Last week I was the moderator of an IoT panel at NTCA’s IP Vision 2017 conference. The panel discussion took an interesting turn when the conversation turned to how small ISPs can monetize the IoT.
Customer demand for connecting devices is contributing to the need for bigger broadband pipes. Today there are about 6.6 billion IoT devices connected in the world. This is expected to grow to 22.5 billion by 2021. Obviously not all of these devices will be going into homes since there is a big growth also with industrial and agricultural IoT. But households will be steadily adding more connected devices.
One of the panelists works at a western telco and his company recently started considering the idea of profiling data customers to help them right-size broadband. The company first profiled employees to see how the idea would work. When the panelist was profiled he guessed that his household had 15 connected devices. But then he went home and did an inventory and was surprised to find that he actually had 55 devices. His household is probably a little unusual in that he has five kids and he loves technology, but he said that every telco employee had the same experience in that they underestimated how many connected devices they had in their home. It turns out for most households that the Internet of Things is already here to some degree.
His company has gone on the monetize this idea. They offer customers the chance to sit with a technician and to create a profile of how they use broadband. The goal is to determine if the customer has enough broadband to do everything they want to do. They immediately found the same thing I hear everywhere – most customers have no idea of how much broadband they really need. It turns out that most customers almost reflexively buy the lowest cost and lowest bandwidth data product and are then unhappy with some aspect of its performance.
Telcos everywhere are telling me that customer complaints about poor performance of broadband are becoming commonplace. It’s been easy to assume that problems are mostly due to issues associated with WiFi. But the experience of this particular telco shows that the problem is often that a customer has not purchased enough broadband to satisfy their needs. After the consultation, if they need a faster connection this telco gives the customer the larger data pipe free for a month – and so far not one customer has reverted to their old slower connection.
The telco also offers a second related product that is getting good traction. They sell what they call managed WiFi. The product starts with making sure that customers have placed WiFi routers in the most effective places. But the real benefit to customers is that they can call the company when they are trying to connect a new IoT device to their network. This is something that often frustrates customers. When customers find out that the telco can easily connect new devices and can help them manage their devices a large percentage of customers are buying this new product.
Within the industry we all understand that customer demand for broadband continues to grow at the torrid rate of doubling every three or four years. This kind of exponential growth surprises almost everybody. Customers that have been happy with a 10 Mbps broadband product invariably are going to need to move to something faster within only a few years. But customers are slow to realize that degraded service is due to their own increased usage and they often blame the ISP for broadband issues.
The broadband profiling has shown this telco that the customer experience varies widely. For example, not everybody needs faster download. They have a number of seasonal homes that are starting to install remote cameras that exceed the upload capacity of the broadband products, and the company can make sure there is enough broadband to satisfy the upload needs. The telco says their customers really appreciate this custom approach.