Home EuropeEurope II 2013 Tapping the M2M market

Tapping the M2M market

by david.nunes
Rachel Ginzberg Issue:Europe II 2013
Article no.:16
Topic:Tapping the M2M market
Author:Rachel Ginzberg
PDF size:193KB

About author

Rachel Ginzberg is the Director of Amdocs’ M2M unit; she leads both product development and marketing for this strategic market. In her previous position, as Director of Product Management, Ms Ginzberg laws responsible for Amdocs Enterprise Product Catalog strategy. Prior to that, she was a Development Manager for Amdocs customer ordering for data products. Earlier, Ms Ginzberg was the Manager of Amdocs Document Designer.
Rachel Ginzberg holds a Bachelor of Science degree in Mathematics and Computer Science from Bar Ilan University, Israel.

Article abstract

Machine-to-machine (M2M) services and applications are growing rapidly; huge numbers of devices will soon connect to networks worldwide. Some network operators only offer connectivity, leaving the rest to M2M partners, but ARPU is likely to be small – US$2-3/month – per device. To increase M2M revenues operators can offer smarter services: policy and security enforcement or IT services including BSS, Big Data and analytics as well as marketing and reselling, device management, application development, bundled services, joint-partner ecosystems, and more.

Full Article

No matter whom you ask – industry analysts, small and large-scale service providers, basically any telecom 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 per cent 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 quite small. For this reason, many service providers are looking for other ways to increase their share of the M2M revenue pie, so they are investigating more involved engagement models.
The fact is that service providers have a lot to offer their partners in addition to just connectivity. They can provide smarter network services such as policy and security enforcement or IT services including BSS, Big Data and analytics. Other services that network operators are well positioned to provide include marketing and reselling, device management, application development, bundled services, joint-partner ecosystems, and more.
This type of engagement between service providers and M2M partners 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.
Service providers and 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 that are a must for the enablement of the M2M ecosystem. Dealing with partners with different lines of business means a variety of requirements, technical and business, that service providers will have to make available to better compete.
There are six principal layers of requirements:

• Device management – Support for device configuration, Firmware Over The Air (FOTA), and device certification
• Partner management – SDK (software development kit)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 BSS/OSS (business support system/operations support system) 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 system intergration services to support partner on-boarding and integration, cross-vertical ecosystem operations and development, and operationalization of business intelligence and predictive insights from Big Data

Indeed, this broad set of requirements must be available in a modular manner to meet each partner’s unique requirements; they must also be available on the cloud, reducing the service providers’ initial investment to a minimum. With these capabilities 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. This can create an opportunity to develop rich service bundles by combining M2M and communication services, as well as offer 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, the connected home is a growing opportunity for service providers, but it still needs to add 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; this gives service providers an opportunity to leverage their intimate knowledge of their customers’ behaviour with regard to all the services they use and offer an unprecedented, unified, experience.
With regard to health services, for example, ‘ageing in place’, in their own homes with online health monitoring can help elderly patients feel more comfortable and secure. Doctors and other healthcare practitioners can readily access real-time data and alerts at remote monitoring centres – or even give relatives and other caregivers’ remote access to monitoring devices – and react as needed in a timely manner. This will help the elderly live independently, longer.
All these offerings use cloud platforms. The practicality, cost-effectiveness and flexibility of these platforms make 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 maximize 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 organizations – 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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