Canadian Operators and the Changing Role of MNOs in the Connected Age

In February 2019, the City of Markham in Ontario, Canada announced the launch of its Smart City Accelerator Research Program in partnership with Bell. Leveraging Bell’s Smart City platform, the City of Markham aims to monitor its infrastructure through applications such as asset tracking, leak detections, weather monitoring, and energy management. Data generated and collected by these applications will then be utilized to drive efficiency improvements and produce environmental studies. The partnership follows on the heels of Canada’s Smart Cities Challenge, which offered prizes of up to US$38 million to cities that implemented new and innovative smart city solutions that leveraged connected technology.

Bell’s decision to partner with local governments and provide vertical-specific value-added solutions is part of its larger strategic decision to move beyond the traditional role of a mobile network operator. Operators like Bell, TELUS, and Rogers in Canada have met the challenges of this emerging opportunity by focusing on their core competencies and partnering with the right players to deliver specific vertical market opportunities.

This strategic initiative is not limited to the Canadian market, but rather reflective of the redefined roles that network operators globally have had to adopt. For these MNOs doing business along the IoT value chain, connectivity is the largest common denominator. MNOs now find themselves partnering and competing not only with other operators, but also device manufacturers, systems integrators, and other professional services providers to compete for new and expanding revenue streams.

For operators in Canada and beyond, there is a significant financial incentive to become a more holistic IoT solution provider. ABI Research predicts that in 2019 Canada’s 18.01 million cellular IoT connections will generate value-added services revenues of US$2.7 billion. Of that, only 15.7% or US$426.4 million will be connection revenues derived through cellular connectivity fees. By leveraging their existing network infrastructures, technologies, and brands, operators like Bell, Telus, and Rogers can tap into the remaining 84.3% of IoT service revenues, US$2.3 billion, to expand their market share and create new revenue streams. For these operators, IoT represents their largest growth opportunity and is a significant driver in their enterprise business segment.

For Canadian MNOs to be successful in this market, they will have to continue to embrace the presence of competitive players along the IoT value chain. One of the major criticisms of the Canadian telecommunications industry surrounds the lack of competition within the market and the high cost of consumer data plans. While the major MNOs do invest heavily into upgrading their networks and infrastructure across the second largest country by area, Canada’s wireless industry has consistently boasted high profit margins and the highest ARPU in the developed world. In addition to significant regulatory barriers to entry, there are also laws that prohibit foreign ownership of a major telecom company and largely protect the three big carriers from competitive pressures in the traditional mobile segments. MNOs in Canada and abroad have realized though that these regulations will not protect them from competition from other segments of the IoT value chain or threats from new proprietary LPWA providers like Sigfox. For operators to gain market share and generate additional revenue streams, they will have to embrace competition.

In 2016, Canada’s Public Policy Forum partnered with government agencies and other business organizations in order to create a series of recommendations aimed at enabling Canadian consumers and businesses to take advantage of the opportunities provided by IoT. The initiative ultimately generated a list of five recommendations, which operators not just in Canada have to consider when implementing their own IoT strategies moving forward:

1. Foster a culture of knowledge sharing across sectors
2. Invest in developing a workforce for the digital age
3. Stay competitive by embracing a disruptive future
4. Prepare for the inevitability of security threats
5. Modernize education through industry partnerships

Canada’s major MNOs have been able to successfully deploy IoT solutions that go beyond simple connectivity because at their core they address the underlying issues that the recommendations sought to solve while effectively collaborating with other industry players. Each operator has launched or is planning over the next year to launch its own nationwide LTE-M network, showing that each of them is committed to staying competitive as end-user protocol needs evolve.

Bell has announced several smart city partnerships that have enabled it to raise awareness of IoT solutions while also educating key government and SMB stakeholders. Bell is focused on delivering fleet and asset management, digital signage, remote monitoring, telematics, and energy management applications. Additionally, Bell launched its Innovations in Agriculture program at the University of Manitoba which invests in developing a workforce for the digital age by providing students with opportunities to develop new IoT applications and use cases for agriculture and food services. Bell also partnered with Hyundai AutoEver Telematics America (HATA) in order to deliver a connected telematics solution encompassing security, safety, diagnostics, and infotainment.

Rogers is focused on deploying holistic IoT solutions for asset monitoring and management aimed at fleet management, smart building, and IIoT solutions. Additionally, Rogers provides safety and security solutions targeting retail, smart building, and smart parking solutions. Rogers is also focused on using connected solutions such as digital signage to create a deepened retail interaction for consumers.

TELUS launched its IoT Marketplace in 2014, when many other network operators were more focused on building out their streaming services than their IoT ecosystems. TELUS’ IoT marketplace offers it a channel to provide more integrated solutions across a variety of vertical category solutions such as asset tracking, digital signage, failover, fleet management, logistics, lone worker, remote monitoring, security, platforms, and professional services. Additionally, TELUS has created a dedicated enterprise network for its IoT connections that is separate from its consumer network to address security concerns.

While each operator focuses on providing a different set of vertical-specific solutions, each strategy is rooted in providing specialized, value-added solutions that solve true end-user pain points. Additionally, each operator relies on a carefully curated ecosystem partner network consisting of players across the value-chain that ensure long term business opportunities. Each operator strategy and vertical focus demonstrates that, when it comes to IoT, operators need to move beyond simple connectivity to increase value not only for end-users, but also for their bottom line.