Will IoT create challenges for CSPs similar to the OTT dilemma?

And while the CSPs around the globe still struggle to agree on a strategy to tackle value migration and monetize OTT, we also talk about the benefit to CSPs from the investments in the Internet of Things (IoT). Call it Internet of Everything (IoE) if you are from the school of thought that considers the IoT concept obsolete.

The basic questions that arise when we try respond to disruptive innovation and new ideas in technology, are:

- Who will invest in the idea? Who will pay to build or upgrade the network?

- Who will earn as a result of the investment? So where does the cash tend to flow after the initial investments?

- Who will enjoy the services as a result of this investment?

- Will the innovation bring new revenue streams into the 4th curve or is it going to take away the revenues from the CSPs to nowhere like the OTTs are doing today?

So what is the relation of OTT to IoT? The unresolved dilemma of OTT is still hovering around the CSPs, where the OTTs suck their voice and messaging revenues away and nobody gets them in the end. The revenues taken away from CSPs are far more than the earnings of the OTTs. This gaps enlarges everyday.

So are the OTTs willing to pay for the smart pipes that the CSPs demand? Will the customers accept discontinuation of services by CSPs in any country or region? Can the CSPs stop investing in new and faster networks or stop developing and selling internet services? Will OTTs continue to ride for free on networks and destroy the CSPs business while earning peanuts for themselves from mostly free services? Will the OTTs acquire or build networks all around? What a dilemma this situation is!! Has anyone resolved it yet by giving some strategic options? I haven't seen any practical ones being implemented yet. Carefully draw the strategic problem of OTT and you will see that CSPs invest heavily in assets while OTTs take away the expected revenues to a black-hole. What a waste of innovation!

Now coming back to the relation of the OTT dilemma to the growing IoT phenomenon, analyse who is going to invest and where is the value going to be created. Will the CSPs have control of Internet of Things on the application layer? It is very easy to comprehend for anyone who understands technology that any fridge, TV, car or curtain can be monitored or controlled over the internet even today. Can the vendors developing the 'Things' inexpensively enable their devices to connect through conventional WiFi internet to their web servers for free? The things can then be accessed and controlled through a web browser from anywhere, which is a very old and successful concept dating back to the 1980s and 90s.

So the debate is not if 'Internet of Things' should be there or not? It should be there definitely and even if somebody doesn't want, it will be there. The question however is, are we trying to create a paradox for the CSPs yet again similar to the OTT dilemma yet unresolved? The whole discussion should be focused on value creation and the revenues in return. So if the CSPs are excited about IoT, how are they going to make sure that their investment for upgrading the networks for IoT are safe? What is the best strategy for the CSPs to monetize and ensure that the customers use their M2M or IoT services? It should be kept in mind that it is not a challenge for any home appliance, office security or any electronic equipment manufacturer to provide a web-based M2M management platform for controlling all of their devices using existing WiFi or very low bandwidth internet services. Isn't it going to be a similar situation where OTTs are accessed by users through cost-effective internet connections without any revenues to the CSPs whatsoever except their share of a cost-effective internet service? M2M services and IoT is definitely not limited to these device and is going to be huge. The number of downloaded OTT applications as of today is over 2 billion with 700 million active users per month. Are CSPs able to monetize those yet? Are CSPs able to get return on their investment as planned after experiencing value migration to OTTs and declining revenues? My brains are trying to equate the 2 Billion OTT application instances of today with the 30 Billion IoT devices estimated by 2020.

So, it is a good time to get excited about the next big thing. However, CSPs around the globe need a meaningful strategy in order to create value, by investing in a way that their control exists beyond merely Internet!

And before I finish the article, do you think OTTs will have more ideas to offer over the Internet of Things? Now start pondering about the number of plausible scenarios here. There should be new business models that demand investment from the telecom vendors, CSPs as well as the OTTs or application service providers and ensure returns to all in order to keep the telecom eco-system running.

Thanks for reading.

Disclaimer: All views and opinions expressed in this article are author's own and do not represent the views or opinions of any of the author's current or previous employers.