Business Transformation of NTT Group
—The Use of IoT and Big Data—

1. The era of IoT and big data

The amount of digital data in the world is expected to increase by about 6,000 times in the 20-year period from 2000 to 2020, while the number of devices connected to the Internet should reach about 50 billion by 2020, a figure about seven times the population of the world. During this time, the machines (computers) for processing this massive amount of data will also evolve; the supercomputers in the year 2020 are expected to have a processing performance greater than 80,000 times that of supercomputers in 2000 (Fig. 1).

Fig. 1. Era of IoT and big data.

This evolution of machine performance will be accompanied by an evolution of artificial intelligence (AI). In chess, IBM’s Deep Blue supercomputer defeated the world champion in 1997, and in the game Othello, the Logistello program defeated the world champion in the same year. The number of moves in Othello and chess is about 10⁶⁰ and 10¹²⁰, respectively, while that of shogi (Japanese chess) and go is about 10²²⁰ and 10³⁶⁰, respectively. It has been said that AI cannot easily beat human beings in the world of shogi and go, but even professional players have come to be defeated by AI programs in recent years. There is also a project now in progress to bring AI up to a level high enough to pass the University of Tokyo entrance exam by 2020.

The era of Internet of Things (IoT) and big data is fast approaching. In this era, IoT will drive the creation of a massive amount of data beyond anything we have seen before, and the use of evolved machines and AI will enable a level of data analysis that conventional computer processing can in no way achieve.

The use of big data will likely begin in the corporate world with the aim of improving productivity. In this case, companies will use big data that they collect on their own in order to promote more efficient and advanced business processes. A company that analyzes big data that it has collected will be able, for example, to predict the occurrence of equipment failures or optimize equipment operation. The keys to achieving this are machine-to-machine (M2M) technology as well as AI and machine-learning technologies for analyzing big data (Fig. 2). This initiative, called Industrie 4.0 in Germany and Industrial Internet in the United States, is helping to transform the corporate business model and the industrial structure.

Fig. 2. Transformation of industrial structure.

For example, Rolls-Royce Holdings has begun to provide airplane engines under a completely new business model known for its long-term, comprehensive contract called TotalCare^*. In this program, fees stipulated in the contract are calculated based on the total operating time of a jet engine, so the company naturally tracks the condition of engines using sensors and optimizes equipment repair plans. I believe that this model will help transform the business model of the aviation industry in the years to come.

2. Solving social and global concerns

Another important initiative is the use of big data to address social and global concerns (Fig. 3). The idea here is to collect information from all sorts of fields such as transportation, medical care, the environment, agriculture, manufacturing, and education in the form of big data, and to provide it to the world as a public asset for use in solving a wide variety of social and global problems.

Fig. 3. Solving social and global concerns.

For example, transportation and medical care data could be combined to reduce the time needed to transport a patient in an emergency, and environmental and manufacturing data could be linked in order to minimize wasteful consumption of electricity and help solve the energy problem.

This type of inter-industry linkage of information has the potential to create new value. Thinking back to the German and American initiatives mentioned in section 1, we can ask whether Japan should create a mechanism for sharing and using data throughout society. On January 22, 2016, the 5th Science and Technology Basic Plan was approved by the Cabinet Office in Japan. This plan points out current concerns such as the limited supply of energy, the aging population and a low birth rate, impoverished rural communities, natural disasters, changes in the security environment, and various global issues. To solve these problems, we need to promote Japan-oriented usage of IoT and big data. These problems are most striking in regional communities, so this initiative should also lead to regional revitalization.

3. Issues in data sharing and usage

There are two main issues in achieving data sharing and data usage throughout society as described above. The first is a data gathering framework that can enrich both the quality and quantity of data. For example, a basic rule in using open data is that the data created from its use must flow back to society as big data and open data to be shared. There is a need here for a neutral institution that serves as a data gathering coordinator so that the gathered data do not become biased toward a particular corporate group or industry. Of course, there will also be a need for various types of data standards and protocols in data gathering.

The other main issue is rule-making for safe and secure data use. The use of data for malicious purposes and the leakage of personal information must, of course, be prevented. Furthermore, in the handling of big data, due consideration must be given to the preservation of anonymity in addition to the application of encryption to prevent spoofing (impersonation) and data tampering. There have been cases in which mixing certain data with other types of data lowers anonymity. In addition, data usage rules covering the purpose of use, the method of use, and the handling of information must be implemented.

While it is necessary to combine and handle diverse types of information to solve social issues, the monopolization of information by a single enterprise would hardly be acceptable. To promote a data-sharing initiative, I believe that local municipalities must take the lead and play the role of a data-handling hub. In particular, a local municipality could merge basic data that it possesses—such as demographic information, map information, and disaster prevention information—with big data gathered via IoT by individual companies and provide that data back to industry as publically owned open data. In this way, diverse types of information can be integrated and used via a local municipality without confining it to a single enterprise, which should vastly expand the possibilities of big data and facilitate the development of regional business. Moreover, as mentioned earlier, feeding back the results of using big data can lead to secondary and tertiary use of big data, which should promote the preparation of open data at an even higher level of quality and quantity. We can expect such locally originated initiatives to vitalize local industry and to contribute to the creation of a Japan-oriented ecosystem. Furthermore, the usage fee of big data in a performance-based manner should promote the use of big data by local startups.

