Monetizing IoT networks using a multi-application approach
Most IoT product innovations are introduced on single-application IoT networks in niche vertical markets. Take, for example, smart metering’s advanced metering infrastructure or smart city public lighting control and monitoring systems.
But what if the organizations that own those products or networks could use their network platform software beyond single, dedicated-vertical applications to maximize asset utility, reduce operational expense and uncover new sources of hidden revenue? A multi-application network approach is an interesting proposition and one that some companies are exploring in more detail as a viable business model.
The IoT situation: Overlooked revenue opportunities
Each time an IoT product company engages with a customer to solve its smart city challenge, it creates a valuable asset in the process — an IoT network. Some would argue that the most challenging part of a smart city or smart utility service starts with the initial network configuration and set up. Once configured, the network is created, installed and commissioned. Devices are deployed and the vertical application is integrated with data flowing into the enterprise.
Having completed its service offering, the IoT product company moves on to find another customer that would benefit from its solution. However, by merely moving on, these companies may be neglecting opportunities to maximize their revenue. Two key overlooked areas offer potential revenue: 1) existing customers after the network has been deployed, and 2) potential new customers in a multi-application network approach.
The IoT challenge
IoT product companies providing these complete end-to-end IoT network products with a single, dedicated-application face challenges in how to maximize their revenue after the initial sale. With their existing customers, the primary fallback is to offer an annual maintenance contract for the IoT application software or perhaps to attempt to sell additional value adding ancillary enterprise software to support the single application domain.
Additionally, customers often demand future-proof IoT communications networks that are invariably based on technology standards, such as IEEE 802.15.4 and 6LoWPAN, and therefore interoperable between device and application suppliers.
The hidden IoT opportunity
While working with customers to deliver maintenance contracts and ancillary software can be effective, earnings from this type of customer upsell are limited by the number of customers and therefore don’t maximize revenue.
Hidden revenue opportunity lies in providing use of the already deployed IoT network to other applications, thus enabling multi-application use of the same standards-based technology that customers prefer. Real value-add is about enabling recurring usage-based business models, with support for multiple applications and multiple services on IoT networks.
Utilizing the hidden IoT opportunity
In order to fully take advantage of the opportunity of multiple-application networks, a few considerations must be addressed.
First, the network must have the ability to track usage and independently bill for that usage. Mechanisms to enable tracking and billing for transporting supplementary data on that network will be essential. For example, if you currently sell end-to-end IoT public lighting systems on a standards-based network, you could enable and integrate an environmental monitoring third-party offering to run on that same network under the same standards. If you can track network data usage for that application, the transport of environmental sensor data on your lighting network can be charged for on a recurring basis. An IoT network billing platform provides the necessary features to accomplish that.
A billing platform should be designed specifically for the requirements of IoT to ensure it is fit for purpose. Other systems that are retrofitted or repurposed from the mobile world add unnecessary layers of complexity that make them cumbersome.
An IoT network billing platform should:
- Be agnostic to network communications methods, working across network types and be able to aggregate, combine and utilize data from multiple network types. For example, you should be able to track and aggregate usage data from cellular, LoRA and 6LoWPAN networks.
- Allow billing of any network data or service function for any application.
- Allow flexible billing, by message or data size, and be able to provide configurable tax regimes, multiple currencies and operator-defined tariffs, including optional connection standing charges, billing adjustments and discount rates.
- Be scalable, secure, easy to integrate, manage and operate — providing low operational running costs.
The second consideration is that of security. If you intend to charge for network access, it is advisable to have a secure chain of trust with end-to-end authentication from each device through to the billing system. This will provide a means of verifying usage, down to each device, throughout the full lifecycle of the device, thus proving the transactions you are billing for have actually occurred.
Security starts with device identity. Issuing a certificate for each device on a network provides a strong, unique identity that stays with the device throughout its lifecycle. Device certificates provide assurance that only authorized devices deliver data and services on the IoT network through a particular billing platform and help to isolate devices among the multiple users of the network. Secure device certificates protect the identity, integrity and privacy of devices through authentication, authorization and encryption.
An IoT platform for device identity should:
- Be built using IoT industry-accepted PKI architecture and be backed by a reputable and trusted certificate authority;
- Be able to provision device certificates either during manufacturing or at the point of deployment;
- Be scalable and able to issue thousands of certificates per second;
- Be adaptable and able to accommodate all types of digital certificate formats;
- Integrate simply using RESTful APIs; and
- Offer a means to revoke the validity of a certificate through a dynamic online certificate status protocol.
Before device application data is used, tracked and billed, an IoT identity platform can authenticate the identity of devices, authorize communication and ensure the integrity of the data through encryption to secure the entire ecosystem from billing to device. Security by design is an achievable part of multi-application network utilization.
Realizing the network monetization opportunity
If an IoT product company can bill for data usage of its IoT network by application or service, it can fully use the value of the network. Moving from single-application network systems to multi-application data usage and service-based networks is achievable by deploying modern IoT network billing and device identity platforms and working with key industry technology partners.
Using new business models with existing IoT networks to uncover hidden revenue potential is a very real possibility and one that could garner significant new sources of revenue.
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This article was co-written by Diane Vautier, IoT product marketing manager at GlobalSign.