The recent pandemic has transformed many companies’ attitudes towards IoT and cellular technology is at the forefront of future growth expectations. Addressing that demand is not a simple process given the complexity of the ecosystem, how cellular networks and suitable coverage are rolled out, and how end-to-end security of networks and devices is achieved. Cyril Deschanel, the managing director of Tele2 IoT, tells Steffen Sorrell, the chief of Research at Kaleido Intelligence, how the industry is working to achieve cellular IoT’s inflection point.
Steffen Sorrell: What has been happening with the IoT market over the last 18-24 months or so? How have you seen the market developing given the impact of COVID 19?
Cyril Deschanel: IoT has been growing steadily in the last two years, with around 12% revenue growth in Europe. There hasn’t been the expected fast uptake yet because COVID 19 has slowed down some application demand, such as in automotive. However, many new IoT applications are emerging, such as in the health sector, and this acceleration has persisted even as the restrictions implemented during COVID 19 have been lifted. Today, you have people videoconferencing with their doctors remotely from walk-in cabins, sending blood pressure and other readings, and with devices at home to measure things like sleep apnoea and so on. In other areas, we have a customer that’s using artificial intelligence (AI) and IoT connectivity to identify potential workplace safety hazards to prevent accidents before they happen. That’s important in environments like manufacturing, construction sites or ports.
We’re at the beginning of a new era in cellular IoT. The momentum with technologies like LTE-M, narrowband IoT (NB-IoT) and 5G is only just starting in terms of hardware availability, coverage and so on, and demand is ramping up. If you look ahead 5-10 years from now, there’ll be many more hundreds of millions of devices connected with these technologies, on top of other technologies like 4G.
There are also external drivers that are accelerating growth. Enterprises are making digitalisation a top priority for one thing, while sustainability is a key issue today. Companies want and need to deliver a better planet. I think it’s fundamental for companies to contribute, but you also need to use IoT to realise cost savings in that effort. There’s also a ramp-up in things like Industry 4.0, smart manufacturing and the relocation of manufacturing facilities to hedge against some of the supply chain challenges that came about during COVID 19.
There are many drivers on the demand side and new technologies on the supply side that will fuel growth.
SS: Talking about growth at Tele2 IoT, what would you say are the key factors behind that in terms of your own offering or your experiences with customers?
CD: Nearly a decade ago we started building our IoT operations from scratch with an ambition towards digital native operations, which has allowed us to move faster than others. I think one of the key things is that the organisation is dedicated to IoT, from sales to product and down to technical support through the IoT Network Operations Centre (iNOC), which is different to most operators, where if you call up their technical support, you don’t immediately get someone specialised in IoT. That iNOC team is also proactive – we don’t just monitor devices on our own network, but also those roaming on other networks, looking at devices’ behaviour over the last six weeks to detect any changes at the access point name (APN) level ,which helps us develop proactive approaches to connectivity management. If you have a fleet of tens or hundreds of thousands of devices deployed in the field globally, this becomes really important for you.
Today we’re very strong in Northern Europe and the Baltics and one of our main objectives over the next 18 months is to get closer to customers in Western, Southern and Central Europe, which is especially important for larger customers.
It’s strange to think of IoT companies not being digitalised, but they actually have focused on digitalising their customers, rather than themselves. You need to use that digitalisation to really streamline the customer experience via a single tool – from SIM delivery and provisioning to SIM logistics, contract management, rate plans, on-boarding and many other processes. At Tele2 IoT, within around three years, we’re aiming to become fully digital in our operations to remove any remaining manual processes to address customer needs.
Also, we don’t just focus on connectivity – we are the IoT-friendly experts. We know the hardware side well, so can offer recommendations for modules or routers and point customers towards suppliers so they can establish direct relationships with those players. We position ourselves as friendly experts who help customers make the right choices. This is especially important for bearer services like LTE-M and NB-IoT, where customers often find the ecosystem confusing. We help demystify eSIM for customers and are one of the few operators that allow enterprises to use our virtual profile on SIM cards that are not issued by us so that customers can benefit from our footprint and connectivity agreements.
SS: Speaking of coverage footprint, we touched a little earlier on massive IoT and the potential explosion in IoT connectivity. How do you see the market for technologies such as 5G, LTE-M and NB-IoT developing, especially on the roaming side for the latter two?
CD: We offer a full suite of technology support all the way to 5G but roaming for LTE-M and NB-IoT is probably the biggest challenge for the market adoption right now. Even though the technology exists, you need time to roll it out due to the fact that each and every network operator needs to fulfil a set of test cases with every other operator that wants to be part of the roaming network of that respective technology. Nevertheless, we have been one of the fastest in rolling out LTE-M – we launched it around two years ago, and already have 25 markets covered. We’re expecting support for another eight by the end of the year and ready to enable more as long as the roaming partners are as ready as we are. We’re pretty flexible in terms of prioritising how those roaming agreements get rolled out – when we see a customer need for a particular market, we can prioritise addressing that roaming need.
