In a recent Financial Times (News - Alert) article Daniel Thomas proclaimed that devices being connected to a network, also known as the Internet of Things, is already a requirement in many places today. The main drivers for the need are cost reductions, increased efficiency, and improved security, but the real prize is access to all of the data that can be collected, analyzed, and utilized by the entity that captures it. There is little doubt that the long and much hyped IoT is finally taking shape because of the desire for this data, but there is some question as to what entity, or entities, will succeed, how, and why. Will it be the telecom carriers, the content providers, or something else?

Network neutrality is critical to pass data over another entity’s network, but it is seemingly unlikely to ever occur whether fairness is legislated or not. Therefore, success will be achieved by those entities that build and are able to control their own networks end to end to collect that data. With that there are two threshold issues with the IoT, and both are related to network infrastructure – who is going to pay for it and who will control it?

The network of networks known as the Internet is constantly evolving and growing, so it is not news that investment in every layer is always occurring, but to-date investment has been dictated largely based on the criteria of profit derived from the service of providing access to the Internet. The volume of data being projected to come from the IoT makes the volume that we have in the United States today look like dial-up from 1995. With such massive investment required, how will the Internet scale at a rate fast enough to meet the demand of all of these things?

The Internet, and more accurately stated Internet protocol networks, will scale by and from the network operators that have the desire for the data, the capital to invest in the network infrastructure required, and the ability to move faster than competitors. The content providers and other non-carriers are actually in a better position to make that investment because their desire to capture and capitalize on the data produces a greater return than that of the traditional Internet service provider revenue and profit model. The non-carriers are also in a better position because they have no vested interest in legacy infrastructure, so they have nothing to protect.

With IoT market size forecasts reaching nearly $2 trillion in just six years from now there is a built-in financial justification for the investment. That is good news because as it relates to mobile devices the geography where these things are will be as scattered as leaves blowing in the wind. Insurance companies and law enforcement agencies monitoring your speed in Wi-Fi-enabled smart cars that need constant and reliable LTE (News - Alert) wireless connectivity is a good example of one application that will require significant infrastructure. Revenue from insurance premiums and speeding tickets is a big motivator.

“There are good opportunities in machine-to-machine for telcos, but they may not be easy,” Martin Garner, analyst at CCS Insight (News - Alert), as quoted in the Financial Times, said. “The major machine-to-machine deals are often on long sales cycles and are highly competitive. Also, connecting things up is only the first step, and the main value to the customer comes from how the data generated is then used – telcos may look for a role in the IT aspects of this, but they will either be collaborating with, or competing against, established IT players.”

Ovum (News - Alert) analyst Matthew Howett, also quoted in the Financial Times, added: “The fragmentation and lack of technology standards could provide the biggest opportunity for telecoms operators in a fast-evolving industry already changing how people live. “There is a clear opportunity for an aggregator who is able to interconnect the myriad inoperable devices.”

Connecting things up is the first step for sure. Without that there is no access to the data.

Given the scale and expense of the infrastructure required for a geography the size of the United States, it would seem logical to create a new business model for the physical layer in the core. Building a neutral, standard physical interconnection infrastructure that aggregates the disparate networks and allows the open flow of the data from the devices and machines to and from the network servers that are processing that data on a national basis would lead to a more efficient and cost-effective process for obtaining dedicated, private network infrastructure.