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The Business of IoT Connectivity

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On this episode of the IoT For All Podcast, Ryan Chacon is joined by Altwaworx’s President, Forrest Derr, to discuss the business of IoT connectivity management. The podcast starts with a conversation around the current pricing models and rate plans in IoT connectivity. Forrest then gives advice on purchasing data and managing multiple carriers before talking about the challenges he’s seen companies face in the industry. Ryan and Forrest wrap up the podcast with a conversation around additional areas of difficulty and technologies helping alleviate these issues.

Forrest Derr has had a long, diverse career as a technology executive and entrepreneur. His roles have included technology, marketing, operations, finance, and sales. He contributes the majority of my success to helping those around him succeed by helping others to remove obstacles and barriers. He’s always interested in making new connections and networking with others in the industry.

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Interested in connecting with Forrest? Reach out on Linkedin!

About Altaworx

Altaworx was founded in 2003 as a commissions-based business that sold wireline data services and premise-based phone systems. After several years of commission success, our visionary reviewed the equity value of Altaworx to determine that he had created a job and not a business. We changed our business model, and Altaworx started providing SIP trunks as a start to transform the business from a commission-based model to a recurring revenue model. Later a hosted VoIP platform was added, and joined the AT&T APEX program. In the end, the journey that we took can be your journey. Are you looking to build equity value through recurring revenue? Altaworx can help by providing a white-label hosted VoIP solution that includes connectivity, a billing platform, and compliance. Our solution requires a small investment and takes on a business-in-a-box solution for you to grow your revenue. 

Key Questions and Topics from this Episode:

(01:20) Introduction to Forrest and Altaworx

(03:40) Pricing models in IoT connectivity

(06:20) Connectivity rate plans

(08:30) Advice for purchasing data

(10:24) Managing multiple carriers

(11:47) Challenges in connectivity

(14:20) Getting accurate usage data

(16:19) Customers managing connectivity

(17:37) Advances in technology

(18:42) Areas of difficulty in connectivity management


Transcript:

– [Voice Over] You are listening to the IoT For All Media Network.

– [Ryan] Hello everyone and welcome to another episode of the IoT For All Podcast, the number one resource and publication for IoT. I’m your host, Ryan Chacon. If you are watching this on YouTube, we’d really appreciate it if you would like this video and subscribe to our channel. If you’re listening to this on one of the podcast directories, please feel free to subscribe to get the latest episodes as soon as they become available. In today’s episode, we have Forrest Derr, the president of Altaworx, very fantastic company, they focus on white labeled, hosted voiceover IP solutions that include connectivity, billing platforms, compliance, you name it, they can kind of handle it for you. On this episode, a lot of good stuff discussed around the connectivity side. So we talk about pricing models, business models, buying rate plans, how that all works, advice for companies purchasing data, how to manage multiple carriers, and then also just general challenges in the space as it connects to the connectivity, the communication side of things so I think you’ll get a lot of value out of this. But before we get into it, if any of you out there are looking to enter the fast growing and profitable IoT market, but don’t know where to start, check out our sponsor, Leverege. Leverege’s IoT solutions development platform provides everything you need to create turnkey IoT products that you can white label and resell under your own brand. To learn more, go to IoTchangeseverything.com, that’s IoTchangeseverything.com. And without further ado, please enjoy this episode of the IoT For All Podcast. Welcome, Forrest, to the IoT For All Podcast, thanks for being here this week.

– [Forrest] Glad to be here, appreciate the invite.

– [Ryan] Absolutely, it’s great to have you, looking forward to this conversation. Let’s kick it off by having you give a quick introduction about yourself, to our audience.

– [Forrest] Yeah, my name’s Forrest, I’ve been with the company for seven years now. I was a customer of the company of Altaworx for about 12 or 13 years before I came and joined them. I tell everybody that they were such a good company that couldn’t help, but join them. I had to lead my former job and move over here, but joined the company seven years ago and started in the IT side of the business. So building out data centers and building out one of our first IoT solutions, which is LTE failover. And so I got to cut my teeth on some applications and development, working with our engineers to launch solutions.

