Johannesburg, 16 Mar 2013
No matter who you ask - industry analysts, small and large-scale service providers, basically any telecoms stakeholder - they will all tell you that machine-to-machine (M2M) is ramping up, and fast, with huge numbers of devices soon to connect to the network and change our lives.
The most generous forecast is for 50 billion connected M2M devices by 2020 (Ericsson, 2011), but even more "modest" predictions - such as Machina Research's estimate of 18 billion connected devices by 2022 (M2M Global Forecast & Analysis 2011-2022) - clearly demonstrate this huge opportunity.
This is why we're seeing service providers across the globe establish M2M business units, in which the service provider acts as an M2M wholesaler, supporting hundreds of different M2M partners, each with specific requirements.
Service providers may initially see their role in this value chain as their traditional one - that of connectivity provider, leaving the application side of the business to their M2M partners. But the opportunity for the service provider is much greater.
According to Machina Research, only 14.5% of M2M devices will connect via cellular networks. And when you add to this Gartner's estimation of M2M ARPU as being only $2-$3 per month, then the opportunity for service providers who are just providing connectivity is reduced dramatically. For this reason, many service providers are looking for other ways to increase their share of the M2M revenue pie, which means they need to investigate a more involved engagement model.
The fact is that service providers have a lot to offer to their partners in addition to just connectivity, for example: smarter network services (such as policy and security), IT services (such as BSS, big data, analytics), and additional services - marketing and reselling, device management, application development, bundled services, joint-partner ecosystems, and more.
This type of engagement between a service provider and M2M partner will enable the M2M partner to focus on what they do best -providing their specific M2M service (such as smart grids, etc), while generating greater revenues for both the M2M partner and the service provider.
First, service providers need to deal with M2M enablement.
So, with the industry landscape undergoing rapid change, service providers need an open and flexible approach to M2M going forward, as new services are constantly being introduced that need to be supported by highly complex engagement and payment models.
Service providers seeking to support M2M partners need to be able to address a number of mission-critical requirements which are a must for enablement of the M2M ecosystem. Dealing with partners of different lines of business means a variety of requirements, technical and business, that SPs will have to provide in order to better compete.
These requirements can be divided into six principal layers:
Requirements | Description |
Device Management | Support for device configuration, Firmware Over The Air (FOTA), and device certification |
Partner Management | SDK for M2M retailers to support and enrich their M2M applications, and provide open integration for partners' IT stack |
Global Agreements | A unified and predictable global roaming capability, based on roaming settlements with global carriers |
Subscription Management | M2M focused real-time B/OSS platform, including business processes and best practices, supporting various business models: B2B, B2C, and B2B2C |
Network Connectivity | Connectivity and policy enforcement capabilities that are tightly connected to the subscription management system |
Professional Services | Consulting and SI services to support partner onboarding and integration, cross-vertical ecosystem operations and development, and operationalising business intelligence and predictive insights from big data |
Indeed this is a broad set of requirements, that must be available in a modular manner to meet partners' unique requirements, they must also be provided on the cloud, reducing the initial investment from service providers down to the minimum. These capabilities will turn service providers into a one-stop shop for their M2M partners, with the flexibility to provide each partner with exactly what they need, from simple IP connectivity to more complex partner and device management.
Service providers should also look to integrate their M2M services with their retail BSS environment, so as to create the opportunity to develop rich bundles combining M2M and communication services, as well as greater continuity of care for the end user through responsibility sharing models between the service provider and its M2M partners.
Connected home
One particular vertical market, where M2M meets consumer, is the connected home. A hybrid of M2M and wireline technologies, connected home is a growing opportunity for service providers, but needs the added layer of consumer-facing applications. Service providers should look to cloud-based solutions to give short time to market to launch pre-packaged home and business services like remote security, energy, health and multimedia. These services can considerably reduce development times and back-office investment costs such as inventory control, billing and customer care.
Unlike the siloed offerings of over-the-top providers, cloud solutions can be easily integrated with existing business and operational support systems and core network elements, which provide service providers with the opportunity to leverage their intimate knowledge of their customers across all services to provide an unprecedented, unified experience.
In the area of health, for example, ageing in place and home health monitoring can add a secure portal for patients and doctors/care practitioners that can be accessed from remote monitoring centres or give relatives and other care-givers remote access to monitoring devices to help the elderly live independently, longer.
All these offerings make use of a cloud platform, and this platform's practicality, cost-effectiveness and flexibility makes it easy for a service provider to include value-added services on top of the connectivity it sells.
Other considerations
In addition to addressing their system and technical capabilities, service providers must ask themselves a number of key business questions, such as:
* What are the key M2M use cases and for which segments are they most relevant?
* What are the liability issues for different M2M services and vertical offerings?
* What is the best practice for customer support for on-premise equipment?
* How do I effectively bundle M2M with my existing communication services?
* What are the optimal price plans for different M2M services?
* How do I maximise the business opportunity of the long tail of M2M partners?
* How will M2M impact my existing business processes?
It's only after creating the right business and operational models to answer these questions, with the right partners, that a service provider is truly ready to enter the promising, dynamic M2M market.
Keeping an open mind
Overall, to be able to partner and be profitable in the M2M market, operators have to integrate two important elements: an understanding of the M2M organization and business process that are able to support partners and masses of devices.
Operators need to focus on keeping their minds - and their organisation - open. Penetrating the M2M market or expanding existing operations will differ depending on the region and operator, and at this stage, the market is continually changing. With no one line of business or formula so far having emerged that can guarantee M2M success, operators must keep their doors open, not to lock themselves into a certain approach, and experiment.
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