NB-IoT is quite limited today in terms of roaming and coverage, so LTE-M offers a great compromise given that it can also address a broader set of use cases. That said, we’re launching NB-IoT roaming this year and should have ten agreements by the end of the year. NB-IoT has mostly been used for national or local use cases, which is why many utilities are looking to utilise it. However, some constrained devices still need that roaming capability. There’s a bit of a misconception around NB-IoT, with customers expecting lower costs on the connectivity side, and a misunderstanding about how it gets rolled out. Actually, the main savings come on the device side, as NB-IoT devices are cheaper than LTE-M. Mass adoption of NB-IoT is going to be helped tremendously by the roll-out of 5G roaming; NB-IoT has been absorbed into the 5G standard, and the way that 5G roaming agreements are set up will mean that they will both go hand-in-hand in future.
We were the first to bring 5G to our IoT connectivity management platform, and we’ve seen the roll-out of 5G being the fastest out of all of the cellular technologies. We have already launched in 60 markets, and by the end of the year we expect that number to increase to around 100, which is remarkable. The thing about 5G is that it not only brings the LTE-M and NB-IoT technologies into the standard, which guarantees longevity for those low power use cases, but it also brings higher speed and lower latency, so you can address near real-time application requirements. This brings new use cases to the market – cellular connected CCTV and security systems, vehicles and transport systems equipped with autonomous and connected safety features, robots and drones, enhanced remote operations for manufacturing, mining and healthcare, and so on. We see for example a need from large companies to reduce reliance on manufacturing in places like China or India, so plans are being made for new factories. It’s always easier to build a connected factory than to retrofit an existing one, and private 5G networks can offer a tremendous benefit here.
SS: We can’t really talk about IoT without mentioning security, and how important it is for customers to have solutions in place to guarantee the end-to-end security of devices. How is Tele2 IoT approaching this?
CD: There are less security standards around IoT than in the telecoms world in general. Part of our responsibility is to push for standardisation, but also to not wait for the industry. We need to lead in the security area. In that context, we have been pioneering helping increase the security of the communication between devices and the companies that manage these devices. Last year we launched our first secure dedicated IoT fibre for our customers through our Equinix partnership.
It’s called Private Interconnect, and transports customer data through Tele2’s backbone fibre network onto the customer’s own fibre network. This takes the data away from the public internet and significantly reduces the chance that cybercriminals can access any data. We’ve complemented this service with Cloud Interconnect which uses Tele2 and Equinix infrastructure to offer a secure, pre-integrated connection to major cloud providers like AWS, Azure, Google and Oracle. Almost all of our customers are using some cloud service, but the type of security offering we’ve developed is not common on the market today. IoT is still a young industry, so the market regarding these types of offerings is not very mature. For example, you still see providers offering connectivity over public access point names (APNs) – this is really high risk.
The issue is that IoT devices can be used as a door to the rest of the network. Today, not a single industry doesn’t use IoT for remote operations, and security is only ever as good as the weakest link in the chain. If you don’t properly secure your devices, there will always be a door. Security doesn’t have to be overbearing – if you look at the traditional way of doing things, you’d use a private APN and virtual private network (VPN) like an onion layer, but then devices need to be configured one-by-one, which is hard to set up and maintain. Perhaps this is one of the reasons why IoT hasn’t adopted the security protocols that it should. Technologies like Cloud Interconnect are basically plug-and-play, as long as you’re using a cloud service, because they are managed at the network level. This is likely to become the norm when we consider how IoT security is implemented.
SS: You mentioned sustainability as a big driver for IoT earlier in the interview. How do you see these interacting?
CD: First off, we would like to be sustainable at Tele2 Group as a whole, and so we’ve invested a lot in the sustainability area, and we’ve recently been named one of the first 40 companies in the world to get approved against the net-zero Science-Based Target Initiative. Now all our customers need to do the same, whether that is due to regulations or other factors, so we want to help them in their sustainability efforts, because there are different needs around that. As you’re probably aware, the European Union is quite strong on that.
For some companies, it is clearly at the heart of their business model – take a classical traditional fleet management company. Their objective is to reduce the costs and the fuel consumption of their customers. And then you have an important change in the market where investors are now looking at the corporate profile of the enterprise and looking to see if they are investing in sustainability efforts. If you are not doing it today, I don’t think you will be very attractive as a company from an investor and shareholder perspective. This wasn’t the case some years ago.
Some people ask me, how many IoT applications are helping on the sustainability front? I would actually ask how many are not. For example, a couple of years ago that new factory would have been in China. But thanks to low latency technologies such as mobile private networks, production costs can be dramatically reduced, so you can benefit from local production, avoiding exploitative working environments and produce in your own market in a sustainable and eco-friendly way. We’re now moving in the direction where essential products are made in local markets, and also recycled in local markets thanks to connected and automated technology.
In conclusion, what has been expected to happen in the IoT world is finally happening. All cellular technologies are becoming enabled, the device ecosystem is becoming mature, and more importantly, society is becoming more demanding when it comes to connected applications. This makes us at Tele2 IoT conscious of our role as an enabler at the heart of this new digital realisation.
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