By Dr Mustafa Aykut, International Affairs and Policy Coordinator at Türk Telekom Group
With ubiquitous connections over high-speed networks and smart devices going mass market, digital innovation has become an integral part of today’s business models.
The digitisation of data is coming to every industry through M2M communication. The market is in transition as fundamental change is taking place in the way operators do business. Because customer demand is no longer based on local needs, global requirements call for smarter strategic solutions.
With 0.2 billion global device connections at the end of 2013, accounting for nearly three quarters of total connections worldwide, and generating $10 billion in revenue, according to Analysys Mason research, M2M appears to be the next big thing.
Although M2M has been on operators’ agenda for some time now, its fragmented value chain as well as industry and market dynamics have hindered it from being used to its full potential. The lack of standards in fields where M2M communications will be at the forefront, such as automotive, utilities and metering as well as local regulations that are inapplicable across regions, render regional cooperation unfavorable.
Add to this the absence of economies of scale in both service and technology harmonization and the shortfalls in developing business models, you will get clients driving the development of closed and largely non-deployable solutions.
Given the level of complexity, and the diversity of competitive advantages, a single company is often not in a position to provide integrated end-to-end solution on its own. Strategic partnerships and alliances are therefore a critical aspect of the M2M ecosystem as they can reshape business-models by lowering barriers to entry and expanding market reach for enterprises.
Thus, operators are now looking into ways to build collaboration and maximise the benefits of M2M to offer customers value-added services, innovation and state-of-the-art connectivity through joint commercial offers.
A partnered M2M ecosystem can consist of multiple stakeholders where each stakeholder is responsible for an assigned task such as connectivity, platform, integration, consultation, activation, and deployment.
Partnerships are critical to capture the value opportunity window opened by innovation, co-operation and commercialisation. Possible areas of collaboration include marketing, customer cares, vertical services, platforms and joint-operations in standardization, R&D studies, inter-working tests and field trials.
Operators are looking to take advantage of this significant business potential via partnerships in the M2M value chain. In this new ecosystem of service providers, software developers, network operators and hardware manufacturers, M2M applications can now be implemented at lower costs with increased efficiency. Players in the ecosystem come together to improve customer experience and develop tailored solutions for enterprises.
Creating a partnered M2M ecosystem will not only enable increased market awareness, it will also expand operators’ foothold across regions; contributing to overall efficiency and creating new and viable revenue streams.
Another way in which operators are making use of M2M’s potential is through forming strategic alliances that deliver integrated management solutions for energy, healthcare, finance, transportation as well as consumer and commercial product industries.
Advantages include activating and monitoring devices across regions and offering a single point of contact for customers and devices. Operators can also centralise their control and management mechanisms, lowering operational costs associated with such deployment projects.
For example, the Global M2M Alliance (GMA) was initiated by Deutsche Telecom and Orange in 2011 and later joined by Teliasonera and Telecom Italia. By synchronising their M2M solutions and module certification processes, one-carrier modules can be deployed across the networks of the other three.
The GMA is looking for ways to enhance seamless customer experience and drive cross-sector partnerships. At the end of 2013, the M2M World Alliance - an entity formed by Etisalat, KPN, NTT Docomo, Rogers, Singtel, Telefonica, Telstra and VimpelCom - introduced its new solution to simplify and promote the adoption of M2M communications across the globe.
Whereas the GMA is following a vertical approach from north to south spanning regions in Europe and Africa, the M2M World Alliance seems to have adopted a horizontal approach, collaborating from west to east and covering Latin America through to Japan.
Such thriving global alliances will lead the way for regional alliances to join forces and expand their spheres of influence, leveraging operators’ global know-how to the service of customers worldwide.
Optimised M2M inter-operability solutions exemplified above, are advancing the potential of enterprises by strengthening new business ventures, improving performance and reducing costs. Widening M2M ecosystems both in terms of stronger operator alliances and robust stakeholder partnerships is becoming a more reliable and efficient avenue for multinational companies.
Strategic cooperation is key in unlocking the great promise of M2M in the delivery of uninterrupted, customised and cross-regional solutions.