— Why do you think your company was chosen for the implementation of IoT in the regions?
— The word «chosen» is not quite right here, nobody chose us. We have chosen the area of development ourselves. Internet of Things is one of the few innovations allowing telecom operators to occupy adjacent markets. As our company does not hold any cellular spectrum frequencies, we were testing various technologies for three years and selected LoRaWAN. Today I am sure that it was the right choice, because according to all marketing reporting materials it is the fastest growing technology that is ready for mass implementation. NarrowBand Internet of Things (NB-IоT) that the cellular operators plan to use, which is much talked about, yet needs to go all the way of creating the ecosystems. It means not just transmitting the information from the sensor to the cloud, but also providing an E2E-solution. This is the task of the operator — to provide to the customers with a turnkey service.
— How will IoT influence the market of broadband operators? How will the industry change?
— The market, of course, will use the operators’ competencies in the field of telecommunications. However, I don’t think that the industry will change much, because IoT now is usually understood as LPWAN (Low-Power Wide-Area Network), which does not require a permanent stationary power source. That means that the sensor may be used in any conditions — its signal covers big distances and has a good penetration capacity. But you have to pay for this with speed. That’s why in terms of load on the network we do not expect material bursts.
Here we can draw an analogy with SMS — the transmission of short messages notifying about something or giving a signal, or simple monitoring messages with readings. Can this be used for data transfer? Yes, but you will pay for this with the sensor term of service.
In order to make the industry change cardinally, we need the implementation of 5G, where there are huge information arrays with the notions of customized quality and customized delay for signal transmission. This is another area, the domain of mobile operators, who have great competencies there. 5G will influence the data transfer network in general and backbone channels as well.
— So, the future belong to 5G?
— No. not just 5G. I don’t think that 5G will cover all the niches. In the history of elecommunications, there has never been the technology that would force out all others. There’s always somebody who deals with certain tasks much more effectively that the yesterday leader. For example, when we talk about data transfer, we think of LTE. At the same time, if we look «who» actually brings information to the network, it is easy to understand that very often it is Wi-Fi. There has to be a correct set of tools. Many people dream of one universal tool, but so far no industry has found such a tool, and telecommunications is no exception here.
— Which areas will primarily allow to develop the Internet of Things?
— Today, it makes sense to talk about the Industrial Internet of Things. Now we are at an early stage of development: at first, there has to be a network, and then the applications. For mass market, the coverage and its density are insufficient. Here there are two approaches: «I want» and «I can». «I want» means the reports of the marketing companies, in which this technology is in most demand. For example, Smart Building. On the other hand, there is «I can», meaning where it can be used now and where there is Smart City. It depends not only on the technology or the requirements, but also on the legally permitted arrangements, the economics, on what influence is rendered by the new technology separately on certain production or vertical industry. Now, Smart City, resource organizations, separate productions are in use where it is easy to make economic calculations. There is a notion of «value for the customer», in many industries it is intuitively clear, in the projects where you can calculate the actual economic effect. Primarily, it is connected with the phase of «follow-up automation» and changes in costs.
— In which production areas is the economic effect from IoT is visible now?
— Traditionally, we work with oil and gas, where the distances are huge, there is no infrastructure, a lot of equipment, ready for local automation, i.e. there is a control system at the local level, it just needs to be linked to the digital model so that the information was received on a timely basis. This industry is fully ready for IoT. They have the means, the understanding, and artificial intellect required for the subsequent phases of the Internet of Things in terms of the industry transformation.
— You use LoRaWAN standard for providing the Internet of Things services. Why LoRa?
— This technology is unavailable at the moment and most developed. Besides, for 15 years already we have been dealing in radio and possess all the necessary expertise and infrastructure — we have field engineers, digital maps, coverage calculation systems, that is, there is a certain base. However, the company did not aim to become a LoRaWAN operator, we want to operate the Internet of Things, and this technology is most available today. Traditionally, we are strong in Wi-Fi, deal in Bluetooth, and all these technologies are used in the Internet of Things. We hope very much that we will find a place for us in 5G as well, not as an infrastructure operator but as an operator of probably higher level for the end customer.
— How fast to you plan to get a payback in respect of the investments into the construction of IoT network?
— The infrastructure cannot yield a payback in a day. You can quickly reimburse the costs, but it will have a material impact on the strategic result. You can choose key points, install base stations there, get a payback in a year and go take a rest. But if you look at it strategically, it’s a long story of investing and expanding the production. That would not take less than three years. All depends on the growth rates, though it may sound as a paradox.
— In IoT-related projects, you cooperate with local administrations. It is at all possible to implement the Internet of Things in our country without cooperating with the government?
— Yes and no. It is possible to restrict the market but that would be a material restriction. As I already said, the Internet of Things is mostly demanded by the government. This means water, gas, power, municipal uses. We work with the government on other services as well and we don’t think it’s reasonable for us to narrow the market. Yes, it required close attention, especially in the resource-providing area: this means enhanced security, compliance with the internal standards, industrial standards, which requires special activities, development and special preparation.
But the most important is that the game rules are known. Everything can be estimated in advance, without going into some venture undertakings. I think that we will not follow the line of belonging to B2B or B2C, or B2G, but focus on the demand from vertical markets.
— Have you studied foreign expertise? How does the Russian approach and the implementation of IoT projects differ from those in other counties? Do we have any specifics?
— Of course, we have specifics. The pricing abroad is quite different. But so far, we have to buy technologies, including equipment, for currency. It should be noted that we already have an established view on or expectations of ARPU (the average revenue per user) and it is approximately the same as of the mobile operators, meaning that we are among the world leaders by pricing, having outstripped India, for example.
That is why, in terms of experience, we were mostly guided not by the experience of the developed countries, but the countries that are similar to ours in terms of purchasing power and economy. In particular, we have learnt a lot from India and we continue to support our relations. They have started a bit earlier. All the operators who we communicate with have achieved a lot and took their lumps for three years. From this angle, it is much easier for us, what we need is the desire to learn.
But I am sure that we need to work on this system no less than our colleagues do, as it shall be nationwide and adapted to the market. If all of this is estimated in US dollars or euros, then these differences may play a cruel joke on us. We will not reach the market elasticity point, we will not achieve the mass application of this product and will remain in the category of «whipping the cream», but this is not for long.
— In which other cities and regions do you plan to build IoT networks?
— I don’t think that there will be a material increase in terms of the number of cities in the nearest future. We have quite a pragmatic position. We have covered almost all the cities with a population of over 300 thousand, created infrastructure, having planned our construction so as to have the opportunity to reach almost any coverage or productivity at any point of our presence for a very short time. This is over 70% of the country’s population. We have made sure that we have coverage, technical infrastructure, technical specialists, and then we will consider the demand by the market of another territory. ER-Telecom Holding will be ready to expand its network presence of the Internet of Things for clear projects and needs.