Regulatory impact on m2m communications
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Regulatory impact on M2M Communications. Željko Popović. Agenda. 1. M2M INTRO and OVERVIEW oF gLOBAL MARKET. 2. UNDERSTANDING THE M2M BUSINESS MODEL. 3. IMPACT OF REGULATION AND LEGISLATION. 4. cONCLUSION. A transforming industry…. New Challenges. Today: Penetration 120%.

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Regulatory impact on M2M Communications

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Regulatory impact on m2m communications

Regulatory impact on M2M Communications

Željko Popović


Agenda

Agenda

1. M2M INTRO and OVERVIEW oF gLOBAL MARKET

2.UNDERSTANDING THE M2M BUSINESS MODEL

3. IMPACT OF REGULATION AND LEGISLATION

4. cONCLUSION


A transforming industry

A transforming industry…

New Challenges

Today:

Penetration 120%

Tomorrow:

Penetration 1200%

Networked Society

Automation

Self service

Low cost

Flexibility

Visibility & control

Multi level distribution

SLA

Custom process

CAGR 60% - 80%


A view of the world in 2020 everything will be connected

A VIEW OF THE WORLD IN 2020EVERYTHING WILL be connected

Specialized M2M applications across all government, industry & society

Drivers

  • Entertainment, security, healthcare

  • productivity, new revenue streams

  • sustainability and regulation

Devices connecting the masses, such as Consumer Electronics and Home Automation

  • Ubiquity of Broadband

  • Declining cost of connectivity

  • Propargation of embedded M2M Devices

Enablers


Connected devices range from consumer to process oriented

Connected Devices Range From consumer to process oriented

Connected Devices

Triple Play Devices

M2M Devices

Devices in Vehicles, Security Systems, Smart Homes, Infrastructure, utility meters etc.

Handsets, PC’s, laptops, tablets IP TV’s etc.

Connected Consumer Electronics

Consumer oriented Business process oriented


Potential m2m services

Potential m2m services


Connected devices in verticals

Connected devices in verticals

3B middle class consumers x 10 connected devices30B connected consumer devices

>100B embedded processors shipped (cumulative)

>1 billion vehicles

>3 billion utility meters

Personal

network

Online homes

People

Intelligent

transport

Societies

Businesses

Industry

& society

Smartutilities


Regulatory impact on m2m communications

Improved human efficiency

Improved process efficiency

Improved value Consumer lifecycle

2007

2010

2014

2020

M2M global visionnetworked everything

3 waves to get human efficiency improved

PC, CE & M2M connections are getting more relevance


M2m the future global m2m cellular connections by technology

M2m, THE FUTUREGlobal M2M CELLULAR Connections by technology

Global cellular M2M connections split by technology 2011-20

Source: Machina Research 2011

In 2011 there were 180 M cellular M2M connections, of which 69% (2G)

However predicted this will increase to a staggering 2.5 B cellular M2M connections in 2020, of which 50% (3G)

“3G will ultimately come to dominate”


Agenda1

Agenda

1. M2M INTRO and OVERVIEW oF gLOBAL MARKET

2.UNDERSTANDING THE M2M BUSINESS MODEL

3. IMPACT OF REGULATION AND LEGISLATION

4. cONCLUSION


Vertical a pplications and h orizontal s olutions

Vertical Applications and Horizontal Solutions

Customer Care & Billing

Field Force Management

(Apps) SP/enterprise

Support diverseapplications

Industry Specific VAS &Enablement

IT & Service Management

Government

Media

Telecommunication

Transport

Utility

Finance

Business process command

Business relevantevents & information

Data collection and processing

Service Enablement

Monetize assets &simplify for apps

Communication services

H2H, H2C, H2M, M2M

Actuation

M2M data

M2M Connectivity

Maximize connectivity availability

Vertical Dev.Sol.

Networks

Devices

Generic business processes

  • Similar process needs across verticals

  • Process decomposition – service enablers

    • Communications services

    • Media and content services

    • Data capture and processing services

    • Directory services

  • Work-flow orchestration in SOA approach

    Re-use for cost efficiency and service innovation

  • Vertical applications vs. vertical solutions

  • Move away from tightly integrated solutions

    • Multi-purpose device deployments

    • Applications using multiple devices

  • Long-tail support via re-use and cloud

  • Inherent horizontals vs. “pattern recognition”


Standardization situation needs

Applications

System interfaces

Architecture

Service

brokering

Service

discovery

Service

composition

3rd party

services

Network

enablers

Information

  • maps

  • tag resolver

  • location

  • billing

  • TSM

  • AAA

  • IMS

  • Policy

Communication

Access

Communication

Access

Access

Network impacts and

optimizations

Unified interface to

gateways and modules

Phone

Vehicle

Home/

building

BAN

”WSAN”

Standardization situation, needs


M2m industry is maturing and taking off good timing to act

Low

Low M2M volumes - primarily transport and utility

<100 M connections

M2M Industry is maturing and taking off, good timing to act...

