At Mobile World Congress in 2010, Ericsson predicted that by the end of the decade, there would be more than 50bn connected devices across the world. One year on, the M2M market is already demonstrating dynamic growth, and this is likely to continue. According to the analyst, Berg Insight, the number of mobile network connections for wireless M2M communications reached 81.4m by the end of 2010, up 46 per cent on the corresponding figure for 2009. 

Other research firms, such as InfoCom, say that despite huge gains in 2010, the M2M market continues to show significant growth potential worldwide. The company claims that M2M has become a fast-growing and strategically important market for business, because it opens doors for new services and solutions that improve process efficiency and productivity.

This rapid and ongoing growth sends a signal to wireless operators that the opportunity presented by the M2M market is huge. To capitalise on this projected growth, however, providers must be flexible. Rather than treating the M2M model as an extension of their existing mobile offering, they need to abandon their reliance on legacy business processes and established specialised M2M infrastructures, and start to build a new approach to this fast-growing sector. 

Assessing the challenges
The attraction of the M2M market to wireless operators is clear: make use of existing spectrum and network assets; deliver revenue growth by wireless-enabling new devices and business processes; and maximise profits by avoiding customer acquisition and support costs. Wireless operators are excited by the opportunity, and most have already established their own dedicated M2M business unit.

Unfortunately, success in the market is not straightforward. There are significant challenges in serving it, starting with its fragmentation into a broad spectrum of different industries, business models, devices and connectivity requirements.

Almost every M2M device will have a different value chain from the mobile phones and related devices that network operators most commonly sell today. From production and testing, through distribution and provisioning, to support and lifecycle management, the participants and processes are different.

Many devices also have a longer supply chain and shelf life, which, together with a lack of insight into the retailing or installation process, poses real challenges to operators. Further, device manufacturers, and even regulatory bodies, can demand longer continuity of service for M2M devices, challenging how operators manage technology transitions.

Another key challenge is the threat that M2M devices could pose to the public network. In disaster or emergency situations, operators need to prevent the network being overwhelmed by millions of M2M devices spontaneously attempting to attach to the network.

Equally, it is vital that low-cost wireless modules with poor protocol implementations do not overload the network. These, and other challenges, can be summarised into three main, interrelated categories: commercial flexibility; technological adaptability; and process efficiency, for each of which solutions are now beginning to emerge.

Commercial flexibility
The potential of the M2M market is not lost on any wireless operator and, therefore, even at this early stage, price pressure already exists. More importantly, the development of the market depends on operators being able to stimulate innovation and support new business models where the price per device per month is typically measured in pence rather than pounds.

In addition, operators need to support ‘comes with data’ pricing models, where the cost of the device includes a quantity of mobile data – whether volume-based (‘first 10GB of data included’), time-limited (‘first year’s service included’) or transactional (‘includes the synchronisation of the first 1,000 digital photos’).

Technological adaptability
Due to the fragmentation of the market – M2M devices encompass everything from smart meters to pay-as-you-drive insurance, to point-of-sale transaction processing – operators need to offer an M2M platform that supports a variety of use cases and applications. In particular, the connectivity requirements of M2M devices and applications can be completely different to those of traditional mobile phones and mobile data devices.

Many M2M devices are ‘intermittent transmitters’ – they only connect to the wireless network a few times a day, week or month, will often connect for a short time, and may only send small packets of information. Treating these devices the same way as mobile phones – which are often on 24×7, sending and receiving information frequently and spontaneously – is inefficient, wasteful and expensive. Instead, operators need to deploy an M2M platform that adapts to varying requirements for managing and communicating with M2M devices.

Process efficiency
The drive for efficiency is a direct consequence of the need for commercial flexibility and technological adaptability. Operators need to strip out costs and improve agility. Specialised M2M infrastructure can help here as well, bringing new approaches to managing and provisioning M2M devices. Without it, operators run the risk of adversely impacting the economics of M2M business models (both for the cost of connectivity and the impact on the device itself).

So how can operators find a suitable solution to this diverse range of challenges? In certain cases, operators have already established M2M management and application platforms, together with an ecosystem of partners, resellers and integrators. These platforms naturally leverage the existing wireless network, but have specialised M2M devices and gateways; an M2M management platform responsible for asset management, diagnostics, billing, device management; and a customer web portal. The ability to leverage these platforms, however, is not in itself sufficient to enable operators to take advantage of the M2M opportunity.

They also require dedicated intelligent M2M solutions, capable of complementing these platforms, integrating to the network using standard protocols, and enhancing any existing management platform with a dedicated solution for intermittent transmitters.

Evaluating benefits
This approach, which we are now beginning to see come on stream, offers operators a range of key benefits as they look to tackle the challenges of the new connected world. Chief amongst these are the need to remove cost overheads. This new solutions approach helps operators avoid the permanent allocation of network database capacity and numbers to devices that are intermittent transmitters, while allowing them to reduce the utilisation of signalling capacity and network resources by enabling devices to only attach to the network when required.

The approach also enables operators to support a variety of use cases, including temporary network access that is device-initiated (‘push’) or network-initiated (‘pull’), and allowing external systems to ask a device to attach over a second bearer such as GPRS (‘shoulder tap’). It will also help operators to minimise their deployment risk.

The approach makes use of current signalling protocol standards, and doesn’t require any proprietary changes to network interfaces. And, critically, it mitigates risk to the operator’s network by minimising the impact on upstream network systems (e.g. HLR/HSS, SMSC, SDP) through overload protection and flexible rules for the quarantine of devices that behave aggressively to towards the network.
Finally, operators benefit from reduced Total Cost of Ownership through the ability to deploy a single platform that seamlessly supports 2G (GSM/GPRS/EDGE) and 3G (W-CDMA/HSPA) networks.

Driving market growth
So the M2M market opportunity is clearly an exciting one for operators. As the market is now maturing quickly, they will need to move fast to give themselves the best chance of maximising profit and market share, but at the same time, they have a responsibility to help to drive the wider success of the market. Ultimately, their success in achieving these objectives will be at least partly dependent on their ability to embrace new approaches.

Operators need to be aware that in this new, connected world, it is costly, inefficient and wasteful to treat all devices the same. The development of the market depends on their ability to stimulate innovation and support new business models. If operators fail to embrace new business and technological approaches, they risk stifling innovation and blocking the development of this exciting new market before it reaches fruition.

Stuart Cochran is chief technology officer at Evolving Systems