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Nokia’s EDF alliance for LPWAN testing reveals its loosening ties with MNOs

Nokia has been loosening the ties with cellular technologies and cellular operators in a bid to expand its business model and appeal to enterprises and alternative service providers. In doing so, it may start to compete with some of its traditional customers, potentially offering services – especially in the Internet of Things – which bypass the MNO and go straight to the enterprise or vertical industry.

In the longer term, much of that business-to-business activity revolves around Nokia’s platforms for cloud-based core networks and network slicing. In the near term, a clear step towards the slicing nirvana is seen in its rising support for unlicensed spectrum technologies alongside cellular.

Last week, for instance, it said it was working with the R&D division of French power utility EDF, to test the performance of various LPWAN (low power wide area network) technologies, including licensed and unlicensed options. The aim is not primarily to assess whether LTE-based networks (NB-IoT and LTE-M) are superior to what Nokia calls “other emerging, largely unlicensed IoT technologies”, but to explore the capabilities of LPWANs as a whole to support industrial applications with rigorous requirements in performance, critical response, latency or security.

This exclusive partnership claims it will establish a comprehensive LPWAN testing regime which will be unique in the industry, and could throw up some valuable insights into Industrial IoT applications and network requirements. IoT use cases with a need for low latency or high criticality are seen as some of the most interesting to make the investment case for 5G, yet the business case and revenue potential for service providers is largely unexplored, as are many aspects of wireless performance.

The French utility will use Nokia TestHub Services in the vendor’s Device Testing Lab in France to test IoT/M2M objects, chipsets, modules and user devices across wireless technologies and frequencies. Nokia says this enables devices to be tested on real network infrastructure rather than a simulated network.

“The Internet of Things offers tremendous opportunities for our group,” said Stéphane Tanguy, head of IT Systems at EDF R&D, in a statement. “Among the connectivity solutions, it is essential that we understand the performance, the maturity and the adequacy of each technology for our different use cases by an objective and agnostic approach.”

The EDF partnership is the latest example of Nokia working directly with enterprises on connectivity and platforms, in such a way that the role for the cellular operator is not clear. The Finnish vendor always insists that, in its pursuit of increased revenues from services and platforms for verticals, it always keeps the MNO involved, but with shared spectrum being increasingly part of the mix, it is easy to see how Nokia might squeeze the role of its key customer group in some scenarios.

A year ago, it announced two IoT services platforms, an upgraded IMPACT, and WING, which illustrate Nokia’s rising reliance on ‘as-a-service’ offerings, enterprise/IoT deals and eventually network slicing, to drive the growth which is eluding it in carrier networks.
IMPACT enables enterprises and service providers to manage their own IoT networks and services, while WING allows them to outsource that to Nokia itself. Billing it as a “worldwide IoT network grid”, WING represented an aggressive move to fulfil Nokia’s promise to move into business ‘adjacencies’, to restart growth and offset tough pressures in its core network equipment business.

That entails becoming a company driven by software and services, and it is very clear that managed services will be the biggest link in the value chain in many IoT markets. Deploying, connecting, managing and securing huge numbers of connected devices, and handling all the data they produce, will be far outside the comfort zone of most enterprises, governments and even operators – even more so than running a mobile network, and even in that market, managed services have been on the rise.

Managed services already account for about one-third of Nokia’s revenues, but are targeted mainly at the traditional telco base, and in that market, the firm has been overshadowed by the might of Ericsson. Nokia now hopes to deploy and manage networks and services for its key verticals too. In IoT managed services, the market is immature and there is everything to play for.

There is also, however, a long line of companies chasing the opportunity, including IT giants like HPE; the network vendors; some of the big operators; and vertically specific big hitters like GE. So WING will need to make a big splash to give Nokia a good spot on the starting grid.

Like most IoT ‘platforms’ emerging from established giants, much of WING is a tying-together of existing capabilities, including the IMPACT software itself, and managed services offerings. Nokia is pushing the multinational angle in particular, arguing that cross-border IoT networks and operators just don’t exist yet. So it will work with a host of network partners round the world – wired and wireless operators plus specialist vertical networks and potentially unlicensed systems – to offer a global connectivity grid.

Of course, its own technology enables the “command center” at the heart of the grid, with customers being able to manage devices, billing and customer care on a global basis via IMPACT. Nokia says it “offers a full service model including provisioning, operations, security, billing and dedicated enterprise customer services from key operations command centers”.

Other types of services which Nokia offers, or has spoken of developing, could then be layered on top of this – security, data management, analytics and so on.

“One thing we discovered in putting together uses cases is the inability for multinationals to offer IoT services because there is no multinational connectivity service that allows this,” Phil Twist, VP of portfolio marketing at Nokia Networks, said at the launch of WING ahead of Mobile World Congress 2017. “There are US and European solutions but no one has put something in place that federates all this together as a service.”

In fact, some providers do offer a fairly broad international footprint for IoT connectivity, mainly through deals with multiple telcos on an MVNO-style basis (US-based KORE Wireless is one). But Nokia is promising more – to take the whole operations of the IoT, from connectivity up to security and service assurance – off the hands of the enterprise or provider, allowing them to focus on analysing the data from their IoT devices, and delivering services to their customers.

Nokia also offers a white label version of WING for operators, which can then add international support to services they provide in their own markets. However, the launch still sounds the latest in a series of warning bells, of the impending clash between network suppliers and their core customers, the telcos. Nokia and Ericsson may be competing with those operators for IoT connectivity and services deals – that has already been seen in some deals the latter has won in the auto industry, reportedly at the expense of large MNOs which might also be Ericsson’s clients.

The telcos could have been a logical channel to market for Nokia’s software and services, but instead it is appealing directly to enterprises and governments, and not making carriers into equal partners, even when they are providing connectivity.
Twist dismissed the issue, saying: “There is no worldwide operator and so this is a federation in cooperation with operators that allows them to extend outside their geographic remit.”

This is because Nokia and its rivals need to work towards a day when telecoms is just one vertical among many that they serve, rather than their entire business. Nokia has been adapting key offerings for the vertical markets it is particularly targeting – public safety, energy, transport, government, manufacturing, “technological extra-large enterprises” and webscale providers. These, it announced last year, will be the heart of its managed services and IoT offerings, within its increasingly autonomous software business – one of its great hopes for kickstarting healthier growth levels from 2017.

The first priority is to target “technological extra-large enterprise”, as Nokia calls them, and it has focused its early efforts on certain sectors such as utility/smart grid projects and the mining sector. Large enterprise customers include Oklahoma Gas & Electric, Swissgrid, Washington Gas and Rio Tinto.

These type of organizations increasingly need to be connected and digital, linking up large numbers of items, such as machinery and vehicles, which have not needed mobile connectivity before. Unlike telcos, organizations such as utilities, manufacturers and banks are rarely expert in networks, and should be open to entrusting this to a third party.

This is especially true when it comes to mobile enterprises or wireless-centric IoT strategies – however virtualized these networks may become, they will always need actual radios and antennas, and radio skills remain precious and rarefied.

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