T-Mobile USA’s Chief Executive recently crititised America’s largest cellular carrier, Verizon Wireless, for making a potentially stupid acquisition. One of the points that T-Mobile is making is that it is simply a cellular or mobile provider with limited business interests elsewhere. T-Mobile USA is in the business of building an infrastructure to allow customers to use their own devices and services, whereas Verizon is branching out into alternative businesses to help customers use their network. However, one area that likely could bridge Verizon and T-Mobile’s differences in how they should be running their business is the Internet of Things, or IoT. The Internet of Things is the name given to the networking, software and device technologies that will form a network of objects able to communicate with one another. The IoT may be used to make life easier, more efficient of resources and smarter, from things such as controlling our home heating systems to managing the contents of our fridge. The number of connected devices is set to very rapidly increase and the carriers are a central resource to this: each carrier has already carried out research into the technologies.
America’s second largest carrier, AT&T, already has a dedicated IoT division. Earlier today, the head of the unit told Reuters in an interview that: “It is a top priority of our company to continue to be a leader in the IoT space.” AT&T is investing time, money and energy into the new IoT technology: it already has ten major carmakers using one of its in-house systems designed to provide roadside assistance, weather updates, and online Internet radio services to cars on the road. AT&T’s car system has proven successful and it is understood that there are more automotive partners trialing the system.
The reason why AT&T is investing into the Internet of Things is partially because its traditional businesses are starting to struggle. The cellular ‘phone market is very competitive: AT&T are competing with national carriers Verizon Wireless, T-Mobile, and Sprint, plus a number of local carriers and of course the virtual network operators. The company also sells TV services and earlier in the week it announced that it was losing customers for this service and signing up fewer monthly customers than expected. Looking forwards, AT&T will need alternative ways of generating profits. To date, the company has approximately twenty-six million connected objects and is adding “more than a million” every quarter.
When it comes to the business strategy, it is clear that AT&T is closer to the Verizon way of working: it sees itself as much more than a “dumb pipe” and a means for customers to access third-party services, such as email, music, and video streaming. Instead, the company believes that they: “… have the ability not only to connect things … we also have the ability to enable the collection and the analytics of the data behind those as well as do it in a secure manner and do it globally.” However, when pressed, the company did say that it also wanted to be the best collaborative partner and that it could be satisfied as simply providing the connectivity.