with Vodafone

Alliance memberships and partnerships can open up a range of IoT opportunities for operators. These can include wider geographical coverage, lower roaming rates, shared development costs, entry into new verticals and the potential to address other areas of the value chain (such as hardware and applications).

Maxis’s partnership with Vodafone provides the former with a portfolio of enabling and end-to-end capabilities that can help it manage its IoT connections, offer a worldwide service and target new sectors, such as automotive. In turn, Maxis provides Vodafone with access to the Malaysian market and enterprise channels. Maxis is also part of the Bridge Alliance, which not only expands the geographic coverage of its IoT services, but also enables Maxis to reduce procurement costs and share development risks with alliance members.

Learn more from Sherrie Huang about IoT network connectivity requirements and the impact of 5G at 5G Asia 2017.
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About the author:

Sherrie Huang is the lead analyst for Analysys Mason's Asia–Pacific research programme and is based in our Singapore office. Her research covers the entire Asia–Pacific region, and includes market data and forecasts for 17 key markets, as well as thematic reports covering key telecoms industry trends in the region including IoT/M2M, smart cities, video and multi-play, and enterprise services.

Sherrie has extensive expertise in fixed and mobile services and has covered the telecoms industry from various angles, including strategy, market sizing and forecasting, end-user case studies, cost modelling and regulatory issues. She previously worked at IDC, Ovum and ZTE in various Asia–Pacific countries in product marketing, project management, and research and consulting roles. Sherrie has a master's degree in computer science from the National University of Singapore (NUS) and a bachelor's degree in Electrical Engineering from Xiamen University, China. She speaks Cantonese, English, Hokkien and Mandarin.

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