Operators must look beyond “easy-to-reach” M2M: Frost & Sullivan

Telecoms operators need to look beyond “easy-to-reach” opportunities if they are to accelerate the growth of M2M revenues, according to new research from Frost & Sullivan.

The market-research company encourages M2M telecoms service providers to develop opportunities in industrial automation, retail sectors and local government – outside the traditional areas of smart electricity meters and connected cards for E-call compliance.

Telecoms operators need to look beyond “easy-to-reach” opportunities if they are to accelerate the growth of M2M revenues, according to new research from Frost & Sullivan.

The market-research company encourages M2M telecoms service providers to develop opportunities in industrial automation, retail sectors and local government – outside the traditional areas of smart electricity meters and connected cards for E-call compliance.

According to Yiru Zhong, a senior industry analyst with Frost & Sullivan, this could boost M2M’s revenue potential by 10–35% over the next five years.

Frost & Sullilvan also says that operators should be doing more to prioritize M2M offerings for SME customers.

“Widening an M2M telecom service provider’s reach to a spectrum of customers regardless of enterprise size can yield a more sustainable flow of revenue,” said Zhong.

Indeed, a broader approach could stimulate revenue growth by 22.3% in the next five years, as M2M functions and customer needs evolve, according to the company.

Not all operators are getting it wrong, however, and Frost & Sullivan singles out Deutsche Telekom (Bonn, Germany) as an example of good practice in this area.

“Deutsche Telekom’s M2M Marketplace approach announced in 2012 is a good starting point,” said Zhong. “Without a relatively straightforward plug-and-play M2M solution for SMEs, it is difficult to translate this potential opportunity into actual contracts.”

Nevertheless, the lack of M2M standardization and barriers to M2M connectivity roaming could hold back the development of the M2M market in 2013, according to the research.

The absence of common protocols for M2M modules and M2M connectivity platforms is often cited as a problem and Frost & Sullivan says the industry cannot even agree on what needs to be standardized.

“Standardisation efforts will be greatly beneficial, but let’s not hold our collective breaths,” said the company in a statement.

Zhong also emphasises the need for progress on the issue of M2M connectivity roaming, calling this one of the most significant obstacles to enterprise adoption.

“This issue applies particularly in the SME sector,” she said. “We do hope in 2013 this issue comes to the attention of national telecoms regulators … to provide a coordinating hand across national boundaries.”

Frost & Sullivan also reckons that new entrants – including mobile virtual network operators (MVNOs) and wholesale M2M telecoms service providers – will become more “vocal” in 2013.

“This additional market entry push will accelerate market development and stimulate greater innovation within the M2M space,” it said.