No. 4 / 2010
SAS Adriatic Region Newsletter
Shocking vision of 50 billion of connected machines that was announced by one of the major players in telecommunication industry in February 2010, is being repeated like a mantra ever since. It even managed to attract the attention of media outside the telecommunication arena (we all know how much journalists like numbers, not to mention huge numbers like this).
M2M concept has been a subject in the ICT world for a last decade. However, since the beginning of this year telecommunication operators have definitively and unambiguously focused on development of this market. What does actually M2M stand for? “Machine to Machine” concept can be described as technology that enables automatic data communication between various machines, such as power meters, vehicles, alarm systems and literary any kind of device. However, it is much more; it is a vision of network of connected machines that will change revolutionary technology but also our everyday lives (ready or not). If we think about the number of “things” that surrounds us in our everyday life (someone counted that there are from 1000 to 5000 things) in this case mentioned number of 50 billion of connected machines does not seem so unrealistic. In this sense, M2M concept is just a corner stone of much broader so called “internet of things” world.
Leading M2M markets in the world are Europe (Northern Europe has an average machines penetration of 5% of total mobile connections) and USA. In 2009, there were about 20,7 million in Europe, 18,6 million in Americas, 16 million in Asia-Pacific and 5,4 million in the Middle East and Africa.
On the global level M2M vision promises almost endless market potential to various stakeholders:
Bearing in mind the commercial potential which M2M services bring to Telco operators it is logical conclusion that they have to lead the development of this segment. This role will not be easy at all having in mind complexity and fragmentation of M2M eco system. In most cases M2M services are executed through partnership of various partners which imposes the need of complete business process redesigning. Additional issue is that there are still no global standards for devices or applications. Although machines are on first sight most desirable users there are many open issues in support segment such as SLA agreements, roaming agreements, etc. Revenue vise, M2M ARPU is usually about 10% of “human” mobile customer ARPU which implies economy of scale business philosophy; however this also implies increase in costs. Large number of different services customized to the specific needs of users will have a strong impact on billing systems requirements.
Telekom Srbija has been pioneering in this area much before the “50 billion” magic number shocked the world, and there are now more than 240.000 machines connected through mobile network in our network in Serbia.
Our first M2M based service was e-top up system for prepaid recharge, which was introduced in 2004. Despite all controversies and skepticism, it became dominant model of prepaid recharge in Serbia. Concept is very simple: recharge request (amount and mobile phone number) is being communicated between recharge terminal and operators’ IN platform over mobile network. Two machines chatting about the human need, and they speak more than 130 million times per year just in our network!
This first success encouraged us to apply similar concept to control mechanism of VAT taxation system in Serbia. Here we have again, ten’s of thousand of machines talking serious talks about sales transaction every night. Every store or even corner shop in Serbia must have cashier register that must be able (must have SIM card) to talk to the mastermind (server) in Tax Authority premises. From that time, we have been implementing M2M services in various verticals, such as telemetric, fleet management, corporate management systems, etc. These services were mainly designed for enterprise customers. Recent announcement of “Ecobus” service which enable air quality control in city area, with devices located in public transportation vehicles attracted huge attention of media and local citizens. We believe that this service will contribute to increase awareness in Serbian public of M2M services practical advantages.
Despite the overall positive experience and recent heating up of M2M, recognized development potential and strategic restructuring of telecommunication companies, it is obvious that if we want to boost happening of Internet of things we must offer services that will attract mass-market attention. Huge potential of M2M can be adequately used only if all parties involved express creativity in redefining existing business processes, infrastructure usage models… Technology is not an issue; we must be brave to reinvent everything else around it. This seems to be very well anticipated by key participants in 2010: telecommunication operators, mobile phone manufacturers, vendors of telecommunication equipment, car manufacturers and many others seems to be constantly preparing, analyzing, testing, merging, acquisitioning, reorganizing, experimenting in M2M world. I believe that in the near future we will witness the strong progress of M2M services. One of the key factors for expansion of M2M communications, for the benefit of human kind, is raising awareness of “ordinary” customers regarding benefits of machines “chat”. User’s understanding is sparkle that is needed to light up the scene of M2M story. Nevertheless, at the same time, we have even more challenging task of involving so called “ordinary” users in M2M magic and this is maybe the greatest challenge for telecommunication operators. Wish them luck!
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