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Written By:

Alan Gatherer, EIC, CTN

Published: 30 Oct 2017


CTN Issue: October 2017

A note from the editor:

Alan Gatherer
Alan Gatherer

In this issue, we take a look at some money-making schemes popping up in the gap between the end of 4G infrastructure build out and the start of the 5G revenue stream. Traditional infrastructure may be slowing down, but there is still money to be made with wireless for those with the creativity to find it. Your comments and suggestions are as always welcome.

Alan Gatherer, Editor-in-Chief

The Internet of Bikes and what it tells us about wireless

The tardiness of this month’s article is mainly due to your poor editor having to focus on his day job and spend the last two weeks in Shanghai, China. But I’m happy to report that my trip served to inspire this month’s topic.

During my trip, I noticed that there has clearly been a startling change in the Shanghai scenery since my last visit, which was just under a year ago. When I started visiting Shanghai about 20 years ago, most of the population travelled around by bicycle. These were gradually replaced by mopeds and those strange powered bicycles. Eventually the car came to dominate traffic and the bicyclist almost disappeared from the streets. Hence, I was amazed when I returned this October to find that the streets of Shanghai are once again teeming with bicycles.

The reversal in fortunes of the bike is quite startling and has been brought about by bike rental companies who have embraced the Internet of Things (IoT) revolution. The two main companies I noticed were Ofo [1] and Mobike [2], with Ofo seeming to be the dominant player. Both companies use phone apps to allow you to locate a bike near you and to tell you where to drop off your bike when you are done. They also use short range wireless communications in the areas where bikes are left for use, allowing them to keep track of their fleet without setting up the clumsy bike stands that some earlier ride sharing companies had to use. There are so many bikes available for use that at times they clog the sidewalks around the IoT hubs. I took the following picture last weekend on one of the long streets in downtown Shanghai where the IoT sensors and the bikes for rent ran as far as the eye could see.

CTN Oct 2017 Image 1: Bikes
Image 1: Bikes

Bike rental is a prime example of a traditional business that has exploded as a “smart city” application by using the addition of a mobile app and some short range wireless sensing. What was a limited market before has been expanded greatly by smart city technology. The key to success will be to enable very low cost of operation. Bike rental in Shanghai costs only a few Yuan per ride (less than a dollar US) and users are encouraged to report any issues with their bike in what amounts to a crowdsourced bike maintenance plan.

Smart city and other “over the top” IoT applications pose a challenge to the traditional operators because they take value from the data service provided by the operator without the operator seeing any differentiation from this new service. Verizon recently posited that the IoT market was now ready to accelerate and hence the winner and losers will start to become more obvious. They stated that the value for the operators was in providing the platform, security and managing cost [6]. AT&T has also taken significant steps, emphasizing the importance of network slicing [7]. However, there is a new class of disruptive technologies called “under the top” (UTT) that may provide an even greater threat, as described recently by Bengt Nordstrom [3]. UTT technologies try to syphon away the basic revenue stream of operators by supplying alternative pipes for data. In that sense the short range communications used to track the bikes in the previous example is a UTT technology. But the dominant UTT technology is of course WiFi connectivity which is being increasingly used by some MVNOs to provide coverage whenever possible.

There are also the losses being observed by some of the big telecom infrastructure suppliers, mostly notably two of the biggest, Nokia and Ericsson. Nokia saw a drop of 7% in revenue [4] while Ericsson continues to lose money citing a tough market [5]. Though this may be somewhat related to the gap between 4G build out and the arrival of 5G infrastructure this gap in revenue was well predicted and could be planned for. It therefore seems likely it reflects a more general struggle by the equipment suppliers to adjust to the new markets presenting themselves and the new dynamics that are changing the industry. It is also not clear that 5G will bring the spike in revenues for the suppliers than 3G and 4G did because 5G is also an OFDM based technology and operators are looking for more incremental upgrades than they experienced in the transition to 4G.

All of the above is not new news exactly. But the massive lines of bikes in Shanghai brought it into sharp focus for this author. That some simple technologies applied in an IoT manner could make such an impact in such a short time is a sign of things to come. The only question remains, who will make the money?



Statements and opinions given in a work published by the IEEE or the IEEE Communications Society are the expressions of the author(s). Responsibility for the content of published articles rests upon the authors(s), not IEEE nor the IEEE Communications Society.

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