Vodafone IoT has taken a commanding lead in the race to support a new generation of Internet of Things (IoT) infrastructure for connected devices. Today, this service connects over 220 million devices in more than 180 countries across over 760 networks globally.
Vodafone is positioning this as a hyperscaler for connectivity. The thesis is that by streamlining management, provisioning, and security, they can create value in a relatively low-margin business. In the long run, this could open new opportunities for higher-level services built on top of this core infrastructure, leading to an economy of things.
Even with this commanding lead, Vodafone is not standing still. The supporting infrastructure for 5G and emerging standards for automating service provisioning and new AI capabilities are undergoing a seismic shift as carriers begin launching a new generation of 5G standalone infrastructure and provisioning new SG.32 Remote Service Provisioning standards for simplifying the management of these devices.
This emerging infrastructure is also unlocking new opportunities to monetize a wave of 5G infrastructure that is more reliable and efficient. For example, NB-IoT supports lower speeds but can penetrate underground or deep into buildings. Meanwhile, LTE-M can provide sufficient speeds of 1.5 megabits per second for many applications, but is more reliable and extends across longer ranges than consumer-grade smartphone-oriented services.
Vodafone IoT CEO Erik Brenneis has played an essential role in setting out this strategic vision of an economy of things, bolstered by extensive partnerships across sometimes competing telecom providers and a significant network of domain- and use-case-specific implementation partners.Unlike traditional mobile phone networks, IoT implementations are use-case specific and need to be tailored to the vagaries of different industries, physical characteristics, cross-border complexities, and the use of new AI tools. Brenneis explains:
I think the IoT market has now reached a level of maturity in the post-hype cycle where the opportunity is no longer just about connecting devices. Our biggest advantage is that we go a lot further by providing a managed service that cuts down the complexity and allows our customers to adopt IoT simply and securely around the globe. If a company wants to scale its operations internationally, we have access to a vast range of network technologies (2G, 4G, 5G, LPWA, or satellite) all over the world that ensure customers have the best connection to suit their needs. What’s more, our Managed IoT Connectivity Platform enables customers to obtain the intelligence they need from their devices quickly. This means customers can make better data-based decisions to increase efficiency within their operations, as well as troubleshoot or rectify issues remotely.
Simplicity is key
An essential aspect of their strategy has been finding ways to improve the ease of use of the platform's user interface. One of the biggest challenges for companies growing their IoT estate across markets is maintaining visibility and control over large fleets of devices.
Vodafone’s key value proposition of thinking about IoT connectivity services as a hyperscaler is to bring the same kind of simplicity to managing large fleets of devices that virtual machines and the supporting cloud infrastructure brought to compute, storage, and physical networking. Only the sources of complexity differ a little.
In a traditional hyperscaler, the sources of complexity are the vagaries of managing hypervisors running across different physical machines and networks. In the IoT space, the vagaries lie in managing the diverse business, technical, and legal requirements for provisioning, operating, and managing wireless infrastructure owned by multiple carriers and regulated by different laws.
There are also cost considerations. For example, when an IoT-enabled car or container is shipped from Germany to Brazil, it would cost more to use a native German SIM service profile via roaming than to spin up a virtual SIM service profile that works easily on the Brazilian network. And this process is likely to become more streamlined as Vodafone takes the lead in implementing the new SG.32 SIM card standards that make remote management easier. This means SIM cards (or their electronic equivalents) can be managed at scale, unlike traditional approaches that required either an SMS connection or a user interface.
This centralized infrastructure also makes it simpler to integrate data across devices into a common analytics, security, and billing user experience for different teams within an organization:
- The finance team can quickly assess the cost of different business models and approaches.
- The security team can ingest security event data into their existing security tools.
- The development teams can design the data transformations and AI analytics for different business processes.
Brenneis says:
I’m a huge believer in making our customers’ experiences as simple as possible, and particularly single-pane-of-glass interfaces. To that point, Vodafone IoT recently partnered with Simetric to unify visibility of customers’ IoT operations in one place – which is an important step in creating the most seamless IoT management experience. There’s a lot our platform offers: reach, convenience, and complete control – helping businesses enhance their competitiveness both domestically and internationally.
So why now?
Many of the use cases for IoT deployments can be enabled by various 5G alternatives running on unlicensed spectrum, such as: Wi-Fi, Wi-SUN, RFID, Sigfox, LoRaWAN and many others. These approaches might entail lower operational expenses associated with the monthly bill for the actual communication services. However, they can also introduce capital expenses for building these networks, operational expenses for running them, and security and troubleshooting processes that require skilled labor. Also, 5G benefits from regulated spectrum, which can offer greater resilience and lower latency than unlicensed approaches.
