1. 12
Challenges
While on one hand M2M represents a very significant
potential revenue stream, on the other hand, it requires
mobile operators to step significantly outside their core
business areas to secure such revenue. Some of the key
challenges are as follows:
New & different business model: M2M being a new
and different business model, cannot be effectively
addressed by MNOs, with existing infrastructure and
operational practices.
High deployment costs: The cost of acquiring the
infrastructure to launch new M2M applications is high
and average revenue per user (ARPU) may remain low.
Notwithstanding the expectation of huge customer
base, it may take quite some time to recover the
investment and start gaining profits.
Meeting benchmarks: Telecom operators worldwide
are investing heavily in building M2M capabilities,
effectively setting a stiff benchmark of capabilities
required to compete for M2M revenue.
Geographical coverage: The demands of many
potential M2M customers are regional or even
global in nature, often extending significantly
beyond the footprints of any single mobile operator.
The fragmentation of mobile operator systems
environments can hinder the deployment of regional
solutions.
Complexity of applications: Many applications are
complex to develop and deploy. There is a chance of
incompatibility from the network’s view. Operators
should factor such issues so that there is no hindrance
following the deployment. The general mobile data is
different from the M2M data. In that context the SIMs
used in the M2M devices are also different from the
traditional SIMs used in the mobile communication.
Therefore, distributions, logistics & inventory of SIMs
can also be a critical challenge.
Standardization: There are a number of players in
M2M ecosystem. Therefore, standardization is of
utmost importance across all the devices for seamless
operations. A common set of standards must evolve
across the globe.
Recommendations
1.Gross profitability for M2M services varies from 20
to 70 per cent. Such a wide variation is a reflection of
how M2M service providers allocate network costs.
M2M services delivered over 2G can be highly profitable,
because the network may be depreciated and 2G M2M
modules are cheaper.
2.CSP must strive to avoid being a bit pipe operator.
They must find a way to widen their role. This will
require striking a partnership with M2M developers
based on revenue sharing.
3.MNOs should look beyond being M2M data
wholesalers. They must focus on end-to-end service
management and flexible billing for M2M applications,
in addition to having revenue-sharing models with
partners.
4.MNOs have expertise in securing data delivery,
according to end customers’ requirements. Hence, they
must prioritize security because they have the required
skills.
5.CSPs must consider end-to-end service management
of M2M applications crossing into enterprises’ privately-
built networks where technologies such as Wi-Fi,
wireless mesh and radio are used.
6.Instead of focusing on vertical market peculiarities,
“The telecom operators need to
take a more daring approach
toward M2M, as it holds the
potential to increase ARPUs and
reduce the subscriber churn. The
government, telcos, as well as
solution providers and consultants
in the M2M space need to come
together to give this market the
critical push.” - Narendra Saini,
CEO at Sukrut Systems