– [Ryan] And for our audience who may not be as familiar with Altaworx, tell us a little bit about kind of what you all do and the role you play in IoT.

– [Forrest] Yeah, so Altaworx is a carrier, we sell mobility as well as hosted VoIP, but on the IoT side, we’ve been able to, we were one of the first companies that signed up with AT&T Partner Exchange to be able to have access to the Jasper platform, to be able to utilize data plans, small data plans, and have those scale up as data usage is consumed. And so we’ve had a lot of experience in the mobility space, as well as the IoT space. We’ve got customers in 43 different states, as well as some in Canada, Mexico, and overseas in Asia.

– [Ryan] And do you have any types of use cases or kind of verticals that you specialize or focus in, or is it kind of across the board?

– [Forrest] Yeah, it’s kind of across the board because we’re really focused on the connectivity. We help people get connected to other companies to help them leverage their solution. We don’t necessarily develop solutions per se, but it is really across the board, whether it’s scooters or horse tracking or LTE failover, perhaps line replacement, it’s really anything around IoT connectivity.

– [Ryan] And when you say failover, what does that exactly mean for audience who do not understand?

– [Forrest] So failover, what it means to us is a backup internet connection. So if you have a fiber connection and you inevitably have a farmer that digs up the fiber line with his backhoe, cuts off your connection, LTE failover is a way to leverage the LTE network to pick up and run the internet connection for that office until that fiber connection comes back online.

– [Ryan] Got you, okay, perfect. So, today’s conversation, I know we have a number of topics that we wanted to kind of cover and talk about around the connectivity side and the pricing side, business model side of IoT and connectivity. And one of the first questions I wanted to ask you is if you could talk a little bit to our audience about pricing models, business models around the connectivity side. So, what are the common kind of pricing models that we see and just, I guess, high level that for us so that we can kind of start from there.

– [Forrest] Yeah, I think the biggest thing to think about with pricing is you don’t have to price things out the way you purchase them. So one of the things, when we’re consulting companies on building out their IoT solutions, almost everybody wants to try to get the carrier, to provide the rate plan that they need specifically to sell their customers, but that’s not necessarily the best way to do it. The best way to do it is to get aggressive rate plans with your carrier and then derive slash develop your own rate plans for your customers. And those rate plans really are dependent on the solution. So we’ve got zero kilobyte rate plans, all the way up to 500 kilobytes a Meg all the way up 30, 40, 50 gigs. So it really depends on the application. And what I encourage people to do is sell based off what their customer needs, don’t sell it based off how you buy it from the carrier.

– [Ryan] So, I mean, I know a lot of times when we’ve spoken to other connectivity companies or just our own research in the market, we see a lot of companies buying rate plans and then marking them up as a way to kind of make their margin. So you’re suggesting that not be the approach that companies lead with or take, and also companies that are looking for connectivity, should they be kind of avoiding those potential situations as well?

– [Forrest] Yeah, ’cause the challenge is if you buy rate plans and mark them up, you’re limiting the margin you can make based off what, how the carrier will sell you data. And so for example, on our IoT platform, I think we’ve got like 15 different rate plans. Well, depending on what the customer set is and depending on what their need is, we may only give the customer five of those rate plans or six of those rate plans. And particularly in the LTE failover space. So one of the ways that we’ve been able to leverage LTE failover is to provide a zero kilobyte plan to customers. And so they pay for an active SIM. So they’ll pay $15 a month or whatever for an active SIM, but we’re only charged as a carrier customer for a very small fee, a fraction of that $15 for that SIM to be active. That’s where you can make money on the breakage and then you can charge them usage on top of that. So again, don’t restrict your business model to how you can buy the data, figure out creative ways to make margin.

– [Ryan] And when you’re talking to companies and they come to you with the solution that they’re either building to sell or that they are looking to adopt, and you’re starting the conversation around rate plans, you’re start talking, the conversation around which ones are appropriate, how do you kinda handle that conversation? And at the same time, what should companies coming to companies like yours, have prepared to better understand the appropriate rate plans that are right for them or what kind of information they need to supply a company like yours to make sure that they have the options presented to them that are most appropriate to get the best cost for their solution and not in a sense over have any overkill.

