Monetising the “Internet of Tomorrow”
Johan Bester - Principal
David Abt - Team Leader
Eric Archer - Consultant
In our earlier article on the transformation of internet architecture, we explored the drivers behind the “Internet of Tomorrow” and the ever-increasing requirements for greater security, scalability and efficiency online. Despite the inevitability of this change, the timing and commercialisation of the future internet remains uncertain - what killer use-case will be the tipping point and how will it be monetised?
Deploying and driving the adoption of next generation secured internet will be costly and complex, but once implemented, the inherent features of a secure internet will enable use-cases that will disrupt existing markets and unlock new revenue streams. By the very nature of their business, network operators and Internet Service Providers (ISPs) are both at risk of disruption but also well positioned to participate in the opportunity.
Use-cases for the “internet of tomorrow”
The opportunity for network operators and ISPs can be summarised in six major categories of use-cases with multiple applications:
Softbank’s Masayoshi Son expects there to be at least 1 trillion connected devices by 2035 and within this there will be a subset of verticals where secure connectivity is critical - government, healthcare and transportation and connected cars -; where security breaches could be fatal. An inherently secure internet could offer a low-cost alternative to dedicated connectivity that will facilitate updates, communication and data transfers between devices and servers.
Similarly, cloud access could be migrated to the internet. Companies typically create virtual private networks over dedicated infrastructure to ensure secure connectivity to the cloud. Secured internet could offer a similar service at a fraction of the cost, which would completely disrupt the enterprise mobility and leased line markets.
Digital rights management is a less concrete use-case, yet likely to be highly lucrative. Currently, there are limited safeguards online to prevent users from pirating content over the internet. The combination of unique identifiers for content and intelligent routing explored in our previous article ‘Securing the “Internet of Tomorrow”’ theoretically enable network operators to track and manage the distribution of individual pieces of content. Such producers and owners could benefit significantly if network operators created a service that tracks distribution or even manages access to content. As network operators globally explore diversification through content plays, being content gatekeepers may be a stronger game plan than being content producers. Digital rights management builds on inherent network capabilities and may be a differentiating factor in future network monetisation. Telcos could play to their network strengths and build partnerships with players such as Netflix and Disney, ensuring the monetisation of original series and movies as “anytime, anywhere” access to content proliferates.
Content-aware networking as a building block of the internet fundamentally enables edge computing capabilities. Router storage and processing capabilities at mobile base stations, for example, could enable low latency applications such as augmented and virtual reality services. Content and connectivity for mission critical services, like automated traffic control, could be secured and certified at the edge.
Finally, centralised control and global unique identifiers enable a greater degree of network monitoring and optimisation in three ways. Network operators could: optimise traffic flow based on historic patterns as well as automatically reroute traffic away from congested routes; inherently enhance network security by automatically identifying and filtering out malicious traffic and devices; and Better assist enforcement agencies and governments via enhanced interception capabilities.
Delta Partners estimates that next generation secure internet use-cases could generate close to $340 billion globally by 2022. Around $220 billion will come from nascent use-cases and provide new revenue streams for operators. The remaining $120 billion of opportunities are within existing markets where operators’ revenue streams could be at risk of disruption.
How will the “Internet of Tomorrow” be monetised?
There is a myriad of potential monetisation models for the internet of tomorrow, arguably more than today, as additional use-cases are conceptualised and unlocked. Connectivity solutions could likely be best monetised by recurring fees charged to users, such as consumption-based pricing for AR/VR services, or alternatively by one-off charges to device manufacturers. For instance, charging Toyota to connect cars to a secure IoT platform. Management solutions for digital rights have a clear external monetisation opportunity with content producers and owners looking to reduce the indirect cost of piracy. Content houses can force or incentivise distributors to adopt the new technology, thereby scaling the technology across user and application layers. Network monitoring is likely to be an internal use-case generating marginal revenue. Operators could also monetise their investments in network architecture transformation by developing, patenting and licencing the technologies that underpin use-cases, gaining wide-spread adoption similar to GPS technology.
However, it is partnerships that will be key in gaining scale and truly monetising the next generation secure internet. Commercial partnerships will be required between operators or ISPs and key industry players. There will be a set of potential partners for each use-case that will have a vested interest in making the technology succeed.
Let’s take the video industry for example. Film studios stand to benefit greatly if piracy is reduced. If the abovementioned content verification functionality were developed, content producers and owners will have the bargaining power to force distributors to adopt the new technology and thereby scale the technology across user and application layers. Within a very short period of time, billions of users and devices would come online and functionality would be embedded in major operating systems. Beyond commercial relationships, operators will require partnerships to develop (e.g. research institutes and vendors) and standardise (associations and regulators) the technologies.
It is arguably easier to understand the use-cases and monetisation potential of the “Internet of Tomorrow” than it is to see the path towards “tomorrow”. The obstacles to transforming internet architecture are substantial, with cooperation required from a range of public and private players. However, the security, scalability and efficiency risks of relying on current infrastructure and protocols are too great to ignore, and the commercial rewards from use-cases enabled by next generation secure internet are equally – if not more – substantial. The “Internet of Tomorrow” is coming; it is just a question of who will drive its implementation and benefit from its commercialisation.
© 2020 Delta Partners.