The M2M Promise, What CouldMake it Happen?A Techno-economic AnalysisAndrés Laya and Jan MarkendahlWireless@KTHKTH Royal Institute of TechnologyJune 4th 2013
M2M DefinitionMachine-to-Machine (M2M) communications refer to the exchangeof data between devices:· With minimal human intervention,· Controlling and monitoring applications.2
M2Mand the ForecastsThis 5,1% corresponds to1.7 Billion M2M devicesout of 10 Billion total[Cisco, 2013]3
M2MTechnical Challenges• There is a need to• Provide connectivity to large number of devices• Prevent traffic peaks: congestion control.• Energy-efficient mechanism for autonomous devices.• Improve coverage: perhaps with new technologiessuch as device-to-device communications• Specific Requirements• Reduce mobility signaling.• Time controlled transmissions.• Small data transmissions.• Interoperability.4
M2MBusiness Challenges• Existing solutions are typically dedicated to single applications.• Business model focused on provider-customer model.• Interoperability between M2M products vendors and networks.• Difficulties to analyse value.5
M2MValues and Drivers• Values• Low ARPU But high revenue perapplication.• Consumers can be part of theaftermarket in the co-creation of values.• Data represents valuable information:• Improved and customized services.• Reduce expenditures.• Optimize working times.• Drivers• Saturation of human market.• Declining costs in hardware and connectivity.• Expanding coverage of mature technologies.• Particular to each application:• Smart metering and UE 2022 mandate.• Health and change from episodic to continuous-care.• Large scale applications and incentives from public funding.6
8• Digital key using mobile phones• Handles access authorization and processes time registration data• Homecare authorities can prove service delivery• Relatives can monitor who enters the home of the patient• Big values:– Reducing complexity in keys management– Providing accurate reporting timeswww.bluegiga.com/solution?g=Consumer&n=PhoniroAccess Controland Time ReportingHomecare
Showstoppers9MNO in charge of the application managementphased out the service, claiming:• Small market• Lack of suitable phones• Complex product for the sales force• Long sales cycles in the public sectorChange inbusiness model
e-Homecare10• Patient needs assistance several times per day• With ICT technology some physical visits can be replaced byvideo conversation– Checking if medication is taken– Reminders– First contact in case of alarms• Big values:– 300 e-home care customers– will result in 2 M€ annual cost savingP. Forsström, “BoIT 2.0. Lokala projekt 2012 , presentation for SABO,” 20 February 2013.www.sabo.se/aktuellt/Documents/BoIT2%25200%2520_20feb2013.pptxin Västerås town
Once again,Showstoppers11• Less than 30% of people of age above 70 have Internet• For the ISPs, the e-home care service represent:– A very small, price sensitive market segment– Customers that require a lot of customer care• Customers tend to mistrust the ISP installationNew SetupEnd-users(the elderly)HomecareauthorityUrbanbroadbandnetworkInternetserviceproviderE-homeserviceproviderInstallationstaffServicefeeInternetsubscriptionBroadbandfeeaspartofmonthlyrentLeasingcapacityLandlordActorwithinthe townExternalactorEnd-users(the elderly)HomecareauthorityUrbanbroadbandnetworkIT serviceof thetownE-homeserviceproviderInstallationby homecare staffServicefeeBroadbandfeeaspartofmonthlyrentLeasingcapacityLandlord• Customers do not pay for a broadbandsubscription• e-Homecare is part of the overallhomecare package• Installation done by homecare staff• The town IT service department:– Buys broadband connectivitycapacity– Acts as service provider– Is responsible for the technicalsolution.
SmartCities12The case: Stockholm Royal SeaportUniform data access pointover any networkfrom any equipmentConnectivityCellular, fixed or privateENERGYTRANSPORTHEALTHMEDIAActors tend to think on terms thatOur services should be provided by our infrastructureEven when sharing, service providers want to control the customer interface.Fragmentation is expected, even if these services are technically very similar.
SmartHouses&FacilityManagement13The case: Halmstad town• Stovepipe within the very same industry sector• Parallel applications are present• Typically provided with entirely vertical solutions:• Network deployment and operation• Connectivity• Billing• Customer relationship
14The proposed solution is a horizontal and open business model using a shared common infrastructure.The common infrastructure is operated by a neutral actor, a communication operator.
Smart Energy Systems15Value Modelling of Smart Grids• Savings by “smart consumption algorithms” are small..• "Hard" value for EVs is small, around 10€ per month savings.• “Soft” value For EVs is much higher, an incentive to buy an EV andcombine it with private system for renewable energy generation.The common finding:• In Sweden, load is not moved where the energy is greener; on the contrary,energy has the lowest price when high-CO2-emission energy is imported.• When it comes to EV, the country strategies differ;• in Sweden, with lots of renewable energy, little government support.• in Estonia the state strongly support EVs, with “coal based” electricity.“System failures” in the energy production strategy:
16CASEKey FactorsTechnicalissuesBusiness model Values Entry barrierMobile phones for access control &time reportingNo mainissue,installationMNO left, newactor in chargeBig.Clear.Alreadyheree-Home CareNo mainissue,installationISP role unclear,new setupBig.Clear.AlreadyhereSmart Cities Stockholm RoyalSeaportStovepipeNot there, manysectorsYes.How toexploit?YesSmart Houses and FacilityManagementStovepipeNot there, onesectorYes.How toexploit?YesSmart energy systems Scalability UnclearLow.Difficult toassessYes
ChangeinMindset 17Solutions based onmobile communicationdo not have a properM2M connectivitymodel.Traditional models arebased onprovider-consumer.Changein theRelationsConsumersMobileOperatorsConsumersServiceProvidersMobileOperatorsInformationBrokersApplicationProviders}M2M services are often part of a complex value constellation.Consumer not directly involved with communication provider
Final Remarks• Easier to assess the benefits when small and isolated solutions are studied.But M2M is heterogeneous, from end devices to technologies and applications.• Solutions involved changes in the traditional business thinking.Including shift from stovepipes solutions to common infrastructure.• Successful cases have been addressed with tailored approaches.• An open research challenge is the study of applications in context; analysingthe inter-application coordination.For example, the Phoniro application in Facility management.• Shared infrastructure should work for horizontal components that arecommon across diverse vertical businessesCoherent vertical application should be build out of this horizontal components.18