Advanced wireless M2M services monetize machine-to-machine ecosystem

Many wireless M2M applications consume little bandwidth, translating to low ARPU. In response, carriers are launching concierge-style wireless M2M services to generate more revenue and widen partnerships within the larger M2M ecosystem.

The rapid growth projected for wireless machine-to-machine (M2M) connections and devices bodes well for the network

operators that will carry all the traffic. But wireless M2M applications usually consume little bandwidth, which translates into low average revenue per user (ARPU). Service providers are responding with concierge-style M2M services to generate more revenue and widen partnerships within the larger M2M ecosystem.

By offering these kinds of tools in a very open and collaborative manner, we can bring their solutions to market more quickly. And we can bring more customers and partners onto the Sprint network.

 

Tom Nelson
Senior Marketing ManagerSprint Nextel Corp.

"The ARPU on a machine-to-machine connection is way, way lower than it is on a handsets, so there has to be a way to create revenue-generating services," said Kathryn Weldon, principal analyst at Current Analysis.

AT&T and Sprint Nextel Corp. separately announced at the CTIA Enterprise & Applications conference in San Francisco last week plans to open labs where application developers, equipment manufacturers, telecom engineers and even enterprise customers can jointly develop wireless M2M services.

Sprint will open its own M2M Collaboration Center later this month in Burlingame, Calif. The working lab will unite partners, suppliers and customers who want to develop and test wireless M2M applications for Sprint's network, according to Tom Nelson, senior marketing manager at Sprint.

Sprint will have staff engineers on site to help teams develop M2M applications. The carrier will also make its 3G and 4G airspace available for tests at the lab. The carrier does not plan to charge to use the lab for short-term projects and expects to work out any possible payments for longer-term projects on an individual basis, he said.

Providing a space for members of the M2M ecosystem to collaborate should ultimately boost Sprint's bottom line, since Sprint will earn revenue on applications that are deployed on its networks, Nelson said.

"It's very rare that one company can bring a solution to market, and that's what we realized when we talked to some of the solution providers," he said. "By offering these kinds of tools in a very open and collaborative manner, we can bring their solutions to market more quickly. And we can bring more customers and partners onto the Sprint network."

AT&T announced it would open similar "innovation centers" in Palo Alto, Calif.; Plano, Texas; and Tel Aviv, Israel, with several partners: Alcatel-Lucent, Amdocs and Ericsson. AT&T will build its labs with Cisco Systems and Juniper Networks infrastructure. In addition to collaborating on wireless M2M services, application developers will can use the labs for healthcare and HTML 5 applications, according to AT&T.

"The M2M ecosystem is fairly complicated," Weldon said. "It's not only the module manufacturers. It [also encompasses] those who describe themselves as system integrators, and it particularly [includes] the devices and software applications…. Without those partners, I don't think any of the carriers would know quite what to do."

Service delivery platforms cut expenses for wireless M2M services

Fostering the development of revenue-generating wireless M2M services is just one piece of the puzzle. Carriers must also streamline M2M operations and cut costs with more advanced service delivery platforms that automate many administrative tasks.

"Since the platform kind of takes care of a lot of the logistics, the ARPU opportunities for carriers are actually better than they look," Weldon said. "If you can automate provisioning, billing, activation and trouble ticketing, theoretically the ARPU looks a lot better, even if you're getting $4, $5 or $6 per [M2M] connection versus $30 to $40 per [mobile phone] connection."

All major carriers in the M2M space are developing their own service delivery platforms or using a third-party platform. They hope to develop these platforms into competitive differentiators, Weldon said. And for customers who don't like the self-service approach to M2M, carriers can use those platforms to deliver professional services as another way to generate incremental revenue, she added.

"It's like the OSS/BSS of machine-to-machine," Weldon said.

AT&T, Verizon and Sprint have all taken steps toward addressing the service delivery platform issue. At CTIA last week, Verizon Wireless announced its Machine to Machine Management Center -- an M2M service delivery platform built by nPhase, Verizon and Qualcomm's joint venture.

The platform will enable enterprise wireless M2M customers to manage network connections, manage devices and M2M applications directly through Verizon's Web portals or can be integrated on the back-end into customers' business applications, according to Verizon. The platform is expected to go live later this month.

Earlier this year, AT&T announced it would be the exclusive U.S. partner with Jasper Wireless, a wireless M2M service platform vendor, to deliver its Control Center management console to enterprise M2M customers.

Sprint also announced at CTIA its advanced service delivery platform for wireless M2M services, Sprint Command Center, which is slated to launch in 2011. Similarly, the platform, built by Aeris Communications, offers a dashboard for customers to launch, manage, test and monitor M2M devices on Sprint's network.

"Some of the analyst reports [say] that there [are] going to be 20 billion connected devices over the next few years. That [presents] very interesting and challenging opportunities for companies," Nelson said. "We realize that they need some effective tools to be able to develop and implement solutions, and get them out there very quickly."

Let us know what you think about the story; email: Jessica Scarpati, News Writer

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