Brenneis acknowledges that the path towards using 5G for IoT has been much slower than some of these competitors, but it is now starting to accelerate quickly:
We also have to bear in mind that whilst IoT or machine-to-machine isn’t new per se, running it over cellular networks was a major innovation. For the first time, this enabled truly global services. However, this takes time to ensure that standards are met, regulations are created and enacted, and that the entire network is interoperable and secure. If you’re going to build it, build it right, and even though cellular IoT may have taken longer to evolve, it has become the “go-to” solution for global IoT.
Security by design
The IoT industry has also had to confront the growing pace of cybersecurity attacks. Many early IoT deployments just assumed that a device would run in a trusted and isolated environment, and they often had minimal security built into the firmware or the authentication and communications infrastructure. Brenneis acknowledges:
Today, that’s a dangerous assumption. You can’t run large-scale IoT projects if security isn’t baked into your IoT management. That’s why security is now less about traditional perimeter-based controls and more about comprehensive protection across the end-to-end lifecycle of an IoT operation.
An essential differentiator of 5G compared to other approaches like WiFi or other unlicensed-band networks is that 5G supports a different security paradigm by enforcing identity at the chip level. This enforces and supports identity and access management at a more fundamental level than alternative approaches, such as Wi-Fi, that enforce security processes at the infrastructure level. In the early phases, this meant a physical SIM card. But increasingly and particularly in the IoT space manufacturers are taking advantage of electronic or eSIM cards or integrated iSIM built into the communication chip itself.
Brenneis elaborates on how this security by design works in practice:
With cellular IoT, we have a significant advantage in that the networks we use are already highly secure, supported by secure SIM and industry standards that are adopted by us and our network partners. We’ve also seen how our customers have embraced the need for security in their products and services, enabling us to work together to create a highly secure end-to-end IoT environment. However, security and cyber threats don’t stand still, so we continually improve our network monitoring, threat analytics, and cyber defence capabilities.
A growing concern has been the uptick in SIM-swap-style attacks. These kinds of attacks have grown tenfold in the UK over the last year, in which attackers manage to take control of an individual's phone number for various forms of mischief. Although these kinds of incidents gain widespread notoriety, they are often carried out through social engineering or by compromising employees associated with telco networks. This may be less of an issue in large-scale IoT deployments since changes can be enforced programmatically through secure interfaces and APIs.
New mindset required
Brenneis had his work cut out for him in building the business case and the perception required to drive the massive adoption of IoT services. He says:
The raw ingredients of the network were already there, but the challenge was to create an IoT business running on a cellular network that was originally designed for consumer traffic. The first step was to understand the customer need and then start building the platform and core network that IoT required. I think this is what really defined the future of the business.
From those early days of convincing customers that IoT was not the same as consumer, to today, where IoT is a massive global market in its own right (with its own standards, ecosystems, and customers), it has been fantastic both to witness and to be a part of this journey.
Future work lies in leveraging 5G SA (standalone) infrastructure to bolster the resilience and reach of services further. Also, innovations in AI will require collaborating with partners to understand new use cases and to build the supporting data management, aggregation, and analytics workflows to support them.
Expanding the hyperscaler paradigm
In the long run, Brenneis hopes to build a similar ecosystem of physical infrastructure and supporting software, platforms, and other systems comparable to what cloud providers have built for apps.
If done right, this will benefit from the same operational and commercial advantage that scale brings to traditional hyperscale players in IaaS, SaaS, and PaaS. The big difference is how they deploy these services. Brenneis says:
Many of our major customers have far more complex and bespoke requirements; our long tail is extremely long, and we use multiple infrastructures from multiple regional players. This means we can learn from hyperscalers who address these issues at the same global scale at which we operate. As we hyperscale our business, I think we will increasingly align the hyperscales, but not so much in the ‘what we do’ but rather ‘how we do it’.
My take
Vodafone has done a commendable job at scaling IoT fleets across regions and industries. Also, the 5G industry is at an interesting inflection point, as carriers have begun provisioning more 5G standalone infrastructure that operates beyond the limitations of earlier deployments. Furthermore, new SIM standards and integrated SIM cards promise to lower hardware costs and simplify onboarding and provisioning for IoT.
However, taking advantage of these innovations will also require overcoming the overexuberance and misleading marketing of early consumer 5G services. The early focus on super-fast speeds sometimes came at the expense of reliability. These new IoT variants support lower speeds at longer ranges and much greater resilience.
Also, the number of IoT devices is still much smaller than the number of smartphones. Each new industry and use case will require more work to map this complexity to existing enterprise apps and systems. Vodafone has done some good work streamlining these processes, and it will be interesting to see how competitors in the mobile and unlicensed networking spaces keep pace.
One interesting observation is that the revenue per device might be lower with these new services today than with traditional smartphones or even early fleet management IoT devices that support voice calls and higher-speed, always-on connections. However, Vodafone seems to be placing an interesting bet on the potential of the economy of things, which might support greater opportunities down the road.