M2M early days(pre 2011)

Current situation(~2011)

Future(2014-)

Market demand

Increasing

  • Growing M2M volumes – CCE increasingly important, utility & transport still large

  • ~100 M connections

Significant

  • Significant M2M volumes in CCE, transport, utility

  • Health/other verticals growing

  • 300+ M connections and growing

Exploring

  • Most operators still reactive

  • Advanced operators have realized potential and are taking larger roles e.g.:

    • Building M2M divisions

    • Partnering eg

Reactive

  • Mostly reactive with little focus on M2M

Positioned

  • Models will vary across operators, markets and verticals, e.g.:

    • Some in integrator/ solution provider role vs. enterprises (e.g. AT&T in health)

    • Some cooperating to create scale and reach

    • Some passive, rely on e.g. MVNO’s to drive traffic and e.g. MVNE’s/SI’s to serve enterprises

Operator strategies


M2m it s a fragmented industry with varying roles in the value chain

m2m... It’s A fragmented industry with varying roles in the value chain

M2M VALUE CHAIN

CHIP/MODULE

DEVICE/MACHINE

SERVICEENABLEMENT

BUSINESSSOLTUTION

CONNECTIVITY

<10

  • Few large SIs

  • Long tail of small local M2M specialized SI

  • Operators

  • MVNOs

  • Aggregators

  • Small size M2M specialized SW vendors

APPLICATION AREAS

EXAMPLES

Cams, TV, Gaming, eReaders,…

#players

#players

Incar sol, asset tracking,…

Smart metering, …

Surveillance, alarms, …

Payment terminals, …

Portable diagnostics, process aut, …

Banking, vending machines, …

  • General chipset

  • M2M specialized


Operator role 10 15 connectivity share of m2m revenues need for innovations

Operator Role: ~10-15% connectivity share of M2M revenues, need for innovations

M2M VALUE CHAIN

BUSINESSSOLUTION OR APPLICATION

CHIP/MODULE

DEVICE/MACHINE

SERVICEENABLEMENT

CONNECTIVITY

OPERATOR ROLES AND SHARE OF POCKET

+

VALUE ADDED SERVICE PROVIDER

90-95 %

ENABLER PROVIDER

20-40 %

LEVEL OF INVOLVEMENT

CONNECTIVITY PROVIDER

10-15 %

PASSIVE WHOLESALE PROVIDER

<10 %

-


Business model connectivity is key element in smart metering smart grid solutions

Business Model: Connectivity is key element in smart metering & smart grid solutions

M2M VALUE CHAIN FOR SMART METERING

SERVICEENABLEMENT

-Meter mgmt automation, meter data mgmt

BUSINESSSOLUTION

- CRM, billing etc

DEVICE/MACHINE

-Meter

CONNECTIVITY

- GPRS

CHIP/MODULE

COMMUNICATIONS NETWORKS

Connectivity Ownership

Technology

  • Utility owns communications network:

    • Utilities own IP backbone

    • Energy Australia has acquired LTE license for building own communications network

  • Use operator’s network:

    • Utilities such as ACEA Italy and Utility in NA Canada are using operator networks

    • KPN planning to build dedicated CDMA 450 network for utilities

  • Utility MVNO network:

    • On-going discussions with utilities

  • Fiber

  • Power line communications (PLC)

  • GPRS

    • Often used for smart metering

  • LTE

    • Technically fits for smart metering & grids

  • CDMA 450

    • Cost efficient (less base stations required)

    • Good indoor coverage (bandwidth)

  • Satellite

    • GAP filler in remote areas


M2m is different from consumer business

M2M is different from consumer business

  • Big customers with large volumes & many devices/SIMs

  • Volume per device is typically low

  • Typically small sessions/messages

  • Generally no voice

  • Primary use of GPRS

  • Part of a solution (embedded)

  • Value per bit differs according to application (fire alarm…)

  • M2M is about connecting devices and systems and turning machine data into valuable information for applications

…and M2M customers need to be served differently!


