Machine-to-Machine (M2M) communications deployments are exploding globally. As a result, service providers (SPs) are recognizing new opportunities as foundational members of evolving ecosystems as utilities build out smart grids and developers create new applications to optimize performance in this space. For those SPs able to enter the market early, pursue deep involvement and participate fully in ecosystem evolution significant rewards abound. A recent Alcatel-Lucent (News - Alert) Enriching Communications e-zine article, M2M Opens Doors to New Opportunities, highlights the valuable position SPs hold in their ability to leverage their network expertise. Indeed, this expertise is key to their ability to enter M2M value chains at an early stage and develop a deep involvement to maximize M2M profitability. To launch that M2M success, Alcatel-Lucent (ALU) contends that SPs must select their role in the M2M value chain, known also as the “Internet of Things.” For example, smaller providers may prefer to simple carry M2M traffic, while larger ones can move up the value chain to generate additional service revenues.
As the article points out, three basic M2M operating models tend to exist:
- M2M Transport: The SP sells bandwidth to M2M application providers wholesale with network bandwidth and guaranteed quality of service (QoS). This is seen as an entry level offer, but one where SPs logically will need to adapt and expand as M2M traffic grows.
- M2M Platform: The SP adds connectivity support and invests in an M2M server to support traffic and device management capabilities. Other essential capabilities are covered through outsourcing and partnerships.
- M2M Suite: Building on the first two the SP offers targeted customer care, billing and provisioning capabilities.
ALU notes that in regards to the last point, “To date, few service providers have succeeded in developing and customizing hardware and applications without partner support. But these are realistic options that can be addressed by an appropriate business case.” The goal is to ultimately provide a broad set of capabilities that not only secure SP centrality in ecosystems but provide the ability for applications enablement that allows all members to succeed.
It is further recommended that to drive long-term growth and M2M profitability, two key tactics should be put in place: early participation to start building market share and ROI, and a push to justify deeper involvement in planning and execution. In fact, it is observed that when SPs can offer a full suite of M2M capabilities — including customer care, traffic and device management, and billing and developer ecosystems — healthier business cases tend to emerge compared to those who offer transport services only and this increases partner trust for more extensive SP involvement.All of this being said, the realities are that a number of challenges exist that could hinder SPs success in M2M. These include:
- The possibility of low average monthly revenues which can divert SP attention to higher profit opportunities
- Failure to convince potential ecosystem partners of the importance of SP participation in the development and delivery of high-quality services across markets, industries and borders
In other words, SPs need to be more proactive to build the trust they need to assure they have a influential voice at the table. They must also be investing in the infrastructure necessary to make their case, and the case for ecosystem vitality based on their deeper participation, compelling.
One place SPs can turn to get a help in understanding both the challenges and opportunities in M2M as it picks up steam is ALU’s ng Connect program. This technology incubator brings together all elements of evolving ecosystems in a variety of markets with the understanding that no one company can do it alone, and that the innovation engine works best in an environment where focus and collaboration on next generation service concepts is intense.
With things like 4G LTE maco cellular, small cell and WiFi (News - Alert) all becoming essential components as part of smart grid rollouts, along with service provider abilities to offer open APIs and sophisticated billing and support capabilities, SP resources put them in a great position to be full, critical and profitable participants in the M2M revolution. As ALU concludes, the opportunities are there for the taking when SPs approach them in the right way.
Edited by Peter Bernstein