Why Carriers Won’t Need You Anymore
Dogs have a busy schedule — they have a lot of butts to sniff. So when they don’t have the time to call when they go out, you get worried. What’s an owner to do?
Giving them a phone isn’t all that practical. But if you’re on Verizon, there’s a “Pet Tracker” collar that’ll send you a polite text or e-mail when your dog decides to go out for a few errands. You can load up a map and track him down, and in the meantime, get reports to show you if he’s sniffing enough butts — I mean, exercise. Everything works seamlessly. Very cool, indeed.
Gadgets like these are a new breed of “smart” devices that can communicate. Whether it’s smart thermostats that you can control with your phone, or wireless pill bottle that send you a text if you forget to take your medication, 4G is changing the way we live. And at the center of it all? AT&T, Verizon, Sprint and T-Mobile. After all, someone has to connect these devices. And if dog collars and a series of recent overlooked acquistions by carriers gives us any clues, it’s going to be a very lucrative business.
The IPad Revolution
If you bought an iPad, you likely piggybacked off AT&T or Verizon’s network. Pop in a SIM card, activate your device and you were ready to roll. Carriers charged you by the megabyte, and you got all the cat videos you could watch. Life was good.
Carriers have done well drawning most of their revenue from subscribers, first in voice and text, then through data. But the truth is, that business is a saturated industry — everybody has a phone, sometimes two. Telecoms, meanwhile, are dealing with sinking voice and texting revenue, an imbalance between data costs and earnings, and new competitors like Facebook and Google.
You can say the iPad revolutionized the PC industry, but it actually changed the telecom sector as well — but not in the way you think. Prior to the iPad, the Kindle spearheaded the idea of a wireless-connected tablet — you could browse and buy e-books, and get it sent wirelessly to your device — but it wasn’t all that practical to browse the Web. No, the iPad really opened the door to the data business for telecoms.
The New Opportunity
So what’s the future hold? How will it change our lives? When Sprint CEO Dan Hesse talks, he has this demeanor about him — sort of that uncle you can count on to give it to you straight — and he gives it to you straight on the future of data.
“The key for Sprint is that old Gretzky quote, ‘You’re not that fast, how come you’re always at the puck? I skate to where the puck is going.'” he said. “And the puck is going really to data. It really is an exciting time not only in telecom but in digital technology.”
He isn’t referring to consumer data, but rather what’s called machine-to-machine, or M2M, technology. That’s everything from electricity meters that relay information to engineers to parking meters that you can operate from your smartphone. Simply put, it’s devices that can communicate. And the appeal of smarter devices is that it reduces operating costs, significantly.
Of course, none of this is particularly new or complicated. In fact, smart devices have run on 2G connections for years. But 4G is shifting the way companies as a whole are monitoring and controlling their operations. And in the process, telecoms are becoming the gatekeepers of that network.
Why carriers? Companies can connect devices over, say Wi-Fi, but if there are network problems — and there are plenty — it can cripple customer experience. That’s a problem, and companies need support. Meanwhile, carriers will be the first to know what’s going on, and what to fix, so they won’t be cut out. But just to be safe, they’re also providing valuable services, like analytics, to meet the growing demand.
If you’re not scouring the neighborhood for your dog, Pet Tracker has a nifty feature that can show you “activity” charts, telling you whether he’s getting enough exercise throughout the day. It’s exactly this type of value-added service that’s changing how we live and interact with gadgets — and a glimpse into the future role of telecoms.
Different Strategies, Same Goal
For carriers, consumer devices still represent the biggest opportunities for wireless growth — industries like automotive, health care and utilities. How big? According to the Yankee Group, M2M revenue for carriers is expected to reach $9 billion by 2016.
But while the potential profits are clear, long-term strategies are not. Part of the problem? It’s not as simple as setting up a network and collecting the cash. There’s a significant gap traditional companies must bridge to transition to smarter products. Most can’t do it themselves, and many look to carriers for a solution. Unfortunately, telecoms often lack the expertise to help them connect. But they’re forming partnerships to customize networks and offer solutions to bring in related industries.
How? In January, for example, Verizon acquired NPhase, an M2M platform, to beef up its connected devices services. NPhase helps companies connect to smart grid, fleet tracking and other Web-connected services. Then, in June, Verizon bought Hughes Telematics, a company that makes in-car dashboards, giving it an entry into smart vehicles. Hughes also has a “Lifecomm” unit, giving Verizon a beachhead to push into the burgeoning mobile health sector.
AT&T decided to build an in-house division to move into connected devices. While less ambitious than Verizon, AT&T standardized series of tests and certifications to help healthcare, education and home automation companies add connectivity to their devices. Sprint is working with Chrysler to connect the automaker’s Uconnect program, another smart dashboard. T-Mobile, meanwhile, strayed farthest from the herd. Rather than working directly with companies to add connectivity, it’s working with Raco Wireless, an M2M distributor, in a wholesaler strategy. Raco handles all the tools and manages and monitors deployments.
Looking Ahead
AT&T, Verizon, Sprint and T-Mobile have different strategies, but all four have made connected devices a focal point in their future plans. So what does 2013 hold? Well, as a consumer, you won’t see a difference on your phone bill, yet. But behind the scenes, carriers have built the wireless infrastructure necessary to support a new generation of smart devices. And once they gain momentum, carriers will have a lucrative new source of revenue. Whether that translates to lower costs for consumers is yet to be seen. But if you thought you, the consumer, were the reason they furiously spent billions to expand and speed up their networks — think again.
Telecoms are looking ahead to companies, not consumers, and the globs of cash they’ll have to pay to connect to data. Consumers are just the solution for today, but the long-term potential is in all those refrigerators that need connecting to buy your groceries, all those self-driving cars that need connecting to pull directions and all those wireless pills that need connecting to measure and send back cholesterol levels in your stomach.
It sounds like a sci-fi movie, but it’s close to reality. Smart gadgets are being developed and rolled out, and they’ll come in droves — all running one of the 4G wireless networks. And before you know it, you’ll wonder how you lived without your wireless pet collar. But best of all? For now, you can get the peace of mind knowing you’ll be able to track your dog, and he’ll get to enjoy his butts. It’s the best of both worlds.
