As posted on: IoTevolutionworld
By: Flavio Gomes, CEO, LogiSense
As expected, the Internet of Things was front and center at Mobile World Congress ’15 and was the topic of keynote addresses, general sessions and vendor booths. Everyone wants a piece of the action in this global industry segment that is expected to hit $7.1 trillion by 2020, according to research firm IDC. Gartner predicts 25 billion connected devices in that same time period.
These two different figures—dollars and volume of devices—are important for many reasons, but for one in particular: monetization. Combine billions of connected devices with hundreds or thousands of data events from each device, and you get…well, you get a lot of usage data. How are today’s networks and billing systems going to handle that demand?
Many billing systems today are based on the “all you can eat” model—pay one price and consume all you want. However, these systems were never meant to handle hundreds of billions of events per month. There’s a reason, after all, that many service providers capped mobile data limits. It becomes expensive for service providers to maintain that volume on an all-you-can-eat basis. With IoT surging, service providers are at an inflection point: Is it time to consider changing the model for how we bill for IoT events?
One emerging model that counters the shortcoming of the subscription model is usage-based rating. In this “usage economy”, the user pays for the services they consume in increments determined by the service provider (minutes, hours, bytes, API calls—whatever makes the most sense for the provider at hand). Think about the flexibility usage-based billing has brought companies like Amazon Web Services, which is selling operating systems by the hour. Verizon last year also announced it is selling Oracle in the cloud by the hour.
Can that model work for the IoT? Here are five key takeaways from MWC as it relates to usage-based billing for the various Machine-to-Machine (M2M) transactions that enable the IoT:
If there’s one thing that Mobile World Congress made clear this year for communications service providers, it’s that change is coming. The big question CSPs need to ask themselves: Will they be open-minded enough to reap the benefits?