Jim Morrish: What are the leading cellular M2M/IoT applications right now?

Alex Sinclair: Machine-to-machine (M2M) connections accounted for 2.8% of all global mobile connections, or 189 million, at the end of 2013, according to GSMA Intelligence (GSMAi) so it is still very much a nascent technology at a relatively early stage in its development. We believe that with the right standards and regulation in place it will have a fundamental impact on the way we live and work, reducing waste and inefficiencies and delivering major social and environmental benefits in security, healthcare, transportation and logistics, education and energy, amongst many other sectors of the economy. However, it is also having an impact right now.

Regulation

Advances in the M2M market have often been underpinned by regulation, on a national level, as well as in verticals such as Automotive and Utilities.

Scalable Opportunities for MNOs in Automotive

The Car Automotive sector is by far the largest, scalable opportunity in M2M for a number of reasons:

• Long production and in-use cycles for connected vehicles present the need to future proof connected cars, and consequently OEMs are fitting LTE modules into vehicles.
• Additional revenue related streams are presented by the connected car, such as the insurance market, which has introduced pay-as-you-drive usage based plans for consumers that have helped to lower costs significantly.
• Both OEMs and infotainment designers have seen the potential to develop In-car entertainment services within connected cars.
• The opportunity to implement multi-billing mechanisms and combine multi-services via a single connection e.g. the connected car. AT&T, for example, has introduced its AT&T Drive service that aims to package connectivity, data analytics and infotainment for both automakers and developers specialised in providing live linear TV and video-on-demand streaming services within automotive vehicles.

Fleet Management tracking services

Real-time GPS Tracking used in Fleet Management represents a huge segment for a range of global operators. Fleet Management enables companies to track both individual vehicles and shipped cargoes including vehicles that need to be serviced. Fleet management also helps to ensure that drivers are obeying speed limits and following the best routes.

Government Mandates

Other initiatives such as Emergency Call (eCall), a road accident alert system that requires an embedded in-vehicle SIM using satellite positioning and mobile connectivity, is scheduled to be integrated into all new vehicles in Europe over the next few years. Russia is also in the process of deploying an accident notification system called ERA-GLONASS and Brazil has introduced another regulation driven telematics project tracking stolen vehicles called SIMRAV which allows all new vehicles to be fitted with a capability to be tracked and disabled in the event of theft.

Implementing Legislation: Smart Metering

Smart metering is also an area where we are seeing huge growth driven in part by legislation in the European Union. The systematic use of embedded mobile connectivity to create smart utility grids and smart energy environments can improve suppliers’ ability to effectively manage demand for energy and enable consumers and businesses to use energy and water more efficiently. Mobile connectivity can give both utility companies and their customers’ real-time information about energy and water usage, enabling them to spread demand across the day and take action to reduce wastage. Millions of residential electricity, gas, water and heating meters are becoming “smart”, meaning they can be monitored, controlled and managed at pre-set intervals, be it hourly or daily. To date, EU member states have committed to rolling out close to 200 million smart meters for electricity and 45 million for gas by 2020, at a total potential investment of 45 billion.

Implementing Legislation: Healthcare

The healthcare sector is another vertical that is seeing positive traction in development terms and has the potential to see huge growth if provided with a positive regulatory environment. It is a challenging area where mobile operators need to work closely with government and other regulatory stakeholders at a national level. We have already seen government-led projects in this sector in markets such as Singapore, France and the UAE – countries that have instigated initiatives on mobile health, while in the US government policies are in place to incentivise mHealth, for example ePrescriptions and incentives for hospitals to administer in order to reduce readmissions.

B2B2C mHealth services are also a big opportunity with some operators, such as Telefónica and Orange, seeing good traction with mHealth offerings. Many operators have dedicated health divisions in their operational structure. Such a set-up has been established in order to seek the best way to provide sufficient healthcare support via a multitude of technologies including Bluetooth and cellular.

Jim Morrish: Are there any specific industry initiatives that we should know about?  

