Telcos Need to Connect Global Assets, Enable IoT

By the year 2020, data from nearly 38.5 bn IoT-enabled devices will fatten networks worldwide. Today, telecommunication companies are strengthening their skeletons to bear the weight

In the United States, smart water sensors are slowing the flow of precious resources, and apps are tapping satellite and sensor data to make parking easier for commuters. Open infrastructure platforms for the Internet of Things are supporting a range of smart, connected equipment that do everything from running elevators to tracking health to letting television viewers control the screen with their voices. Low-cost technologies are enabling conversations between machines, spurring development in smaller markets.

All of that data puts a tremendous strain on communication networks, the bones of the IoT. As Flex’s president of Communications and Enterprise Computing Caroline Dowling told, “The need for more services and bandwidth is accelerating.” Her group helps design and manufacture communication equipment for such companies as Cisco Systems, Ericsson, Huawei, and others. “There will be a 400% increase in traffic in the next five years,” Dowling said. “Video will grow by 700% in five years. To keep up, we need to increase broadband by five times in five years.”

Telecommunication providers such as AT&T, China Mobile, Vodafone, and equipment maker Huawei are working on the Internet of Things because customers of cellular, cable, and other related service providers demand bandwidth to let all of their devices communicate with one another. The telcos are sitting on considerable R&D experience that could be activated with relatively few institutional challenges. Equally important, they also have relationships with potential clients lined up from their other enterprise offer- ings, and possess the know-how to make sure the IoT will work.

The question is how they’ll bite off a piece of the profit up for grabs—the McKinsey Global Institute estimates that the IoT’s impact on the world by 2025—without stifling the access that