CES 2016: AT&T business chief sees Internet of Things as next Industrial Revolution

LAS VEGAS---There are three little words being repeated all over Sin City this week: Internet of Things.

As garish (if not simply uninspired) as that terminology is, there's no denying the innovative and business potential for ubiquitous Internet-connected devices, sensors and apps.

Certainly, there are a number of other trends dominating conversations at the annual Consumer Electronics Show. But most of them, from self-driving cars to smart cities, aren't possible without the Internet of Things as a foundation.

And the Internet of Things isn't possible without robust, global networking infrastructures, either.

Thus, IoT was at the top of the agenda at AT&T's Developer Summit, held simultaneously over at The Palms resort on Tuesday.

Following the opening keynote, I sat down with Ralph de la Vega, CEO and president for AT&T's mobile and business units, to discuss IoT as well as other plans the telecommunications giant has for enterprise customers.

Here are a few highlights from our discussion, edited and condensed for clarity.

ZDNet: What do you expect to be some of the biggest trends in mobile and cloud services for business customers in 2016? How will those build upon or differ from the growth of Bring Your Own Device (BYOD) and mobile device management (MDM) adoption over the last few years?

De la Vega: What we're seeing is a remarkable transformation in business enabled by the innovation provided through smartphones, high-speed mobile broadband and the cloud. The software advances, just like the ones you saw at our hackathon here -- it's amazing what can be done with software today if you have mobile devices, mobile broadband and the cloud.

It's really transforming the way business gets done.

ZDNet: You mentioned during the keynote this morning that you see the Internet of Things as the "Industrial Revolution 2.0." Could you elaborate on what that means for AT&T and its customers specifically?

De la Vega: It's like the Industrial Revolution 2.0 because it is so much more transformative than just MDM or BYOD. This is changing the way people do business. It is disrupting industries that don't play in that space.

I was in London two months ago. When I opened the Financial Times, the cover story was that black cabbies -- the famous black cabs -- were shutting down their training school. It takes three years for a cabbie in London to go through that school. They told me an unbelievable figure that on average, they fail the test 12 times before they pass it. They were shutting the school because of Uber.

Now, Uber is our customer. It's Uber's use of the smartphone, applications, mobile broadband and the cloud that have obviated the need for the expertise because they have GPS built into the smartphone and smart enough apps that they may not be able to do it exactly as good as a cabbie does, but good enough that people are using Uber.

So for an institution like that for it to close its doors, it highlights the point that either you accept and embrace these technologies and disrupt yourself -- or you will be disrupted by people who use them.

It's that transformative. This is much more impactful than any single thing. It's not about one device doing it. It's a combination of smartphones, mobile broadband that is super fast and available just everywhere, and the cloud. That is changing everything.

You saw what we showed with Red Bull today. The thing that distinguishes this change from any other change is this is all real-time. You're getting real-time data for things that you never had real-time data before, so you can have those things perform better.

The example [Red Bull] used in the tires is mind boggling. They have to change the tires on a Formula One car every 50 to 60 miles. They really have to optimize the tires. When do you decide when its time to pull that driver in?

Well, they use real-time data. The data is different by track, by day, by conditions. You can't have a standard that says we'll change it by "X" amount. It depends how hot the track is, the weather, the location.

So they're doing this in a very, very smart way with data they never had before. They know the profile of the tire because we're sending real-time data form the cloud. It's mind boggling how detailed they are.

That's what businesses everywhere are going to have to do or they will be disrupted by businesses that do use that data. And we have seen that in the way you lay out retail stores, in the way you change signage in stores. It just changes everything when you have data you never had before.

ZDNet: What have been some of the biggest improvements to AT&T's cloud and data services for enterprises?

De la Vega: We have a lot of money spent on outdoor advertising. You look at this town -- it's a complete billboard. From the minute you walk in, that's all you see. And yet, when you advertise -- with most advertisers that have outdoor advertising today -- they can't tell you who is seeing that advertising.

