Vodafone sweetens IoT service with ‘outcome-based pricing’

Vodafone building (Vodafone)
Vodafone is working to grow its U.S. IoT business. (Vodafone)

LOS ANGELES—Vodafone is working to build out an internet-of-things business in the U.S., and it knows it faces an uphill climb in the sector considering the company must rely on roaming partners to offer services here because it does not operate its own U.S. IoT network.

The result, according to Vodafone’s Ludovico Fassati, is “outcome-based pricing.”

“We have to be creative” with our pricing, Fassati explained during the recent Mobile World Congress Americas trade show. Because Vodafone cannot hope to match the IoT pricing offered by the likes of AT&T and Verizon—companies that have invested billions of dollars building out nationwide LTE networks for the IoT—Fassati said Vodafone is hoping to entice customers in other ways, such as through its innovative approach to pricing.

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Under Vodafone’s outcome-based pricing scenario, the company essentially shares some of the risk involved with the sale of its services. For example, if a car covered by the company’s services is stolen, customers only pay if Vodafone’s IoT services help them find it. Or, in another example, customers only pay for packages tracked through Vodafone’s IoT services that actually arrive at their intended destination.

Fassati said Vodafone’s pricing helps sets the company apart from its IoT competitors in the U.S. But it’s not the only thing that sets the company apart.

Vodafone’s IoT business in the U.S. is an offshoot of its European-based network, which of course is powered by the carrier’s network there. Indeed, Vodafone just last week announced it doubled the size of its NB-IoT network in Europe. But as Vodafone works to build out a global IoT business, the company must ink roaming agreements with operators outside its footprint, so its IoT customers can still track stolen cars that cross country lines or have packages delivered internationally.

Fassati said his job at Vodafone in the U.S. is to sell the European company’s IoT services to U.S. companies that are looking for global reach. “We have a clear strategy now,” he said, explaining that the company offers IoT services across 26 countries.

Further, Fassati said Vodafone is working to provide services beyond simple connectivity, in that Vodafone will help its customers design their products and manage their deployments, either through Vodafone services or services from partner companies.

Importantly, Fassati said Vodafone’s main business today is focused on the healthcare market, a situation he attributed to the company’s early work in obtaining necessary approvals from the U.S. FDA. “That is the largest and fastest growing vertical for us today,” Fassati said. “It’s just exploding.”

Fassati said other verticals Vodafone is targeting in the U.S. include the automotive sector and the logistical and transportation sector.

Of course, Vodafone is one of many companies seeking to tap into the IoT opportunity. For example, AT&T has made a major business out of connecting vehicles and other IoT-style devices to its LTE network. Verizon too is working to grow its IoT business, as are Sprint and T-Mobile.

Even Dish Network is getting into the game with a plan to spend up to $1 billion to build out an NB-IoT network using its extensive spectrum holdings.

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