LTE and WiMAX will leverage M2M services

We have been hearing Machine-to-Machine (M2M) services for ages now. M2M ecosystem (devices and services) is undoubtedly the second highest revenue generating area for the mobile network operators after the mobile handset ecosystem.

The mobile operator’s business-model is transitioning from a voice-only-service model to a data-only-service model as a result of following factors -

Improving mobile broadband technology, connectivity, capacity and penetration;
Increasing proliferation of data-oriented devices into consumer as well as enterprise segments;

This trend has resulted in shifting the mobile operator’s focus to “Data” ARPU. This has been the primary reason for the operators in developed markets embracing tiered pricing buckets thus moving away from the flat-pricing which now gives them complete control over every bit transferred to-and-from the devices (protect the newt work from the data-hungry devices) and at the same time add more and more data services to keep the overall cost/bit down and enhance the overall profitability.

Opportunities and Applications

M2M communications offers plethora of opportunities to – right from product manufacturers to service providers to mobile network operators and to the end-users in generating significant value out of this service. M2M communication service is a game changer in a way the machines communicate directly with one another for example: over-the-air upgrades, updates, monitoring, troubleshooting, security, information extraction, tracking, etc. M2M service is possible in almost any future device in house or office which possesses the potential to access internet or a broadband connection. The major applications are as follows -

As we can see, we have a extensive scope of M2M applications with an enormous Total-Addressable-Market (TAM) ahead of us, comprising billions of potential consumer electronics products, appliances, terminals, instruments, metering systems, etc. However, it also complicates the way every device will identify each other and communicate with each other. This calls for a pressing need of standardization in devices identification, in protocols i.e. the way they connect, communicate with network as well as with each other. With this in mind, 3GPP in its Release 10 have established significant improvements in addressing, supporting the M2M solutions for the next-generation-network (NGN) technologies such as LTE. The All-IP NGN should address IPv6 based address solutions for the M2M devices as the IMSI numbers have 9-10 digits has limited capacity to address this sea of devices. In future, we might see our home-TV, refrigerator, etc with an IP address and the manufacturer will communicate over-the-air (OTA) with the device in either providing the required firmware updates or monitoring the health of the devices or maybe enhancing the features. We are already witnessing various flavors of M2M applications being employed, from the OTA Operating System updates in smartphones (ex: from Android 2.1 to Android 2.2 Froyo) to the Smart Grid initiative with internet-based metering systems to m-health initiatives in remotely monitoring health instruments and hence patients. Other example includes Self-Organizing-networks in LTE will be another example of smart-machines with capability of self-healing communicating with each element in the network collecting parameters, calculating the optimum values and adjusting accordingly  realizing benefits such as reduced costs, latency, improved efficiency and accuracy.

M2M Value Chain and Developments

MNOs will play an important role in M2M value chain with their networks transporting the data traffic from sensors in target device back to the servers/back-office-systems. With opportunity to tap the consumer as well as enterprise TAMs, the operator can capitalize on this emerging business case to move into a more profitable position in the value chain. Talking about M2M value-chain, players other than product manufacturers, MNOs and end-users are, companies producing M2M device-side sensors, M2M embedded modules/chipsets, M2M embedded SIMs, M2M middleware platforms fro MNOs, and M2M applications and developer firms.

The other form of emerging players in this space includes M2M MVNO (Mobile Virtual Network Operators) that provides M2M services to the end users using MNO’s resources, and MVNE (Mobile Virtual Network Enabler) which provides infrastructure  and services that enable these MVNOs to offer these services to their end-customers. ex of MVNO: Stream Communications & MVNE: Aspider Solutions. Key benefits entering this space as a MVNO are: Lower CAPEX and OPEX as a result of shared platform and shared resources along with faster time-to-market the services (reduced testing implementation timing and effort).

MNOs including Verizon Wireless, AT&T, Sprint, Vodafone and many more realizing the potential and role of NGN technologies like LTE and WiMAX have setup special R&D labs to work with new partners everyday to help these companies integrate M2M solutions into their products. MNOs also have started building middleware platforms for M2M services working with platform vendors like Jasper Wireless & Sierra Wireless to integrate server-side and access-network side resources.

Looking ahead, with LTE and WiMAX technologies bound to leverage the M2M space the other significant boost comes from the government side (Smart grid, healthcare, rural broadband) and push from product manufacturers and supply side realizing the importance of automation and communication with the products to be flooded in the market. It will be interesting to see how MNOs will derive maximum benefits and how these operators will move-up the value chain in making M2M a successful revenue generating opportunity. The key to this will be to build a successful Total Cost of Ownership (TCO) business model reducing development, transportation and services costs thus reducing overall cost/bit and at the same time well supported by smarter pricing plans to boost end-user acquisitions.