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M2M Hype and Reality

There are many predictions that the next big wave in telecoms is M2M and that this will be the next growth market for the telecoms industry. There is no doubt that M2M is a revolutionary development, but we need to separate the hype from the reality. In order to do this it is best to divide the major developments into two main areas, although there is no doubt that others will emerge over time.

One area is the sensors that are being installed in networks such as electricity, the environment, roads and other infrastructure. The other area can perhaps best be described as one of embedded technology linked to mobile phones, wearable devices, and many other consumer devices such as home automation, security and hobby-based applications.

The first category is potentially an area in which the telcos can be directly involved, working with large organisations such as utilities, government agencies, etc. They will use their mobile networks to link together all those separately installed sensors while data storage and analysis can be either provided on a service basis by the telcos or undertaken directly by the customer.

The other development is more consumer-oriented and is currently dominated by the digital media companies. They will largely bypass any direct involvement with the mobile networks and will link directly, through the mobile data or WiFi networks, to the various apps that are developed for such applications.

The actual data requirements of the application is provided through the existing fixed and mobile broadband packages as they have been purchased by the customers from the telcos—there is no separation of what data is used for what a data application. So in reality there is not a lot that telcos can do to influence that market and obtain a share of it. And the data use of IoT is rather low, so it will not immediately lead to an upgrade of the broadband subscriptions either.

With IP-based technologies it is also rather easy for other parties to build both M2M and IoT infrastructures, so it will be a rather diverse market that will make up the overall M2M market. We already see some of these developments happening in the corporate world at mining sites, campus-based infrastructure, hospitals, etc.

Smart cars, building and city-based developments potentially fit into an overlap area between the two. The mobile carriers will also be forced increasingly into MVNO or other wholesale-based arrangements, especially if the telcos don’t want to see this market being totally dominated by the Over-the-top content (OTT) providers.

On the M2M side, which is more of a wholesale nature, the telcos are in a prime position to dominate this market; however the price needs to be very competitive or else those organisations will develop their own M2M infrastructure.

So yes, in the broadest sense M2M will be—and to certain extent already is—a major game-changer, but there are distinct segments within it, and the borders between these segments have already been drawn and it is clear who the major players are/will be in each of these segments.

And while the telcos can potentially play a key role in this market the most innovative and exciting new M2M/IoT developments are currently being developed by the OTT companies.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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