Wireless Watch: Carriers’ M2M platform necessary, but needs US and Chinese support Jul 12, 2012 – Rethink Research
Seven major cellcos have formed the latest alliance seeking to create a unified platform for machine-to-machine connectivity, roaming and device management – something which is essential to achieve the scale and reach that the ‘internet of things’ will require. However, as a candidate to be that unifying framework, the new initiative – centered on Jasper Wireless’s platform – so far lacks sufficient support, especially in the US and China. It needs to attract additional players quickly, and address key business model issues, if it is not to become just one among several bids to seize control of the M2M ecosystem, whether led by operators, or by web and cloud majors.
Seven cellcos have formed the biggest alliance to date in the M2M (machine-to-machine) market, looking to avoid fragmentation as the market evolves. The septet will develop a common platform to manage and provision embedded wireless devices round the world, based on the Control Center from M2M enabler Jasper Wireless.
Jasper, which already provided M2M services for all the participants plus others like AT&T, has played a masterstroke in making itself indispensable to cellcos, which are often fumbling to define their M2M business models, even as they believe this to be a critical source of new revenues. The supplier which can make itself the underlying platform for a growing ecosystem may not gain massive visibility, but it is very hard to dislodge once it has attracted sufficient support – as seen with the players whose platforms underpin payments, messaging or other critical multicarrier services.
Major vendors may have hoped to supply the underlying architecture – and may well have their acquisitive eyes on Jasper now – but if the new alliance attracts sufficient support, they may have to deal with a fait accompli. That remains uncertain though. The initial line-up notably lacks US or Chinese participation, and some major early M2M players, such as AT&T, could seek to drive their own ecosystems, creating yet another set of battles for standards and control.
The participating carriers so far include three from Asia-Pacific (NTT Docomo, SingTel and Australia’s Telstra); three from Europe (Telefonica, Vimpelcom of Russia and The Netherlands’ KPN); plus Rogers of Canada. But the line-up lacks any of the top three carriers in terms of M2M subscriber numbers, as identified by specialist analysts at Berg Insight. Berg says the leading carriers in the segment are AT&T, with 13.3m M2M subscribers at the end of the first quarter of 2012, followed by Vodafone and Sprint.
However, the presence of heavyweights like Docomo and Telefonica mean this is an alliance to be taken seriously. Its unified platform will be built around a unique SIM card, and a web interface and portal to provision, monitor and manage M2M devices and their status, from a central point.
The partners will also agree on a set of standards and core technologies to use, and will aim to influence the broader community of operators, and to submit ideas to standards bodies. This should stimulate the availability of all kinds of connected devices, as the economies of scale improve for the makers of such products.
The operators said in their joint statement that they believe their alliance will result in cost reductions and an improved user experience. In M2M, carriers have to take into account a far wider range of vertical markets than many are used to, and within that complex world, they aim to achieve pole position in a potentially fragmented value chain. The partners said they hoped their moves would accelerate M2M communications uptake in many vertical sectors, notably consumer devices, automotive and smart energy.
“Standardized global service, with local support, is the Holy Grail in M2M and mobile operator alliances are a vital activity to make this a reality,” said Macario Namie, VP of marketing at Jasper Wireless. “Customers can get a single SIM, single API and single point of visibility and control all without the complexity typically associated with working across disparate operators.”
Undoubtedly a unified platform of this nature is necessary to even start to address the complexities of multinational M2M communications, which will have to accommodate multiple vertical sectors, a massive range of applications, and potentially roaming among a global base numbered in billions of devices. But the stakes are high, and the firm which controls the platform will have enormous power over the whole ecosystem. The carriers are obviously keen to ensure that this player is under their own influence, rather than a powerhouse in a rival ecosystem (a cloud operator or infrastructure vendor, perhaps). As with their repeated efforts to keep hold of the tiller in mobile software platforms or payments, they will often unite behind a smaller but expert force, and Jasper was a strong candidate. As Jim Morrish, director of research at M2M specialist Machina, told TotalTelecom: “This kind of development was almost inevitable. Jasper has made clear its aim of establishing a constellation of operators around the Jasper platform and all of the operators in today's announcement are already Jasper clients."
However, others may disagree. Verizon Communications’ CTO Tony Melone recently called for a common architecture to create a harmonized approach to the machine-to-machine boom, but has not, as yet, joined the new alliance. Nor has Jasper’s flagship customer AT&T, and without US support, a key immediate benefit – roaming – will be weakened.
