Examining the Role of M2M Alliances

Jan 06, 2014

In Europe, 2013 was an interesting year for the machine-to-machine (M2M) market as participants ranging from telecommunications (telecoms) service providers to software applications providers addressed the connected industries’ opportunities. Frost & Sullivan estimated that the European M2M market, as measured by the growth in M2M SIMs from M2M telecoms service providers, experienced a 2009 to 2013 compound average growth rate (CAGR) of 42.3%. M2M adoption is expected to continue growing, helped, no less, by more M2M telecoms service providers achieving successful operations.

Market entry by M2M telecoms services was made easier through 2 operator-led M2M groupings, M2M World Alliance and Global M2M Association (GMA). The groups not only have similar sounding names, but also similar ambitions and roadmaps for M2M market development. They include so many heavy-weight telecoms members that there are strong expectations for these common efforts to accelerate M2M adoption and market development towards next generation M2M and Internet of Things (IoT) outcomes. Further, these are anticipated to have a similar impact on GSM standardisation and global roaming alliances, which helped to accelerate mobile adoption and reduce global coverage issues across the broader mobile communications sector.

An expected outcome of these 2 groupings is immediate downward pressure on M2M connectivity price points for customers as more telecoms service providers and other value-chain participants are able to enter the market. As the well-defined spectrum of M2M needs become more readily addressed and available margins narrow, M2M service providers will show a concerted effort to develop new areas of M2M applications. This search for new M2M revenues is a key factor behind Frost & Sullivan’s prediction of an increase in M2M projects in healthcare, industrial automation, smart energy, and retail in 2014–2015. Within existing M2M applications in automotive, smart metering, logistics, and remote monitoring, a greater application of machine data and intelligence is expected as enterprises in these industries rely on M2M technologies to achieve more efficient operations. As these innovations continue to develop, market leaders will emerge in the medium term, beyond 2015, as digital enablers of connected industries.

Getting the basics right through coordinated efforts

Both organisations aim to simplify M2M deployment processes, ranging from device certification and testing to enabling global roaming and remote subscription management for easy integration into enterprises’ business processes. The importance of seamless roaming with measurable service level agreement (SLA) metrics is one of the first parameters that enterprises demand from M2M telecoms service providers. For example, within an M2M context, machine roaming creates additional challenges because of the more complex value chain behind an M2M deployment for a particular industry or function. In a traditional M2M track-and-trace application, there is complexity in the management of thousands of remote devices, the challenge of managing the global and localised nature of manufacturing and consumption patterns, the need to overcome a permanent state of roaming in logistics devices, and the necessity of enabling enterprises to monitor these on-the-move assets easily. These challenges translate into several start-up and back-end requirements such as accelerating the following processes:

  • Certifying and managing devices
  • Enabling use of machine data for enterprise functions analytics
  • Fitting connectivity to SLAs and quality of service (QoS) requirements
  • Facilitating remote subscription management to fit industries’ assets lifespan
  • Allowing self-service capabilities to enterprises

By getting the basics of an M2M deployment right, the 2 groupings will continue to drive coordination efforts towards achieving common elements within the M2M architecture. Several outstanding issues need attention, hopefully addressed by both M2M World Alliance and GMA. The issues are:

  • Connectivity protocol: Unlike in the United States where long-term evolution (LTE) is championed as the dominant future technology for M2M, Europe remains uncertain about using 2G/3G/4G in M2M. The most immediate impact of this uncertainty concerns the progress of connected cars in Europe. However, while car manufacturers push for enabling connectivity to the car—either in embedded, tethered, or integrated form—M2M telecoms service providers are keen to provide the necessary infrastructure to support these options.
  • Machine data security: Frost & Sullivan hopes these forums will tackle machine data security. The route of machine data will become more crucial as devices or objects are increasingly connected and data analytics are applied as direct inputs for business decisions.

Getting the basics right—M2M World Alliance

The M2M World Alliance was officially branded in December 2013 but remained the same 8-member multi-operator M2M group. It was first formed in June 2012 with 7 mobile network operators in Telefonica, KPN, Vimpelcom, Rogers, NTT DoCoMo, Singtel, and Telstra. Etisalat’s membership was announced in February 2013. Together, this alliance has a local presence in Latin America, Europe, Russia, Canada, Asia-Pacific, and the Middle East. The immediate objectives for this alliance are related to achieving some common elements to speed up the route to market and the ease of adoption by enterprises, but also to jointly develop enterprise propositions across the M2M industry spectrum. In December 2013, the M2M World Alliance announced that its previous joint development efforts have resulted in the global first solution. This solution addresses the issues raised earlier this year concerning global roaming with in-country tariffs and a single SIM with a single interface for the customer for M2M management.

Getting the basics right—GMA

The GMA was formed originally as a bilateral agreement between Orange and Deutsche Telekom in 2011. TeliaSonera joined in the middle of 2011. By November 2013, this association added 3 more operators in Telecom Italia, Softbank, and Bell Mobility. The latter 2 members have expanded GMA’s local reach from Europe to Canada and Japan. The immediate objectives are similar but narrower—accelerate devices certification and testing, enable global roaming, and manage remote subscription.

It will be interesting to see how far these 2 groupings will be able to deepen M2M demand further in connected industries such as automotive, energy, transportation, and even healthcare. While Frost & Sullivan Europe is more cautious than the industry is about the uptake of M2M in consumer electronics, this prudent outlook can change once standardisation is achieved to such an extent that economies of scale can be achieved rapidly.

Build on this foundation to create an unique proposition

Along with the expected increase in the number of market suppliers, M2M telecoms service providers will be keen to develop their own capabilities in the next wave of market demand. This concurrent drive towards differentiation will not only accelerate market development in “new” M2M application areas, but also enterprises’ realisation of machine data analytics use in the next few years. Thus far, the market has also observed the use of pay-as-you-drive insurance as a result of the connected car opportunity. The use of smart meter data should also spread among utilities market leaders, where data analytics companies such as Opower have made significant progress in penetrating the use of data for improved customer services. In the next 2 years, these applications will continue, but there will also be greater integration of enterprise mobility data with industrial control systems data. Many of the telecoms service providers within the 2 operator-led M2M groupings have varying success in facilitating these business needs. In particular, Frost & Sullivan believes such European companies as Telefonica, Deutsche Telekom, and Orange Business Services will be the companies to watch as they develop converging communications and IT propositions for their enterprise customers.

The standalone telecoms companies

The 2 M2M groupings have another commonality. Neither includes the membership of any operator based in the United States; Verizon and AT&T are not official members. Seen together with Vodafone’s preference to stay out of these organisations, such an “independent” stance may reflect a non-verbal signal to its peers and customers in their confidence to determine their own M2M roadmap, including their M2M ecosystem partners and portfolio. This development reflects the different roles of telecoms service providers in the M2M market. On one hand, full-service, end-to-end telecoms service providers with connectivity, IT, and managed services capabilities operate. A similar offering will be made by telecoms service providers with a combination of connectivity and managed services capabilities. Finally, on the other hand, there will be a group of telecoms service providers interested only in enabling the connectivity piece of the M2M project. Frost & Sullivan believes that to accelerate M2M adoption, there must be a coordinated effort to reduce barriers to entry. As Tier I telecoms service providers strive to create an unique proposition by climbing up the M2M architecture, there will also be expectations of commercially-viable innovations to achieve the connected society vision beyond 2020.

Yiru Zhong


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