How the IoT will Shape the Network of the Future

NEW YORK – By 2020, analysts predict the Internet of Things (IoT) will connect at least 20 billion devices, all generating data to be managed and analyzed. This tsunami of data will place major demands on network infrastructure, requiring a significant expansion in capacity.

So what will this network of the future look like? It will be a hybrid network featuring fiber in new places and lots and lots of wireless, according to network infrastructure specialists, boosting data capacity and coverage density with small cells and distributed antenna systems. As data volumes explode, the network will be everywhere.

“The Internet of Things will require massive amounts of infrastructure,” said Ray LaChance, the President and CEO of Zenfi Networks. “There’s no way to move that capacity to the edge with Ethernet. The network of the future will have a huge wireless component.”

“We expect to see 100,000 cell sites in New York City,” LaChance added. “There are about 2,000 or 3,000 today. The antennas are going to pop up on every building and every street corner.”

Managing the IoT was a hot topic last week at Telecom Exchange NY, where telecom and fiber executives discussed the challenges and opportunities presented by the explosion in connected devices. There was unanimous agreement that the growth of the Internet of Things looms as a disruptive event for communications infrastructure.

“I think we’re really just on the cusp of IoT and how we manage it,” said Frank Rey, Director of Global Network Acquisition Group at Microsoft. “We have to change the entire supply chain to handle the volumes.

Frank Rey, Director of Global Network Acquisition Group at Microsoft, speaks at last week’s Telecom Exchange in New York. Listening at left is AT&T’s Mobeen Khan. (Photo: Rich Miller)

“The key is the exchange of data from devices and from Point A to Point B to where someone can make use of it. It’s going to stress the way network operators function, and create a lot of new entities to manage the data exchange.”

This enhanced network will take time to build, arriving in some places earlier than others. The deployment of new capacity will test the business models of existing players, a process begun by the explosion of Internet video traffic. In areas where the telecom carriers cannot make the economics work, the network capacity gap may be filled by hyperscale Internet companies and “over the top” video providers battling for user eyeballs.

‘The Next Productivity Revolution’

The Internet of Things (IoT) is the emerging network of intelligent devices and sensors, including many everyday objects that will begin to send and receive data. Businesses view the IoT as a potentially rich trove of data, providing deep insights into their operations and customers.

“The IoT is going to change every industry,” said Mobeen Khan, who heads IoT and M2M (machine-to-machine) strategies for AT&T. “It’s the next productivity revolution.”

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About 6.3 billion devices are currently connected to the Internet of Things, according to research from Gartner, up 30 percent from 2015. Gartner projects that number to rise to 20.7 billion devices by 2020, while network equipment giant Cisco sees an even larger universe of more than 50 billion devices.

By any measure, the increase in traffic will be dramatic. “We’re seeing this huge data explosion,” said Ronald Gruia, the Director for Emerging Telecom at Frost & Sullivan.

Tom Gilley, a venture capitalist at Momenta Partners, says some companies are already generating 1 petabyte of data a month from Internet of Things devices.

“Companies like Uber are producing astronomical amounts of data,” said Gilley, noting the expansion of the Uber data center network . “These are indicators of big change in the volume of data across the network.”

The rise of the IoT is clearly seen in data for new wireless accounts for the first quarter of 2016, in which connected cars (32 percent) and machine-to-machine devices (14 percent) represent nearly half of all new accounts.

Many Kinds of Networks

The Internet of Things is part of a broader challenge for America’s network infrastructure, which is also likely to see a surge in traffic flows from growing use of virtual reality, machine learning and other emerging data-intensive technologies.

As we noted last month, the explosion of connected things will lead to new types of data centers in new places, optimized around the needs of machine-to-machine (M2M) workloads and the analytics that mine these oceans of data for business insights. That could include unmanned facilities placed closer to network of IoT devices, where software and analytics can make real-time adjustments to data center configuration.

This transformation of data center design and geography will be closely tied to the evolution of network infrastructure. As data volumes grow, telecom thought leaders say network congestion will be addressed through a variety of technologies. [clickToTweet tweet=”AT&T’s Mobeen Khan: In the Internet of Things, we will need many kinds of networks, each with their own use cases.” quote=”AT&T’s Mobeen Khan: In the Internet of Things, we will need many kinds of networks, each with their own use cases.”]

“In the Internet of Things, we will need all kinds of networks,” said AT&T’s Khan. “There will be many, many types of networks, each with their own costs and use cases. There’s room for solution architectures in the home, the street and the enterprise. Use cases will define the cost, the pricing, and the architecture. There will be many architectures to support these devices.”

Bridging Fiber and Wireless Infrastructure

A key strategy in addressing latency is edge computing, which moves content closer to the edge of the network.

