World News: Cellular M2M communications revenues to quadruple by 2012

World News:  Cellular M2M communications revenues to quadruple by 2012

ABI Research forecasts that revenues for cellular M2M communication services will rise from approximately $2 billion in 2006 to more than $8 billion in 2012.

ABI Research senior analyst Sam Lucero says the company‘s research identifies three classes of providers, each offering a different mix of capabilities: mobile network operators (MNOs), mobile virtual network operators (MVNOs), and a small number of specialised M2M mobile operators (MMOs).

Some MNOs, traditionally offering handset-based voice and data services, are now directly entering the M2M market. Examples include Sprint, Rogers Communications, Orange Business Services and others in Europe and Asia.

Lucero says that there are problems for traditional MNOs in entering the M2M market directly. “A cellular voice customer ARPU might be in the $50 to $70 per month range, whereas the M2M services ARPU might be just $5 to $15 per month. MNOs don’t want markets without large volume opportunities: a problem in the M2M space because market applications are so fragmented.”

Enter the MVNOs. Reliant wholly on infrastructure provided by MNOs, they focus on aggregating both supply and demand, matching multiple networks to multiple customers. They have organised their processes and operations around serving lower-ARPU markets.

MMOs utilise and aggregate MNOs’ base transceiver stations, but, unlike MVNOs, they own key network infrastructure elements, giving them more control over the provisioning, service level agreements, and management functionality they can offer. ABI Research is aware of only two companies fitting that description: Aeris Communications and Jasper Wireless.

The few MNOs that have entered the market directly see it as a “solution” sale, involving system integration work and application development – an opportunity to bundle the M2M services with traditional telecom services. They want to standardise and package these offerings in a way that’s replicable across multiple customers.

It takes a tremendous amount of both application-specific business acumen as well as technological acumen to bring an application to market, and MVNOs, while significant business entities, do not have the same resources as the traditional MNO.

“We think that instead, many MVNOs will opt for a more MMO-like model,” Lucero concludes.


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