Profitability issues m2m is often high volume low arpu business

Profitability issues, M2m is often high volume & low ARPU business

50B

THINGS

PEOPLE

5

PLACES

0.5

1875 1900 1925 1950 1975 2000 2025

ILLUSTRATIVE

High Growth

Low Average Revenue Per Device

Low Cost

X

-

???

A B2B market with lower cost

Optimizing the M2M Business Process for profit!

  • Low customer acquisition cost

  • Less need of device subsidy

  • Less marketing cost

  • SIM within the device for many more years

  • Low churn

  • Automated service management

  • One customer, many devices

  • Low network usage per device

  • Customer management per customer, not per device

  • Simple set up of tailored customer contracts

  • Optimized end-2-end provisioning & service delivery

  • Management of subscriptions in bulk

  • Enterprise self-service portal

  • Remote device management

  • Online charging control

  • One bill per customer, not per device

Source: Current Analysis Inc, 2010


Agenda2

Agenda

1. M2M INTRO and OVERVIEW oF gLOBAL MARKET

2.UNDERSTANDING THE M2M BUSINESS MODEL

3. IMPACT OF REGULATION AND LEGISLATION

4. cONCLUSION


Regulations important market driver for m2m adoption

Regulations important market driver for M2M adoption

  • Regulation plays an important role for M2M market growth, particulary in smart metering and telematics

    • The Energy Services Directive (EU directive on nenergy end-use efficiency and energy services 2006/32/EC)

      • 80% of European cosumers are expected to have smart energy meters installed in their homes by 2020

    • eCall directive

      • The European Commission is aiming to have a fully functional eCall service to be in place throughout the EU by 2015

      • The eCall initiative aims to deploy a device installed in all vehicles that will automatically dial 112 in the event of a serious road accident, and wirelessly send airbag deployment and impact sensor information, as well as GPS coordinates to local emergency agencies


Impact of government initiatives on m2m standards

Impact of Government initiatives on M2M standards

  • eCall project

    • 3GPP developed two specifications to address eCall requirements (3GPP TS 26.267 – eCall Data Transfer, In-band modem solution-General description; 3GPP TS 26.268 eCall Data Transfer, In-band modem solution-ANSI-C reference code)

  • EC M/441 mandate on smart metering

    • Standardisation mandate to CEN, CENELEC, and ETSI to provede the set of standards needed to deploy interoperable smar metering systems.


Numbering options for m2m applications

Structure of IMSI

MNC

MSIN

MCC

3 digits

2-3 digits

max of 10 digits

max of 15 digits

  • MCC = Mobile Country Code (DK = 238)

  • MNC = Mobile Network Code

  • MSIN = Mobile Subscription Identification Number

  • MNCs can only be assigned to”Recognised Operating Agencies”,i.e. Network operators

Numbering options for M2M applications

  • In the current mobile number range, most countries will not have enough available numbers

  • ECC/CEPT evaluated four possible solutions to the scarcity problem:

    • Option A: Existing mobile number ranges, including possible expansion of them (E.164 numbers)

    • Option B: A new number range for M2M or similar applications (E.164 numbers) (for example longer numbers than normal, however maximum 15 digits according to E.164)

    • Option C: An international numbering solution (E.164 numbers)

    • Option D: Network internal numbers


M2m issue privacy

M2M issue: privacy

Top issue amongst a survey of industry experts

A lot of (very) personal information is already shared

Concerns re: use by government, law enforcement and businesses

They’re concerned too!

Concerns about the Internet of Things Source: Machina Research, Latitude, Council, Info.nl 2011

Imagine that 5 years from now, most of our physical surroundings – our cars, home appliances, buildings, roads, natural resources, etc. – are connected through the Internet of Things. What do you think might be potential problems or concerns associated? [Free text response] (Source: Machina Research, Latitude, Council, Info.nl 2011)


Regulatory issues facing the global deployment of m2m communications

Regulatory issues facing the global deployment of M2M communications

  • Most regulatory assumtions to date are based on domestic deployment of M2M devices resulting in regulatory frameworks that are inadequate to accomodate deployment on a global basis

  • Issues such as roaming, numbering, lawful interceprtion, technical regulation and regulatory barriers could impede the deployment of M2M communications in different jurisdictions


Conclusion

Conclusion

  • M2M related technologies are in place and the market has massive potential for growth

  • Standardization is essential for long term development of the technology and for interoperability of networks and services

  • Operators, integrators and vendors have expressed the need to standardize end to end M2M

  • Regulation in Europe, USA and Asia is pushing for a standards based solution

  • It is essential to have globally compatible standards


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