– [Forrest] Yeah, so the first thing is lots of questions that we have. So when a customer comes to us, we have lots of questions to understand how they’re gonna be utilizing that data, what is their typical usage that they’re seeing in their solution and obviously geography and where they’re selling that data. For us, what we want to understand is what is their typical framework for that customer, for those solutions? Do they need to have a zero kilobyte plan and charge the customer or do they need to have a 500 kilobyte plan? So as much data as we can get from them, we can help guide them along the journey to make sure that they’re making the right rate plans. It amazes me when I’ve had very, very large customers, I mean, Fortune 500 customers that don’t have good rate plans. It’s astonishing to me, but there are large companies out there that have huge volumes, but the carriers don’t help educate those large customers on how to buy rate plans. I had one that has two rate plans and millions of SIMs, and we talked them through the process of renegotiating with their carrier, getting that carrier to give them multiple rate plans, to be able to make money on the breakage.

– [Ryan] And why is that usually the case as far as, why are those not presented to them or not available?

– Well, the carrier doesn’t present them because they would rather make the margin themselves, they’d rather make the breakage. And the larger companies that we’ve come across in talking to them, they don’t know what they don’t know. They feel like they’re getting the best deal because they’re a really large company and they have a large volume, but that’s rarely the case.

– [Ryan] So for companies out there that are looking to purchase data, what advice do you have for them on how to go about that and how to do it most effectively and efficiently with the organizations either they work with or the carriers they work with on the other side.

– [Forrest] I think the big thing is to get lots of input from other companies. So don’t just rely on the carrier directly, talk to other companies like Altaworx or another competitor of ours and see what’s out there in the marketplace. One of the challenges is, again, you don’t know what you don’t know. And if you just say, give me the best deal on a 20 gig plan, well, you may need a 20, a 10, a five and a two gig plan to be able to scale that business and make money on breakage. So my advice is to get advice and find out what’s out there in the marketplace.

– [Ryan] Right, and aside from how data is being purchased, are there other factors that are influencing kind of the margins and that decision making process?

– [Forrest] Yes, it’s also how you optimize with the carrier. So on different platforms, so Jasper is one platform that AT&T uses and there’s some other carriers, T-Mobile I think has started using them, and there’s a lot of international carriers, but the Jasper platform will allow you to optimize and change the rate plans, all the way up to the end of the bill cycle. And so if you buy data and strictly mark up rate plans, then you’re limiting yourself on how much margin you can make. So you could have a customer that buys a two gig plan and they only use 50 megabytes, and with the Jasper platform, you could use some automated tools that companies like we provide and other companies that will actually optimize your carrier rate plan, all the way to the last minute, before the end of the bill cycle to get you the lowest bill possible. So instead of buying a two gig plan and marking it up, you’re buying a 50 Meg plan and still charging a two gig price.

– [Ryan] Got you, okay. And how often are, I guess there’s two sides of this, there’s companies like yours who are kind of bringing the connectivity as an option to purchase and the companies that are purchasing the connectivity from companies like yours. When it comes to managing multiple carriers, how does that kind of work on potentially both sides of it? Is there a difference between how that’s managed on both sides and what kind of things should be taken into account when you’re getting into multiple carriers, as opposed to focusing on one?

– [Forrest] Yeah, multiple carriers adds a whole nother layer of complexity because of the way they sell the data. So some carriers sell it based off consumption. So then you’re just a matter of making your own rate plans, there are no rate plans, you’re just paying based off the data that’s consumed across the aggregate. So it is a challenge, especially from a standpoint of figuring out how to bill your customers. So especially if you have a model where you’re charging your customers the same rate plans across multiple carriers, you got to make sure you’re making the margin, but there are tools out there. There’s a company called AMOP out there that has a platform that allows you to manage multiple carriers in one dashboard. And so you could manage Verizon ThingSpace, AT&T Intelligence, T-Mobile Jasper, AT&T Jasper, all in one platform to give you a holistic view of how your data’s being used and how you can optimize your bill with those carriers.

