Home EuropeEurope II 2013 Beyond the SIM

Beyond the SIM

by david.nunes
Brian Cappellani Issue:Europe II 2013
Article no.:15
Topic:Beyond the SIM
Author:Brian Cappellani
Title:Chief Technology Officer
Organisation:Sigma Systems
PDF size:190KB

About author

As Chief Technology Officer, Brian Cappellani is responsible for the architectural and technology vision and deliverables for the company’s award-winning Service Management Platform and Solutions Suites. Named one of the Top 25 most influential people in the BSS/OSS market by Billing World magazine, he is a 12-year veteran in telecommunications with an extensive background in designing, architecting, and building large-scale operations and billing support.
Prior to joining Sigma Systems, Mr. Cappellani worked for Accenture in numerous roles of increasing responsibility, including senior-level architecture, engineering and development management positions, held both internally and with Accenture’s telecommunications practice, focusing on the wireless and satellite industries. Mr. Cappellani also served as an Advisory Director to the TM Forum’s Board of Directors. TM Forum is the world’s leading trade association that provides leadership and guidance, technical and business innovation, and education and training to improve the way telecoms, media and information services are created, delivered, assured and charged.
Brian Cappellani holds an Electrical Engineering degree from the University of Waterloo in Waterloo, Ontario.

Article abstract

The telecommunications service provider’s market is at a crossroads. The growth of new services, such as M2M, has been a mixed blessing. M2M devices, despite potentially huge volumes, generate relatively little revenue. To thrive, service providers, will have to partner with a host of specialised applications and device developers to meet the needs of a wide variety of individual and business users. Service providers will also have to reorganise to administer the needs of their new partners and customers alike.