We spend a lot of money (and so does everybody else), but essentially today you get the number of cars that drive by.

We, with our smartphones and the capabilities to use anonymized, aggregated data can give new insights that those outdoor advertisers have never had, and that is by time of day, day of the week. I can tell you how many cars pass. I can tell you male or female. I can tell you the age profile, the economic profile.

So once I give you that, do you think you can make a smarter decision on where you advertise? Sure, you can.

We did a study in Dallas. It was basically making-believe if you were a business owner with X amount of money that I need to spend, and I want to advertise in Dallas to women between 35 to 45 who make $75,000 per year, where should I spend?

The study came back saying you only need to buy two billboards in Dallas, and we have you covered. We showed that to the customer, and the customer said, "Wow."

That industry, in absence of that data, wouldn't exist because there's no way people in today's age would buy a sign without knowing what good you're going to get from it.

Here's another example: concerts, people who sponsor concerts. We spend a lot of money sponsoring concerts.

But you never know what people who go to concerts do before or after they go, whether they buy your products. But with aggregated data -- again, none of this individualized -- you can see patterns that happen before, during and after concerts so you can tell if that is a good investment for you.

So it's getting insights to things that you never had insights into before, and in many cases, you were blind to using it.

Do you see how you would run a business differently? This is what I mean that it's a new Industrial Revolution because it's using data to revolutionize the way business gets done.

People just thought about this as just connectivity, but it's more than connectivity. It's data and insights to help you run your business better. Those are the trends I see that are transformational and super disruptive that in this space.

ZDNet: What are some of the top requests for new services and features you receive from enterprise and business users?

De la Vega: We have many cases now with enterprise customers realizing they are in a space where they could get disrupted that they're coming to us in teams.

In many cases, the C-Suite executives -- it may be the top executive with the chief information officer or the chief technology officer, and even in many cases, the chief financial officer -- trying to understand how all this will impact their business.

I've never seen that happen before. You don't get that kind of group deal when it's BYOD or mobile device management.

ZDNet: With the estimate of more than 400 improvements made to the M2X Data Service alone last year, where does AT&T need and plan to improve this year?

De la Vega: Well, I think what John Donovan (senior vice president of AT&T Technology and Operations) said at the end -- and I always hate to put him at the end because he has some really important messages when it comes to software-defined networking.

He mentioned the AT&T Integrated Cloud where we're putting instances of that cloud and that allows our services to be software-defined.

He specifically mentioned a service I have been really pleased with, Network on Demand. It allows a customer to adjust bandwidth on-demand in less than 90 seconds. So if you're an enterprise, and you just added a new group into a building and you wanted to put additional bandwidth in, the process could take you up to 30 to 60 days. We're allowing the customers to control their own network so once we put [bandwidth] in, they can adjust it up or down based on the needs of their business.

The really big idea here is we have taken things that were based on how we would run our internal network and now are turning those into products we sell to customers.

So this service, we sold to the Fort Worth Independent School District. They have 150 schools on Network on Demand. When the kids leave the schools, they turn bandwidth up and down by themselves almost effortlessly without having to issue an order or call a technician in or anybody on the phone.

When you think about how dramatic that is, that changes everything. It means that if you have a big meeting and you're going to show a bunch of video or have a training session, you know that as a CIO, all you have to do is take the bandwidth up and you won't get any complaints from customers.

We have hundreds of deals that we've won with this new capability using software-defined networking and virtualizaition, which is another key trend.

Another space we think about is the whole area of cyber security. There's no CIO today that is not interested in making sure their assets -- physical or virtual -- are protected. We've got a huge effort in security to make sure we use the know-how we have at AT&T and provide network-based security to help protect them.

The tie-in to that is you have this Internet of Things generating all kinds of data for things we never had data on before. We're using it very insightfully, but in the end, you have to protect it.

Just like with the Red Bull team, they don't want their data hacked by their competitors to find out what they had learned. Getting them data was key, but securing and protecting it is also part of the service we're offering today.