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Verizon finds insurance is leading the world in IoT projects

Verizon has released its latest State of the IoT Market report, with headline figures finding that 73% of executives are either researching or currently deploying IoT projects, with manufacturing, transportation, and utilities making up the largest percentage of investments. Insurance and Consumer represent the areas with fastest spending growth, and Verizon says 8.7bn ‘things’ will be connected in 2017 – up 31% from the total number in 2016. IoT spend will apparently account for $2tn in 2017.

The main drivers for adoption are new network technology, cost reductions, and regulatory pressures, and the B2B sector is expected to account for around 70% of the potential value enabled by IoT technologies. However, over half of business execs said that standards, security, interoperability, and cost, were their main concerns for IoT adoption.

Broadly, 2016 saw many organizations move from pilot projects to full rollouts, according to Verizon. Early adopters are enjoying a lead, with deployments seen across a wide range of industries – from pharmaceutical, energy, transportation, and smart cities. SMBs are positioned to be strong adopters in the next year.

In the webinar that Verizon hosted to launch the report, Mark Bartolomeo, VP Global Enterprise Sales, said that Verizon had seen a year of heavy investment, led by large enterprise customers that were building out new systems to tackle three main concerns – sustainability, safety, and growth.

Bartolomeo noted that the key barriers that these enterprise customers were encountering were defining business models in terms of their return on investment (ROI) and total cost of ownership (TCO), with the regulatory requirements further complicating matters.

He added that adoption has been cautious, with the enterprise moving in an incremental manner, aiming for low-risk options. While some sectors reported large increases, such as manufacturing’s 80% year-on-year growth, Bartolomeo noted that more mature markets, like smart grid, are settling down.

Across the sectors, a lack of standards and security were commonly at the top of to-do lists, and Verizon thinks that the new LTE-M and NB-IoT standards are going to help in this regard – giving enterprises a GSMA-backed answer to their connectivity problems.

Bartolomeo added that it seems that Verizon can’t do enough for security in the IoT – and that it will be an ongoing problem for users. Noting that he had seen a number of deployments made without an integrated security offering, he said that the introduction of embedded modules that managed certificate services on the device was encouraging.

Platform consolidation was singled out as an answer to the complexity problem, with simplified choices and less fragmentation the main benefits of the industry thinning out the number of suppliers available. In addition, this helps make platforms and services easier to integrate. In addition, Verizon says that the deployment of network analytics to monitor communications between IoT devices was beneficial – allowing an MNO to spot patterns and trigger alerts for anomalous traffic.

The combination of those GSMA standards, the platform consolidation, and the introduction of network-side analytics have helped IoT devices become enterprise-grade, in Bartolomeo’s words – creating new revenue streams, and in particular for those offering condition-based monitoring services like predictive maintenance.

Verizon expects the IoT platforms to continue to simplify the process of managing an IoT deployment, but Bartolomeo notes that there is still a need for better bulk activation, alerts, monitoring, and maintenance tools among the platforms – as well as the security certificate systems to support them.

As for other big opportunities, Verizon sees pharmaceuticals as a huge potential use-case. Bartolomeo pointed to the US Drug Supply Chain Security regulations, which Verizon believes will evolve into a $75bn opportunity – as businesses have to more thoroughly track the movement of their products through their distribution chains.

In the past year, Bartolomeo notes that he has seen a lot of the largest investor-owned utilities deploy smart metering and smart grid projects, and is seeing the opex-based investments taking off – rather than the previous approach of large capital investments. He added that SMBs are likely to score bigger growth figures here than the larger enterprise adopters.

Unmanned Aerial Vehicles (UAVs) are another high-growth opportunity, according to Verizon. Currently, the FAA has registered around 80,000 commercial drones in the US, and Verizon says that about 70% of Fortune 500 companies are investigating using drones in their operations.

Property and Insurance companies are using them to perform remote inspections, to help streamline the claims processes made that require field visits. However, the current regulations regarding line-of-sight operation are going to be a hindrance for drone adoption.

Bartolomeo said that the B2B sector is still going to outscore the consumer side, accounting for around 70% of the value generated in the sector. He said that the consumer sector was still seeing rather slow adoption, and believes this is largely due to the fragmentation of service providers, the complexity of adoption, and the cost.

Again, Verizon is confident that LTE-M and NB-IoT are going to be solutions to those problems, but the service providers have a long slog ahead of them before we see the market shake out into dominant platforms. Trying to get the smart home service providers to agree on a standard approach is going to take years, and that is compounded by the number of providers in each country, all of which might take a different approach. GSMA standards aren’t going to speed that process up, especially as the smart home is more focused around unlicensed protocols like WiFi and Bluetooth.

Of course, it wouldn’t be a MNO presentation without the mention of 5G, which Verizon says will massively expand IoT applications – thanks to its low-latency connections, which is apparently the most interesting feature for developers.

Autonomous mobility services (transport, drones, all manner of mobile devices really) are the most popular candidate for 5G, but Bartolomeo said that there will be issues with agreeing on how to manage the multitude of spectrum requirements for these different applications – especially when multiple regulatory agencies are involved, such as the FAA and FCC.

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