Full Article

M2M has been talked about as a future growth engine for many years and some applications have been around forever, but it is only now that we are really starting to see the market begin to take off.
Manufacturers and analysts alike are predicting an exponential increase in the number of connected devices in the next decade; according to a recent report by Machina Research we can expect M2M’s share of cellular connections to grow from two per cent to 22 per cent in the next ten years, from 146 million connections at the end of 2011 to a projected 2.6 billion in 2022, and most will be non-phone devices.
In the same research, Machina estimates M2M revenues will rocket to USD 1.2 trillion in 2022 , a CAGR of 18 per cent, herein is an opportunity for service providers if they can strike the right business model and investment.
You could say we’re in The Year of M2M or an inflection point, but what are service providers’ plans to capitalize on the opportunity, and how will they approach it?
Not all analysts agree on the overall volume, but they do all agree that the growth seen over the last couple of years will continue to accelerate. M2M will eventually over-take consumer connections as being the largest proportion of the market, so where should the providers hedge their bets? With the M2M market spanning many different vertical applications, all growing at different rates, some due to regulation, such as smart metering within utilities, others by consumer demand to stay connected as with automotive, and others by progress in automation and monitoring – healthcare and security for example. Many European service providers are riding this wave, to name but a few, KPN, Teliasonera, Vodafone, Deutsche Telekom and many more, proving that M2M has a part to play in driving new revenues.
What’s interesting for a service provider is how they can play a part in the whole customer experience of the smart home – they have much more experience in this area than do utilities, security firms, home appliance producers, etc. Coupled with the need to invest massively in new network technology like FTTH & LTE to remain competitive, and the rise of serious over-the-top competition there’s a bit of a perfect storm for many service providers as they battle to retain customers and remain profitable. Service providers are in a unique position to seize on these new opportunities to provide services as industry adoption rates grow, and to forge long-term partnerships in different verticals by aligned communications expertise with industrial know-how. But can they go beyond the SIM, to take ownership of the smart home of the future and serve the end customer as well as the underlying M2M connectivity?
We have already seen that M2M is a unique business, or more accurately it is a whole range of unique businesses. To support the low revenue per connection services, operators must ensure that they are very ‘hands off’ in the management of those connections. The M2M application and hardware providers must be able to monitor their devices and manage their connections by themselves – and the communications service provider must give them the tools for them to do this. The hardware manufacturers in M2M are effectively the equivalent of handset manufacturers in mobile telephony, but with much wider range of devices. Each industrial application has a unique set of application requirements that require industry knowledge to produce and support. This is why M2M is different from traditional consumer, business or wholesale telecoms – the industrial uses of the services are just so varied and each one is specialised.
The scale of M2M can be daunting. Service providers cannot afford today to invest in systems that can support billions of connections. Instead, they want to be able to easily grow as the market develops. Faced with increasing commoditization and stagnant growth of their core services, they need to ensure they can cost-effectively process the volumes.
New complexity, new challenges, and unknown devices all pose a threat, but the key to success could lie in the lucrative value-added service of home / business device management, over and above simple gateway and transport services. The service provider must be able to provide the tools to support the devices. Some providers are creating in-house expertise in certain verticals, but we mostly see many partnerships formed. This means that the service provider must be able to manage those partnerships, from both an administrative and a revenue sharing perspective. This is a new model for many. It’s a model that could swamp the service provider, so tools and platforms, which will enable the provider to scale, grow and profit, are vital:
• Administrative and end user portals; providing self-service access to a broad set of M2M applications, with an experience closer to Facebook, enabling users to manage subscriptions with network and cloud services.
• Back office provisioning and order management tools that allow providers to automate, create and coordinate orders with existing back office systems, on-network services and M2M applications.
The ability of service providers to rapidly onboard and integrate new M2M app vendors in weeks rather than months is critical. The service providers do this through automated system tools, which facilitate the business relationship between the service provider and the app vendor and jump starts the programs for branding, pricing, and business relationship administration.
It is essential that service providers have a scalable, repeatable, and economic provisioning solution to manage M2M and VAS offerings. Whether for consumers or business customers, unlocking revenues requires launching new services in weeks rather than months. Open APIs and ecosystems, integration with existing legacy systems, integration with leading M2M app and VAS vendors and portals to support self-care by users and administration staff are also crucial to service provider profitability in this market.
Given the great number of M2M cloud apps being developed, can there really be a differentiator for service providers? Well, with hundreds of millions of dollars being poured into the cloud XaaS [‘x’ (anything) as a service] market by investors, tapping that innovation successfully can plug the ARPU gap the service providers are facing. It’s unlikely that service providers will necessarily become market place vendors with thousands of applications for consumers and the small and medium business (SMB) market. What they need to do is focus on a set of value added services that take advantage of their network, system investments and unique in-home or commercial business experience which will position them uniquely for their target markets.
The new M2M, OTT and SaaS vendors do not have a lot of automation in their own back offices to support the delivery of their services through third-party channels. The removal of the ‘integration tax’ required to bring those technologies into a service provider’s ecosystem is critical to successful and profitable services. Service providers can be a trusted advisor to the SMB/SME market in this space and look for opportunities to aggregate applications and services. There are literally thousands of cloud services and applications in the market place, many of which are likely to disappear as the market matures. Service providers will be looking for sets of services that are equivalent in capability and reliability to the services they provide themselves.
If service providers, SPs, are to manage these new M2M services efficiently, they need to offer following:
• an extensible OSS platform that automates order management, service provisioning of core services, and of new value-added services;
• configurable solutions in the form of pre-packaged products for each type of service which they wish to offer;
• a focus on customer enablement and self-sufficiency, by arming customers with training and knowledge management toolkits, (The most successful service providers in the M2M business have self-sufficient customers that use the service provider’s systems, to implement routine changes – without engineering support);
• a platform that allows service providers to work with a multitude of third party M2M applications aimed at supporting specific market verticals.
While service providers have always faced similar issues, inefficiencies could be masked in the past by the higher margins service providers achieved. However, in today’s low-margin market, service providers must continue to offer innovative services, and diversify into new markets to position themselves for the journey ahead with automation and customer self-management as key strategies.
The profitability of new M2M services will be elusive without automation and user control.

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