Recent news has highlighted forecasts of M2M market opportunities. The research has been picked up by Total Telecom and Telecoms.com, among others. According to the reports, the research, sponsored by the GSMA and other leading stakeholders, and undertaken by Machina Research, points to a $1.2 trillion opportunity for mobile operators.
Of course, not all of this will be achievable by MNOs, but even so, there is a significant revenue opportunity that has yet to be addressed in any meaningful way. As Machina points out, a significant proportion of M2M communications – more than 70% – will take place via short-range technologies such as WiFi. However, many connections must exclusively use cellular technologies, particularly in utility and automotive segments.
And it’s this area that MNOs need to target. But, many commentators have pointed to the essentially low value of M2M data, so despite the potential size of the overall market, there has been the suggestion that this will be a volume business with low margins. Even so, not to be ignored.
Interestingly, in a recent speech at the Broadband World Forum in Paris, Sasa Lekovic, CTO of Telekom Srbija, claimed that M2M applications will require a 20% increase in mobile network capacity. This suggests two things – first, a significant growth in data traffic that goes beyond some of the current forecasts; and secondly the emergence of higher value applications that drive significant data usage. Mr Lekovic did not reveal the specific applications that would consume such capacity, but clearly Telekom Srbija has thought carefully about the services it will offer and their demands.
And that’s a clear lesson – data from Machina highlights the financial implications of the difference between simply providing a bit pipe and playing a more active role in M2M communications. MNOs need to consider how they can move from simply being a channel for M2M data so as to increase the value that they can offer. And, they will need to be able to use their assets more effectively for the transmission of M2M data – a 20% increase in capacity would be costly and may not be justified by low-value M2M applications.
While on the one hand MNOs need ways to optimise M2M communications, starting with visibility and control of the data from the M2M devices and terminals, they also need to develop strategies that increase the overall value of M2M services. But as the M2M market gathers pace and we move towards the fabled “Internet of Things”, MNOs will need to move fast to develop a more prominent role in the industry.