“There’s going to be a lot more content going to the edge, which will mean more space and power going to the edge,” said Cliff Kane, Co-CEO and founder at Cleareon Fiber Networks, a dark fiber provider connecting New York’s carrier hotels.

One of the key challenges, Kane says, is improving access to fiber to wire new buildings and tying wireless infrastructure into the backhaul fiber that connect Internet backbones to the edge of the network.

“Yes, there’s a lot of fiber, but it doesn’t go where you need it to go,” said Kane. “You’re going to have wireline delivery to a point, and then you’ll have wireless. The underlying infrastructure has to accommodate highly localized data delivery.”

Ray LaChance, President and CEO of Zenfi Networks, envisions up to 100,000 antennas to boost wireless connectivity in New York. (Photo; Rich Miller)

Zenfi is a new player focused on bridging the gap between fiber and wireless infrastructure.

“Wireless infrastructure requires wire,” said LaChance, Zenfi’s CEO. “There’s a lot of fiber in New York. I’m sure there are 10,000 strands of fiber running down Sixth Avenue. The problem is that most of that fiber is not as accessible as it needs to be for mobile densification. There’s not enough for the applications that are coming down the road.”

Zenfi is deploying dark fiber that can be accessed in more places, making it easier to tie wireless antennas to fiber infrastructure.

“We’re building a network designed to deliver fiber to the curb,” said LaChance. “Our network is accessible at every manholes it traverses. It’s going to be in all 3,300 intersections in Manhattan.”

Beyond Hype: Business Demand for IoT

For all the hoopla around the Internet of Things, the panelists at Telecom Exchange said they’re seeing real-world demand from businesses that are sorting out how insights from data can offer a return on their investment.

“I see organizations that have been sleeping through the IoT marketing hype that are waking up,” said Gilley of Momenta Partners. “They’ve recognized that there’s a lot of value locked up in their devices. I think that’s a big opportunity. I can see great growth in taking non-intelligent devices and making them intelligent.”

“The biggest benefits are going to come from real-time access to the data,” said AT&T’s Khan. “That allows you to make decisions faster and alter your business. The important challenge is how you use that data. That’s going to be the key to IoT.”

The telecom companies are among the many players offering services to help enterprises make sense of their data.

“In IoT, we’ve made a conscious decision to move up the stack,” said Khan. “We’re collecting and analyzing data, and adding intelligence – allowing companies to add rules and policies to refine the data. Not all data needs to be stored at all times. Edge computing and edge analytics allows us to do that.”[clickToTweet tweet=”Zenfi CEO Ray LaChance: The Internet of Things will require massive amounts of infrastructure.” quote=”Zenfi CEO Ray LaChance: The Internet of Things will require massive amounts of infrastructure.”]

New Business Models Will Emerge

If the Internet of Things offers business opportunities, it also creates some challenges.

“There’s definitely going to be a need for new business models for these telco providers to manage all this data,” said Microsoft’s Rey. “They’re going to have to take a look at how they charge and bill for” data from billions of sensors, moving in both directions across the network.

Zenfi and Cleareon are examples of opportunistic startups. Both companies seek to boost network density in New York City, a seemingly mature connectivity market. They illustrate the upside of the IoT opportunity, and also the difficult economics of building new infrastructure.

“We have very little duct capacity in the city to build new networks,” said LaChance. “The city makes the claim that it wants (connectivity everywhere), but they’ve created a franchise fee model that limits speculation” by charging fees for each foot of installed fiber.

“It’s always about capital and what the market will bear,” said Kane of Cleareon. “We have to be very smart about how we deploy capital.”

The Role of Hyperscale Players

What about the segments of the network where the economics don’t support new infrastructure buildouts, such as rural areas? In some case, the gap may be filled by large Internet companies like Google, Facebook and Microsoft. These companies, along with “over the top” (OTT) content providers like Netflix, are making hyperscale investments in infrastructure, both in data center space  and network capacity.

One example is undersea cables to run fiber. Google is part of the consortium that built the FASTER cable between Oregon and Japan, which comes online this week.  Facebook and Microsoft have also partnered with consortiums building new undersea cable capacity.

“The OTT and hyperscales have changed the game,” said Al DiGabriele, Senior VP of Product Management at cable specialist Hibernia Networks. “They’re serving as anchor tenants on new cables. They’re a critical component in expanding the infrastructure globally. ”

An illustration of solar-powered drones that Facebook is developing to bring wireless Internet to the world, including the IoT. (Image: Facebook)

The hyperscale players are also investing in new technologies to wire the unwired world, using everything from balloons to drones to satellites. As these initiatives bring wireless access to untapped markets, Internet infrastructure will extend to new places, connecting IoT devices and cars wherever they are deployed.

“This is a national issue,” said Enzo Clemente, President and CEO of Cross River Fiber. “There are pockets where there’s no density. We’re not done (building) and to think we’ll ever be done is foolish.”