There are alternatives to Jasper, both from big names like Ericsson (via its purchase of Telenor Connexxion) or NEC, and pure play specialists like Axeda. And Melone has his eyes on an initiative driven by the standards bodies themselves to unify the M2M applications and communications frameworks. In particular, he cites a group of standards organizations (ARIB, ATIS, CCSA, ETSI, TIA, TTA and TTC) which announced a collaboration early this year, aiming to create a “common cost efficient, easily and widely available M2M Service Layer, which can be readily embedded within various hardware and software”, which would be the basis of a “global initiative for M2M standardization”.
Melone would have no argument with the intention of the Jasper group. He recently called for a horizontal layer for M2M services that would handle device activations and monitoring, among other services, arguing that proprietary approaches to M2M cannot scale. He told a debate at the recent CTIA Wireless show that devices with embedded wireless connectivity – whether a Kindle ereader or an OnStar navigator – each needs a separate and specific implementation in order to function. That will become unmanageable as wireless links find their way into the smallest sensors and the most universal objects. But like other big operators, he may seek a different center of power for the effort.
Verizon has its own M2M alliance with Vodafone and Qualcomm, while another potential power base for standards and roaming is the M2M Service Alliance between Deutsche Telekom, France Telecom, TeliaSonera, Everything Everywhere and Sprint.
Another carrier looking to drive M2M developments is China Unicom, which sees cross-border M2M services, especially for the automotive industry, as an important element of its international expansion plan. It says it is in talks with other major operators over M2M roaming and infrastructure sharing, but would not comment on the Jasper alliance.
Other obstacles will lie in the path of success for the Jasper initiative, most importantly the quest for a profit model based on millions of tiny devices and connections; and the poor track record of cellcos in working together to drive an ecosystem. "It is easy to define a strategy which looks attractive to all participants at the portfolio level, but it is far harder to drive through real life commercial opportunities at the individual account level," said Machina’s Morrish, especially once the partners start to compete for the same business. "If this alliance can cross those commercial hurdles, then it could really accelerate market development. If not, then it will probably have a moderate impact."
As with conventional consumer and enterprise services, connectivity in M2M is likely to become rapidly commoditized, so operators will need to provide added value and services in order to be profitable and differentiated. Yiru Zhong, an analyst at Frost & Sullivan, commented: “In the likelihood of connectivity becoming another commodity, higher revenue must come from additional value, such as using analytics to wrap intelligence for end users, enabling more relevant application development and utilizing computing trends to support different M2M deployment scales.” Vodafone has been particularly active in pursuing an approach built around adding value for specific applications or verticals, notably industrial automation.
A unified framework for connectivity, device management and roaming will allow operators and other ecosystem players to invest their efforts in added value rather than basic mechanics, while gaining the scale to make the ‘internet of things’ viable in cost terms. However, as the carriers wage their inevitable political battles over how that framework will look, they may find their approach overtaken by newer players more focused on cloud services, and on shifting the initiative towards web and services providers – relegating the carriers, once again, to their dreaded bitpipe role.
Maravedis-Rethink will soon publish a new report on how the mobile cloud will drive M2M and the internet of things. For details of this ground breaking study, please email us on caroline@rethinkresearch.biz.
Deutsche Telekom’s M2M market:
Deutsche Telekom recently unveiled the first marketplace for M2M and the internet of things.
Companies like Qualcomm – working with Verizon itself – have shown off M2M app stores before, but DT’s initiative goes further and could provide a template for a global approach to avoiding fragmentation and siloes. Its online marketplace provides manufacturers and dealers with a global distribution channel for their hardware, software and vertical market apps.
The German telco said the huge variety of potential applications of M2M connectivity and web access, in a broad range of industries, means that many different partners have to work together. The new portal will allow customers to compare offers on an international scale and find solutions that are best suited to their individual M2M needs. "The marketplace brings together global supply and demand for M2M solutions in a straightforward way, thereby lending greater dynamism to M2M business," said Thomas Kiessling, DT’s chief product and innovation officer.
The M2M Marketplace will revolve around nine categories – energy, healthcare, transport and logistics, automotive, consumer electronics, retail, industrial automation, public sector and security. It will initially launch in English, with other languages to follow.
Wireless Watch: Carriers’ M2M platform necessary, but needs US and Chinese support