– [Ryan] Got you, okay, that makes a lot of sense. And one of the other questions I wanted to ask you, which there’s a couple of different pieces we can dive into here around challenges that you’ve seen kind of from your angle and same side, and as the angle from customers that you work with, what are some of the biggest challenges you’ve seen on the connectivity side of things in IoT? Let’s just start high level there, just kind of, what would you say to kind of that?

– [Forrest] I think it depends on the IoT solution. So we’ve seen a lot of people with fixed devices in IoT. So it’s like a generator or LTE failover, and trying to find the best carrier for that device in that physical location is definitely a big challenge. If it’s a GPS tracking device that’s moving around, there’s not as much issues as far as choosing a carrier because it can pull the data and then spool it back up when it gets to a cell signal again, but fixed IoT devices and choosing the right carrier that has the connectivity that’s required from a cellular strength standpoint is probably one of the biggest challenges we’ve seen.

– [Ryan] And what is the advice to kind of working through that thought process and overcoming that kind of challenge since obviously asset tracking is a very big area from an IoT standpoint, the environment, the sensors. Yeah, the devices itself varies so greatly. You’re moving indoor outdoor potentially, you’re in rural areas, you’re in different environments and it’s very tough to align the right connectivity, which influences the end cost of these solutions pretty greatly to make it something that company can justify adopting or not. So how do you kind of overcome that kind of challenge?

– [Forrest] Yeah, so it’s about looking at the devices that you’re gonna choose because a lot of devices out there have the ability to have two SIM cards and two carriers. And, again, there’s a cost component to the device, but then there’s also a cost component to deploying that device and then maintaining that device. And so what we have seen is people make sacrifices on the front end for the upfront cost of device to be able to have two carriers so that they can deploy one device with two SIM cards, with two carriers anywhere and not have to go back and forth and try to figure out which carrier is the best. And so we’ve seen a lot of success from people that are doing that, and what they do is they have both SIMs active, figure out which one’s the best once it’s in the field, just deactivate the SIM that’s not the best and move on and just don’t worry about that SIM card anymore.

– [Ryan] Absolutely, okay, that makes a ton of sense. One of the other questions I had was I imagine at times it can be a challenge to get accurate usage data from carriers, whether that’s on your end or your customer’s end, how do you approach that and what, I guess I should start off with, what is that challenge really like, and then how do you kind of overcome and handle that to ensure that you have the most accurate data available to choose whether it’s the best plan, make adjustments in real time, so that your customers get the best costs and price at the end of the day.

– [Forrest] Yeah, and it’s actually twofold, it’s not only getting data from the carrier to make sure it’s accurate, but it’s also making sure you have accurate data to bill your customers for the right rate. So we’ve seen a lot of applications where people are not getting accurate data from the carrier, therefore they’re paying a higher price, but then they’re not charging their customers as much either, particularly in the LTE failover space. So one of the ways to do that is to leverage a solution where you can have APIs that connect to the carrier to get real time data. A lot of carriers will provide data via FTP reports, but those may be delayed five hours, 10 hours, sometimes 24, 36 hours, and so you can’t just rely on one source of data. Not all carriers provide multiple ways, but a lot of carriers do provide multiple ways to get data. So I’ll give an example, AT&T on the intelligence side, which is technically not IoT, but yet people use mobility, SIMs IoT applications, whether it classifies that or not, there’s like three different sources to get data. There’s a mobile report, there’s a FTP report, and then there’s data you can get via FTP or APIs. What we have decided to do is we’ve leveraged APIs and a portal to pull all three of those sources in and look at which data consumption is the highest and use that, because we’ve found that not all of them are 100% accurate and individually, they’re not accurate more than one or the other. So you really have to look at all three of these data sources, combine them together and figure out which one has the highest data usage.

– [Ryan] And when you mention portal, I know there’s kind of the side where you’re able to interact with and kind of see the data. But what about from the customer side being able to access and manage the connectivity themselves? Is that something that your customers often do and find beneficial, or is that something that’s kind of usually reserved and handled and managed by you all so that it’s less work and kind of things to worry about for the customer itself?

