Machine-to-machine (M2M) simply refers to the communication between devices without the intervention of a human, and it's what makes many IoT applications possible. It is the backbone of the Internet of Things (IoT), and represents a tremendous growth opportunity for telecom operators looking to find new revenue sources.
Some of the communications methods used by M2M devices such as bluetooth, wireless, and RFID are some most efficient methods for many telecom operators. This also includes the ability of smart lighting systems to communicate with smart meters within the home to enable energy efficiency, or the ability of sensors on products to communicate with warehouse computers and update stock quotas. The telecom industry could easily find its lifeline by investing in their own M2M technology, such as wireless systems, sensors, or radio frequency identification (RFID).
Booming Increase in M2M Wireless Communications
M2M technology and wireless will be given a huge boost when 5G networks are launched, currently estimated for 2020. But even before then, IoT and M2M will grow.
The number of M2M wireless communication continues to grow, with an expected 1.3 billion M2M connections worldwide by 2025, up from 205 million in 2014. However, if a number of growth inhibitors were addressed by industry and government, that number could hit two billion. These include, among others, several pillars that telecoms can help with:
- Enabling low-power wide area network (WAN) opportunities
- Significantly growing the connected consumer goods market
- Enacting government policies that drive M2M
- Assuring end-to-end security
- Developing sustainable M2M business models
Operators Need to Go Further Than Simple Connection
According to an Analysis Mason report, most operators have started their M2M communications journey with the simplest connectivity offering: using their SIM card in an M2M device. But this isn't enough to generate significant returns. The report notes that it puts the operator in a weak position as connectivity prices are high, while differentiation is typically small.
Operators need to go further. Many have made forays into smart home innovations. In the US, AT&T has its Digital Life service, a security and home automation system offered through a smartphone app, which Telefonica has also licensed for use in its home market of Europe. Another fast-growing IoT arena is connected cars. Deutsche Telekom and China Mobile, for example, signed an agreement in 2014 to address the Chinese automotive market.
Telcos also need to look at how they can enable businesses to digitize, rather than just being the conduit of connectivity. But these innovations present a challenge for the telecom industry.
Taking Steps in the M2M Market
Selling voice and data services has previously allowed operators to offer customers a point of difference on minutes of use, data plans, and the different device types. But to provide greater value to their customers, telecoms need to branch into non-traditional telecommunications services and products.
Telecoms need to take some steps to ensure they fully embrace the opportunities M2M communications present:
- Continue to invest in their core offering - high-quality connectivity
- Work with standards agencies and governments on interoperability standards for the M2M industry
- Contribute to growing security and data privacy standards for M2M devices
- Partner with horizontal and vertical players in the industry
- Develop their own platforms - e.g. hosting, billing, application enablement
- Develop or acquire their own products - e.g. Vodafone's acquisition of stolen-vehicle-tracker firm Cobra
Telecoms need to see the IoT as more than just Smart Cities and Smart Homes, connected cars, and other consumer applications. Digitization is a strong trend throughout the corporate world and telecoms have an opportunity to be a partner to companies looking to embrace it.
Shipping and distribution, logistics, sales and customer service, production, accounting, and human resources are all areas where industrial IoT solutions are being deployed. Businesses not only need help setting up these solutions, they need a partner that can service the solutions as well. Telecom operators are in a unique position to offer supply-chain optimization, e-Wallets and contactless payments, telemedicine platforms, parking management systems, emergency-response systems, augmented-reality experiences, and so much more.
For example, Verizon has partnered with the Mercedes-Benz to integrate mbrace into the Mercedes-Benz cards. mbrace is a telematics platform, where Verizon is responsible for the connectivity, network operations, and system integration.
The M2M market is set to explode. If telecom operators don't invest in the right places, or build the right partnerships, they might be left behind when M2M technology takes off.