by Julien Blin
In the past two years, M2M (machine-to-machine) applications have become one of the most talked-about topics in the wireless industry. While M2M apps can be used for many purposes (such as smart homes, smart metering/electricity meter reading, fleet management, mobile workforce, automobile insurance and vending machines) and in many sectors (such as healthcare, agriculture, commercial, industrial, retail and utility), smart metering applications--also known as smart grids--present the biggest growth potential in the M2M market today. With many leading wireless service providers and utility companies jumping on the bandwagon and the growing support from states like Texas and California, M2M applications are set to become very successful in the coming years.
1. Smart grids are set to become a new driving force for many wireless carriers and utility companies.
M2M apps like smart grids could become a new revenue opportunity for many wireless service providers as they could help boost data ARPU and offset declining voice ARPU. The ARPU for M2M apps is likely to be pretty small compared with traditional voice or data services. However, through M2M apps like smart grids, carriers could potentially benefit from much higher volume than generated by traditional wireless services. Smart grids being self-contained and fairly easy to deploy, carriers do not have to subsidize devices or implement a large customer care structure, which is a key advantage.
For utility companies, smart metering apps probably present the biggest potential as smart grids could be used to control and monitor energy consumption in order to help customers save energy. Ultimately, consumers would receive incentives or discounts for using their electronic devices during low-pick hours.
2. AT&T, Sprint Nextel/Clearwire, T-Mobile and Verizon are out in front.
Due to the growing interest in M2M apps, many carriers have made inroads into this emerging market. Today, companies like AT&T, Verizon, Sprint Nextel/Clearwire and T-Mobile USA appear to be out in front, as M2M apps like smart grids could become a key element of their upcoming 4G (LTE/WiMAX) strategy. Carriers probably recognize the huge potential for smart grid apps in many vertical markets like industrial, commercial, agriculture, retail, healthcare, and especially utility. In fact, the Utility Telecom Council estimates that as many as 1.3 billion meters in China could be used for smart metering apps, against 300 million in the U.S. and 470 million in Europe. Thus, carriers want to capture a large portion of this future revenue opportunity.
For instance, in March AT&T teamed up with SmartSynch to create a smart meter offering to be used by utility companies. Smart grid apps are also set to become a core component of the carrier's open-network initiative (especially for AT&T's Connected Consumer Electronics initiative). Meanwhile, T-Mobile USA has developed a new SIM card providing wireless connectivity to smart electric meters. Echelon, which develops technology for smart meters used in building smart electrical grids, already announced its plan to use T-Mobile's new SIM.
Verizon already teamed up with Itron, a leading provider of intelligent metering, in order to develop secure, two-way communications for smart grids, and plans to use its LTE technology in the 700 MHz band for M2M apps. Like AT&T, smart grid apps are also likely to play a key role in Verizon's open-network initiative. On the other hand, Clearwire already announced its plan to support smart grids in the future. Lastly, we believe that M2M MVNOs like Kore Telematics and CrossBridge Solutions could also play a key role in this market.
3. Competition will be among LTE, mobile WiMAX, WiFi and ZigBee in the smart grid market.
Network technologies including LTE, mobile WiMAX, WiFi and ZigBee potentially could be used for future smart grid applications. While it is still too soon to tell which technology is likely to become the big winner in this market, mobile WiMAX appears to have an edge over LTE due to mobile WiMAX's time-to-market advantage. Mobile WiMAX also has the advantage of being more reliable and secure than "pure" unlicensed technologies like WiFi. WiMAX can also count on support from leading companies like GE, Intel, Sprint Nextel, Clearwire, Motorola, Samsung and Google, among others. ...Continue