Can carriers make the switch to become M2M service providers?

Canada’s big telecom providers have a lot to prove as service providers in machine-to-machine communication (M2M), according to Macquarie analyst Greg MacDonald. Companies such as Rogers Communications Inc., BCE Inc. and Telus Corp. have the financial resources and the national networks to provide the backbone for connectivity between devices in a future “Internet of everything,” MacDonald said in a phone interview, adding they will also have to shift their approach in order to become service providers for M2M clients. “ are very good at charging customers for access to those networks, but going beyond that, there just isn't a lot of evidence yet,” MacDonald said. “They haven't sufficiently moved past the business of network provision toward the business of leveraging service on an over-the-top basis.” Rogers, BCE and Telus are all looking to become one-stop-shops for M2M solutions, integrating their wireless networks with their own and outside technology to provide customers with one source for the design, implementation and service of M2M networks. MacDonald said the telecom companies don’t disclose many details about their M2M networks, but “they talk a lot about it.” The M2M market is still evolving, he said, and the big telecom companies have to invest in new ways of doing business to build applications and become service providers for their enterprise clients. “There aren't a lot of carriers around the world that have proven they can do this well, but they’re trying,” he said. Revenues for M2M, MacDonald said, are much lower than those in wireless, though he said there is much future potential in M2M. "Early in the day we realized that machine-to-machine is very different from the traditional wireless and wireline ecosystem," Sachin Mahajan, director of products and services for machine-to-machine at Telus, said in phone interview.“We need to invest in it wisely to make sure that we monetize it as well as make a good margin.” Telus has made M2M investments in areas such as health care, connected cars and the oil-and-gas industry, and Mahajan said the company ‘s M2M revenue comes mostly “from applications, not connections.” Mahajan said Telus has a dedicated enterprise network for M2M connections segregated from its consumer network for security reasons, which he claimed gives it one of the most secure networks in the world. Mahajan said automated medical monitoring is one area of focus for Telus, which recently purchased an electronic medical records company, Med Access Inc. The carrier is pursuing an “aggressive but cautious” approach to expanding its portfolio, Mahajan said. “We are in the stage where the possibilities are endless,” he said. “We need to be aggressive in targeting the right but cautious in not making acquisitions for hundreds of millions of dollars when the revenue stream can't support it yet.” Eric Simmons, who heads Rogers’ M2M division, said in an interview last week from the M2M Canada conference in Toronto that his company, which claims to already have brought more than a million M2M connections online, will “lead the solution for the customer.” “We're pulling those pieces together,” he said. “I want all kinds of companies to build all kinds of amazing M2M solutions. And then I want to work with those companies to enable those solutions to take place and be leveraged in Canada. We'll build our own solutions leveraging those technologies.” Rogers will use its rapid development platform, the Rogers machine cloud, to provide applications for its clients, Simmons said, many of which will take advantage of Rogers’ pre-existing code base from other projects. “That would tie into all these sensors and make it really quick for a customer to build an application or for us to be able to build that application for customers,” he said, noting that the firm will have pre-built apps for specific industries that can have perhaps 80 per cent of the code ready before tailoring it to the specific application. “If you only have to do 20 per cent of the work, I can get you up and running in weeks instead of six months or a year.” Simmons said this means companies have only one phone call to make in case of an outage or problem, and he expects that the machines themselves might make the call before the customer. "We can call them and say, 'By the way, there was an issue that we predicted was going to happen; we went and serviced it,' " he said. Nauby Jacob, who heads M2M operations at Bell Mobility, said in a phone interview that having a robust network is only half of the M2M solution. “It all comes down to a combination of having the network and being able to manage devices remotely,” he said. “You can’t afford to go out to those devices every time you need to update.” Jacob said the biggest competition between the carriers in the M2M space will be on services. “We have an incredibly strong business helping major enterprises build out their IT functionality,” he said. “The network is fundamental; you have to have it to be in the business. What gives you the differentiation on top of the network capability is that functionality.” — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Can carriers make the switch to become M2M service providers?

News | March 25, 2014

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Can carriers make the switch to become M2M service providers?

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