– [Forrest] So it depends on the customer. I mean, if it’s a customer that only has 10, 15 devices, typically they’re not gonna wanna manage it, but the larger customers, a couple of hundred, even 50, they’re gonna want to manage and have access to that device. So we propose and want our customers to have a portal where they have management access to activate and deactivate their SIMs. One side of that says, “Well, why would I wanna give customers “ability to activate and deactivate, “I wanna be in control of that.” But then what is the cost of having to maintain the support staff, to be able to respond to those requests and do those types of things? So our focus has been building portals where our customers can leverage the APIs. We give them access only to their SIMs that they’re in control of and then they can activate, deactivate, suspend, retire, whatever they wanna do to them, at their convenience.

– [Ryan] And are there other types or other parts of the process in general when it comes to connectivity that have, I guess, as of late been more optimized or automated in order to help reduce labor needs? Or are there other areas that, I guess, that have been challenges that have now kind of been worked to overcome to help reduce those needs?

– [Forrest] Yeah, I think on the carrier optimization side, there’s ways that you can manage the rate plans that you’re being charged from your carriers and automatically make changes. I can tell you that when we first started out, gosh, it was 2016, somewhere around there, I was actually in the seat of manually optimizing SIM cards on the Jasper platform, which was a tedious process of downloading the spreadsheet, running through some algorithms, making the changes, uploading the CSV, now all that stuff can be automated. And so with the average of APIs, you can automate not only the carrier side, but also the billing side. So you can calculate usage charges and push billing to various billing platforms via those APIs.

– [Ryan] From your conversations with companies that you work with, are there any other areas that kind of continue to cause headaches for customers that you engage with? And I mean, from your conversation today and conversation I’ve had in the past, the connectivity management side of things has evolved a ton over recent years and made things much more easy to adopt and understand, made things more cost effective, et cetera. But do you still see any outlying areas of concern or areas that kind of pose challenges still for customers that you have conversations with throughout their kind of adoption of these solutions?

– [Forrest] I really think even though there’s automated tools for SIM card management and billing, I still think there’s a lot of opportunities for people to use these tools effectively. Not that they’re not available, but how they use them effectively to make sure they’re billing all their customers for all the active devices, make sure the billing and for all of the usage. So we’re still seeing to this day, I have people come to me and they tell me they’ve got somebody in their office that makes sure everything gets billed to their customers. And inevitably when we run an analysis and figure out how many active SIMs they have, versus how many they’re billing, they’re always short. And so on the carrier side, there’s a lot of ways to automate and a lot of people are doing good job on there, but I think on the billing side, there’s still room for improvement.

– [Ryan] Got you, fantastic. Last question I have before we wrap up here is for our audience out there who is looking into connectivity and wants to just make sure they’re prepared. What is the best advice you have for companies looking to kind of go down that conversation and adoption journey for the connectivity piece of an IoT solution?

– [Forrest] Yeah, definitely look at multiple carriers and definitely look at how you can buy data flexibly. Again, don’t get stuck in the rut of trying to buy a rate plan and sell to your customers based off that rate plan. I wouldn’t even tell the carrier what rate plans you’re selling to your customers, get them to provide the various options and let yourself work your way around to what you need to charge customer.

– [Ryan] Okay, fantastic, and for audience out there who wants to learn more about kind of what you all have going on, touch base, maybe follow up with questions, what’s the best way to do that?

– [Forrest] Yeah, you can email me at [email protected], A-L-T-A-W-O-R-X.com or go to Altaworx.com.

– [Ryan] Fantastic, well, this has been a great conversation for us, thanks so much for your time. Connectivity is an area that we’re trying to expand our conversations around, we’re starting a new series focused solely on connectivity specific topics that we’re gonna hopefully launch in the coming months. So we’d love to have you back and other members of your team, even to talk more about very niche connectivity focused questions, and topics that come up and just share more knowledge.

– [Forrest] Well, let us know, be happy to be a part of it.

– [Ryan] Fantastic, well, thanks so much for your time, we appreciate it.

– [Forrest] Thank you, appreciate it.

– [Ryan] All right, everyone, thanks again for watching that episode of the IoT For All Podcast. If you enjoyed the episode, please click the thumbs up button, subscribe to our channel and be sure to hit the bell notification, so you get the latest episodes as soon as they become available. Other than that, thanks again for watching and we’ll see you next time.

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