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Archive for October, 2011

#M2M set to snowball – operaors need to act fast

Written by GoS on . Posted in Blog

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.

Mobile and Fixed #broadband to drive #telecom revenue

Written by GoS on . Posted in Blog

New research from Ovum forecasts significant new revenue opportunities for the telecoms industry in the years to 2015. According to the report, more than $200 billion of new revenue will be generated. More than two thirds of this will come from fixed and mobile broadband, with mobile broadband dominating.

While this is good news for operators, struggling to offset declines in traditional revenue and competing with OTT providers, it presents challenges. First, this apparently represents new revenue, so where will this come from? Will it be new applications? New customers? New charging models? New business relationships? It’s likely to be a combination of all of these, but even so, it’s a big number.

Secondly, the additional revenue implies that networks will evolve both to support new applications and a significant increase in traffic. This will impose costs on network operators, who are already struggling to manage CAPEX.

Clearly, while there may be significant incremental revenue that can be captured (as, of course, some of the new revenue will simply be a replacement for revenue that is lost from existing business, so the net impact of the new revenue is not clear), operators must be careful in how they manage costs in chasing new opportunities.

And this means operators need to carefully plan network capacity upgrades. If they can take advantage of technologies that allow them to use capacity more efficiently, they can both defer upgrade costs until economics are more certain and experiment with new services that can contribute to the anticipated new revenue streams.

Bandwidth optimisation will be essential as more and more users demand access to high-performance services, particularly where they share connections within the same home or office, or share capacity within the same cell. While optimisation techniques within the network are well-known, operators will need to consider how to achieve this within the user domain – optimising data connections directly from devices and gateways, before user traffic hits the network.

The potential is clearly hugely attractive, but operators need to take steps to ensure that they can target the new revenue profitably and by minimising risk.