Alex Sinclair: The GSMA recently issued guidelines for the Internet of Things (IoT) market that outline how devices and applications should communicate via mobile networks in the most intelligent and efficient way. You should also be aware of the GSMA Embedded SIM Specification for remote SIM provisioning, which is now being deployed by operators around the world.

The guidelines called ‘IoT Device Connection Efficiency Guidelines,’ are designed to support device and application developers as the IoT market develops and are intended for use by all players in the mobile ecosystem, ensuring that mobile networks can efficiently accommodate the increased number of connected devices and services resulting from the rapid growth of M2M. The guidelines will help IoT device and application developers expand the number of devices connecting to mobile networks, whilst preventing service outages and ensuring optimal performance that will ultimately enable the market to scale across a diverse range of sectors including automotive, transportation, utilities and health. The guidelines include a number of best practice areas such as data aggregation within devices, non-synchronous network access, application scalability and guidance on how to manage signalling traffic from de-activated or out-of-subscription SIMs. They have received the backing of leading mobile operators including AT&T, China Mobile, China Telecom, China Unicom, Deutsche Telekom, Etisalat, KT Corporation, Orange, NTT DOCOMO, Tata Teleservices Ltd., Telefónica, Telenor Connexion and VimpelCom.

The GSMA’s Embedded SIM specification allows mobile network operators to provide scalable, reliable and secure connectivity for M2M connected devices that are often hermetically sealed, such as in the connected car or smart meters. It also facilitates over the air operator provisioning and management, which provides service flexibility to end customers. The GSMA’s Embedded SIM specification promotes a common global architecture that will reduce costs, drive efficiencies and further accelerate the rapidly growing M2M market, which is set to reach 244 million global connections this year according to GSMA Intelligence. A number of organisations have launched compliant solutions including AT&T, Etisalat, NTT DOCOMO and Telefónica as well as Gemalto, Giesecke & Devrient, Morpho (Safran), Oberthur Technologies, Sierra Wireless and Telit. The GSMA also commissioned independent research from Beecham Research that estimated that the immediate industry-wide adoption and deployment of the GSMA Embedded SIM Specification will deliver 34 per cent higher market growth by 2020.

Jim Morrish: Mobile industry has been waiting for the M2M hockey stick for 5-10 years, do you still see this happening?

Alex Sinclair: GSMA Intelligence recently released its latest figures that show that global cellular M2M connections are currently set to reach close to one billion by 2020. At the current rate of trajectory, global cellular M2M connections will reach 974 million by 2020, growing at 26% per year (CAGR) in the period between 2014 and 2020. We believe that this growth rate could go above 40% a year if a number of favourable market conditions are achieved, leading to a potential two billion cellular M2M connections globally by 2020. These could include the introduction of additional government policies enabling a wider deployment of

cellular M2M in key sectors such as utilities, smart cities, automotive and healthcare in addition to, increased standardisation on remote provisioning and APIs and significant M2M module cost reduction enabling a wider range of connected products and services.

Jim Morrish: What are the biggest opportunities for the mobile industry in the Internet of Things?

Alex Sinclair: Recent research commissioned by the GSMA highlighted that the two biggest opportunities lie in the connected car and consumer electronics markets. A number of these we have already highlighted but others such as the Wearables market for example will also be a significant area of development. It currently has the perception as an extension of the smartphone but this will change. It also has a diverse use potential across business and consumer sectors.

Jim Morrish: Can you give some examples of where mobile connectivity has proven key to unlocking value?

Alex Sinclair: Mobile operators’ M2M revenues are dependent on application type, scale and on the approach to service delivery. For example, connectivity only deals reap far less revenue than end-to-end (E2E) solutions. So it is important for the mobile operator to be able to provide a more value-added offering, either via acquiring expertise or by partnering with other companies, in order to  increase revenues from M2M. For example, KT Corporation achieved this by launching a Taxicall solution generating higher revenue, increasing customer stickiness and reducing churn. We are still only at the beginning, but Vodafone, for example, recently revealed that its M2M revenue as of end of June 2014 was up 30.7% year-on-year “driven by increased innovation and a widening range of vertical markets”.