IoT holds undeniable appeal for CSPs and vendors alike, but arguably no IoT vertical is getting greater attention than smart cities. The fact that this vertical has problems that need to be addressed, has high public visibility, and has stakeholders that are motivated to use technology to show progress and solve problems, results in it being an attractive pool for IoT providers. CSPs are also naturally inclined towards serving this vertical since they see the opportunity to leverage existing infrastructure relationships with cities to expand commercial engagement with them through IoT. The path to CSP success is not easy, however, and Ovum’s upcoming research (The Role of CSPs in Smart Cities: A Best Practices Viewpoint Analyzing Leading CSPs in Smart Cities) consequently looks at CSPs that have become leaders in smart cities and analyzes lessons learned.
The challenges and opportunities of this IoT vertical can be summarized by the lack of consensus about what exactly a “smart city” is. Smart cities encompass an extensive range of applications that Ovum has categorized as follows: smart lighting, public security, traffic management, smart parking, smart urban transport, environment management, and smart buildings. This large category of applications means that CSPs who enter the smart cities space often feel compelled to provide – by creating, partnering, or acquiring – a broad portfolio and bench strength to match; these are challenges. On the flip side, since there are so many opportunities to solve problems in a city using sensors, data, connectivity, and analytics, and especially the new low-power wide area (LPWA) networks and 5G networks that the CSPs are building, these IoT applications that are created appeal to CSPs. Unsurprisingly, smart cities make a natural 5G testbed and there is symbiosis between CSPs and city clients: cities that CSPs select to launch 5G networks also benefit from the CSP’s and their partners’ portfolio of smart cities applications running over that CSP’s 5G, legacy, and LPWA networks.
But the large number of smart cities applications means that CSPs risk being spread too thin. So, CSPs need to be laser-focused on what they offer and how they implement their solutions to smart cities, as this vertical is highly fragmented with multiple players all vying for a piece of the (limited) revenue pie. Moreover, procurement and sales cycles are slow in the public sector, and cities often look to piecemeal solutions. Added to this business risk, the general IoT pitfall of being stuck in proof-of-concept limbo equally applies here. Successful CSPs have to commit to being in this space for the long term and must think of creative financial and business models; examples include public-private partnerships to overcome proof of concept and other IoT and public sector-specific business challenges.
The leading CSPs in this space commit to the vertical through dedicated organizational resourcing, end-to-end solutions, and professional services. CSPs need cities to view them as a trusted partner that can help cities identify and drive outcomes. One CSP even has a separate systems integration and consulting team, which enables it to differentiate itself sufficiently to enter completely different geographical markets. The smart cities vertical is not for the faint of heart. Future rewards will likely accrue only to those that show focus and commitment.
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