HANOVER, Germany (Reuters) - U.S. telecoms provider AT&T is betting it can carve out a significant business in connecting objects with one another, the head of that unit told Reuters in an interview, as it seeks new revenue sources in an oversaturated wireless market.
The so-called Internet of Things (IoT) is a fast-growing area where industrial and consumer firms and software providers are teaming up to offer smarter ways of doing things such as predicting mechanical problems before they arise, controlling machines at home remotely or integrating municipal services.
AT&T already has a strong position in the automotive industry, where it has 10 major carmakers using a platform it has developed to deliver services such as roadside assistance, weather reports or Internet radio to cars on the road.
“We’re just at the beginning,” Chris Penrose, senior vice president of AT&T’s IoT organization, told Reuters in an interview at the Hannover Messe industry trade fair, adding that more automotive partners were “in the works”.
“It is a top priority of our company to continue to be a leader in the IoT space.”
Most Americans already own a mobile phone, and the U.S. wireless industry is turning to connected cars and devices for growth. AT&T’s partners include General Motors, Audi (VOWG_p.DE) and Ford.
The global IoT market is expected to grow to $1.7 trillion by 2020 from $656 billion in 2014, according to market research firm IDC.
In first-quarter results reported on Tuesday, AT&T said it lost subscribers to its TV services and signed up fewer-than-expected monthly wireless customers - highlighting the need to develop new business areas.
AT&T is working to avoid the pitfalls of the past - where telecoms carriers largely played the role of “dumb pipes” used to convey lucrative services for the likes of Netflix, Google or Apple while bearing the costs of building the wireless networks.
“We have the ability not only to connect things ... we also have the ability to enable the collection and the analytics of the data behind those as well as do it in a secure manner and do it globally,” Penrose said.
But he said AT&T did not insist that customers use its own platforms, rather allowing them to use their preferred technology. “We want to be the very best collaboration partner,” he said. “Sometimes we will provide connectivity and that’s OK.”
At the Hannover Messe, AT&T announced new deals including one with Otis, in which it will connect data from Otis elevators to Microsoft’s Azure cloud, enabling Otis to access real-time equipment performance data.
Penrose said in this case AT&T would add value through the security of its connection. In other cases, it might exploit its more mundane but essential expertise in areas like billing - a core competence of wireless carriers.
AT&T does not disclose how much revenue it makes from the Internet of Things. Rival Verizon said it made about $690 million in IoT revenue in 2015, up 18 percent year on year, of a total $132 billion in revenue.
AT&T has about 26 million connected objects and is connecting more than a million more every quarter, Penrose said.
Additional reporting by Malathi Nayak in New York, editing by David Evans