Unfortunately, some companies are considering the resale of data gathered by free Wi-Fi. I have been saying to NTT Broadband Platform, an NTT Group company involved in the Wi-Fi business, that we should not make small change from the primary use of such data. This is because such a way of using data involves privacy issues and hinders the sound development of the use of big data.

4. Enhancement of urban infrastructure by IoT

Two case studies involving the use of IoT are introduced in this section.

5. Collaboration with local municipalities

With the aim of advancing concrete initiatives with local municipalities, the NTT Group concluded a comprehensive partnership agreement with Fukuoka City in April 2015 and a development partnership agreement with the City of Sapporo in September 2015. These initiatives are being undertaken as concentrated case studies toward regional revitalization by exploiting the local characteristics of Fukuoka and Sapporo. The urban scale of both cities involves a sum just under a total of two trillion yen in general accounts, special accounts, and corporate accounts, which we consider to be an optimal urban scale for testing a variety of initiatives.

At present, the port at Fukuoka City has nearly reached saturation due to inbound demand generated by Chinese tourists and other factors, while the City of Sapporo is faced with various problems that need quick attention, as it plans to hold the 2017 Asian Winter Games. In these cities, the aim is to collect big data from companies, citizens, and organizations, accumulate it at the local municipality level, and use the data throughout society as open data. There are expectations that the use of such data in a variety of fields such as tourism, transportation, medical care, and nursing will be promoted and will lead to industrial development, disaster prevention, and public infrastructure management.

However, there are limitations as to what the NTT Group can do on its own here. I look forward to collaborating with diverse players that have already agreed to participate in these initiatives.

6. Security technologies for IoT and big data

In this section, issues concerning data security are explained.

7. Information processing technologies in the era of IoT and big data

I previously mentioned the application of big data to self-driving cars. This system requires quick response (real-time characteristics) in order to be feasible. When a traffic jam occurs, local processing is likely to become congested, but since this system functions as a social infrastructure, even a momentary interruption is unacceptable. In response to this problem, NTT is researching edge-computing technology.

Edge computing reduces the response time by the installation of servers at the edge of the network, that is, in the locations nearest the automobiles targeted for processing. When connecting to ordinary Internet servers, the response time is about 100 ms, but with this technology, the aim is to reduce that time to less than 5 ms.

8. The era of collaboration

About three years ago, I expressed the belief that we were entering an era of collaboration. I recently read a book by Professor Takashi Nawa of Hitotsu­bashi University, which talked about the three layers of competition, collaboration, and co-sourcing (Fig. 7). In the coming era of IoT and big data, I believe that collaboration—the middle layer—will become increasingly important if data sharing continues to expand. Moreover, if collaboration expands in all sorts of fields, competition will take on a more diversified form, and the world may take on an entirely new dimension.

Fig. 7. Era of collaboration.

Incidentally, the focus of the fiber-to-the-home (FTTH) business model of NTT EAST and NTT WEST was redirected from retail sales to wholesale (Hikari Collaboration Model) in February 2015. In other words, the business model was transformed to one that promoted collaboration by enabling other operators to sell FTTH, which had formerly been positioned in the competition layer, in combination with their own services. At present, several players including NTT DOCOMO are rolling out original services combined with FTTH and competing with each other in this way. In the future, we can envision a migration of mobile services as well to the collaboration layer. This collaboration model should stimulate competition in novel services and produce added value.

9. Society 5.0

Japan’s 5th Science and Technology Basic Plan mentioned earlier points out a number of social issues. The government advocates the concept of a super smart society as a means of solving these issues.

The super smart society is defined as “a society where the various needs of society are finely differentiated and met by providing the necessary products and services in the required amounts to the people who need them when they need them, and in which all the people can receive high-quality services and live a comfortable, vigorous life regardless of their various differences such as age, gender, location, or language.”

Such a society will be created by broadening the scope of IoT application beyond manufacturing to a wide variety of fields in order to transform society and by achieving a high degree of merging between cyberspace and physical space (the real world). The government has named this series of initiatives Society 5.0 (Fig. 8).

Fig. 8. Society 5.0.

The 5th Science and Technology Basic Plan calls, in particular, for the development of systems in 11 fields and the building of a common platform for running these systems to achieve a super smart society. It should be easy to see that the aim here is to achieve data sharing throughout society. Incidentally, the notation 5.0 here signifies that the super smart society is the fifth type of society to develop in human history after the hunter-gatherer society, agricultural society, industrial society, and information society.

10. NTT Group CSR Charter

The NTT Group CSR (corporate social responsibility) Charter drawn up in 2006 is shown in Fig. 9. The main theme of this charter is the creation of a safe, secure, and prosperous society through communications that serve people, communities, and the global environment through four types of communication. I was initially a bit unsure of these somewhat abstract declarations, but I now feel strongly that we are on the verge of such an era. As a major direction in its business transformation toward the future, the NTT Group is doing everything in its power to shape communication between people and their communities and between people and the global environment.

Fig. 9. NTT Group CSR Charter.