|Issue:||Asia-Pacific II 2011|
|Topic:||M2M – a mobile technology goldrush|
|Title:||Director, Telecoms Solutions|
Tony Jackson is the Director of Telecoms Solutions at Convergys; he has global responsibility for Smart Revenue Solutions Strategy and Marketing within the telecommunications vertical at Convergys. Mr Jackson previously held a number of business development, product management and project delivery roles within Convergys and has 20 years experience of delivering IT solutions throughout the telecoms and oil & gas sectors. Prior to joining Convergys, Mr Jackson worked in oil exploration R&D and also for a leading telecoms systems integrator. Tony Jackson is a graduate of the University of Newcastle and holds a Master’s degree in Computer Science from the University of Manchester.
Many new mobile data services – including mobile TV, mobile advertisement and location-based services – have failed to give the expected boost to operator revenues in the Asian region, even in many of the more mature markets – at least yet. M2M is new territory; most analysts agree that M2M has huge potential for growth and, given the long-term nature of corporate agreements, it is not likely to experience the churn and uncertain revenues of the retail mobile services market.
The growth in the Asian telecommunications landscape has resulted in the growth of the markets of many related telecom services over the years, includng SMS, voice call revenues and now mobile broadband and LTE. With mobile technology increasingly considered a necessity rather than a nice-to-have service for consumers, regional operators have ensured that they diversify their services to add new offerings and value to their subscriber base. From games, photos, mobile Internet to music streaming and downloads – the mobile phone has become the personal device of the 21st century. However, some of the new service goldrushes have not always worked out – mobile TV is still in development, and mobile advertisement and location-based services not yet fully taking off in the Asian region, even in many of the more mature markets. With consumer ARPUs in decline, operators are now feeling the pressure to diversify and utilise their technologies in innovative ways. But a new opportunity is already here, machine-to-machine (M2M) is the future revenue goldrush for the telecommunications industry. M2M is happening We believe that M2M is already established, albeit in its infancy, and is gathering pace as we speak. Several service providers have already partnered with M2M specialists to provide the infrastructure needed to connect a vast array of machines and automate data readings. For many other Asian operators looking to diversify the versatility of service offerings, the opportunity to use mobile technology for intelligent new services is there to take. Experts within analyst houses are also predicting huge success for the M2M industry. Berg Insight research forecasts that M2M mobile connections worldwide at the end will grow to 3.1 per cent by 2014. Meanwhile, Juniper Research predicts that embedded mobile and M2M device revenues will rise to almost US$19 billion globally by 2014, Ovum also supports the view of rising popularity of M2M technology and expects Asian operators to cement their M2M strategies by the first half of 2011; this points to exciting revenue opportunities for the Asian telecommunications industry. Not your average service Unlike previous telecommunications goldrushes that operators considered as add-ons to existing voice and data businesses, M2M communications are viewed as a market opportunity in their own right, but to maximise returns and offer an effective service, operators need to form alliances and partnerships with M2M specialists for long term success. Most operators possess limited competencies in the support and management requriements associated with M2M enterprise solutions, so it is likely we will witness acquisitions that will help build out operators’ M2M capabilities. By connecting machine-to-machine, new business models emerge to increase revenues and profits. Some operators have spotted this opportunity, but the potential is likely to increase dramatically with consumers driving demand for more intelligent machines in the energy and security sectors – creating the need for M2M. The M2M landscape Partnerships have already been formed by some operators globally who are looking to capitalise on the opportunity. On the smart grid roll-out front, AT&T has teamed up with clean tech firm Petra Solar, which specialises in solar generation and smart grid technology, whilst a partnership between Orange Business Solutions and Telit Wireless Solutions, will see Orange’s M2M offerings serving the French market. And a partnership between Telit and Deutsche Telekom is focusing on delivering integrated solutions for the networking of vehicles, machines, measurement, and control modules, along with a comprehensive range of customised services. Whilst these partnerships and others demonstrate how operators are looking to unleash the revenue potential of M2M, there are unique technical challenges that Asian operators need to recognise. For example, existing network infrastructure needs to be updated with technologies that support real-time networks, such as the smart grid. There is also the issue of revenue projections; our own projections puts monthly revenues per unit at a tenth to a twenieth of conventional services, so M2M systems will need to be supported by highly automated provisioning, billing, and support systems. These must be able to scale to millions, if not billions, of transactions monthly across a widely versatile customer base to ensure profitability. A new era for Asia Although M2M is still in its infancy in Asia, two key drivers have emerged for its future. Firstly, it is likely that M2M, as a new business model, will not rely on the short-term customers, that operators must normally rely upon for their retail clients. M2M requires long-term enterprise customers; if operators fails to negotiate contracts and partnerships now, they will miss out on profitability five years down to the line to those who were more actively building relations across the complex value chain. Secondly, whether in a mature or developing telco market, it is vital for to keep M2M as a separate business model with a distinct support infrastructure and with a dedicated BSS and billing system. The number of partners and enterprise customers, not to mention the consumers at the front end, makes for a highly complicated, often regional, ecosystems. Aside from planning ahead, operators must have the knowledge and experience of relevant management systems by partnering with specialists in the M2M sector who can provide the technical, dedicated, infrastructure and tools, that can ensure their venture into M2M drives revenues, while also maintaining the customer experience for enterprises.