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Spending on Internet of Things to speed telecom industry growth

by June 29, 2016 General

June 29, 2016 8:46 pm

The country’s total spending on the Internet of Things (IoT) space is seen to grow faster in the next four years.

In a briefing during the Philippine Cloud Summit 2016 on Wednesday, Reynaldo Huergas, president of PLDT Inc.’s IT subsidiary IPC, said the telecommunications industry may grow faster toward 2020.

Citing a study by Frost & Sullivan, Huergas said spending may go beyond $800 million by 2020.

According to the study, IoT spending in the Philippines will surge to $766 million by 2020 from $55.1 million in 2014.

Huergas noted the telecom industry would benefit a lot from better internet connectivity with the buyout of San Miguel Corp’s telecoms business by PLDT and Globe Telecom Inc., as well as the establishment of the Department of Information and Communication Technology (DICT).

“Yes, I think it will accelerate the industry and increase the [efficiency] of businesses,” he said.

“[IoT spending] could still be larger; it is possible that local enterprises are not yet sold on the value of IoT or find the service risky in light of high-profile hacking incidents. But all of that, we believe, will be dispelled,” he added.

At present, IoT spending in the Philippines is estimated at $260 million, according to IPC.

During the briefing, King-Yew Foong, research vice president and chief of research for IT research and advisory firm Gartner, said the Philippines is “four to five years behind developed countries such as Singapore,” citing the need for smaller enterprises to adopt IoT and cloud computing in their operations.

Huergas said only 2 percent of the Philippine businesses are the large companies which have adapted to IT systems and internet in their operations. He said 98 percent consists of micro, small and medium enterprises (MSMEs) that are still operating via traditional and analog systems.

He sees the one million MSMEs in the country as a space where IoT and cloud computing can grow in the next few years.

“Digitization itself has changed. By definition, it used to refer to business tools that drive operational efficiencies. Today, it is more than that. Digital is a frame of mind that allows organizations to create and engage markets in a disruptive manner and redefine the economy,” Huergas said.

Foong noted that embracing IoT can reduce operating costs, enable a differentiated customer experience, while discovering new business models and income streams.

While these are attractive enough, adopting an IoT ecosystem has its fair share of challenges, including but not limited to cybersecurity, integration, and unclear business benefits.

Foong said it is imperative to educate all stakeholders and to choose the right IoT partner for it to take off in a big way.

Kristyn Nika M. Lazo