November 10, 2014 — The rapidly growing M2M market, which is set to reach 244 million global connections this year, will account for at least 10 percent of the global mobile market by 2020, with nearly 1 billion mobile connections, according to a new study by GSMA Intelligence, the research arm of the GSMA, the global mobile carrier association.
The market currently lacks standardization, however, which limits interoperability, causes fragmentation and restricts economies of scale, as well as the rate of growth. The rate of M2M growth will depend on mobile operators’ ability and desire to make substantive changes to the networks and put certain standards into place.
“It will be a huge, huge market. Operators will need to adjust their network topography and network structure concerning how that bandwidth gets pushed through to cover so many different devices and the different sequencing of those devices,” Reed Peterson, head of North America, GSMA, told AGL Small Cell Link. “To fully unlock the M2M market for businesses and consumers, it requires operators to come together. It requires standards and specifications, based on the embedded modules.”
Peterson said that the standards he is talking about may take an industry that is currently growing at 26 percent annually from 2014 to 2020 upward to 40 percent. The United States had 35 million M2M connections at the end of 2013 and is expected to reach 41 million this year, driven in particular by advances in the automotive, utilities, and oil and gas sectors, according to GSMA Intelligence.
GSMA, which represents mobile operators worldwide in more than 200 countries, brings operators together to work on standards specifications and interoperability. Concerning M2M, one area that the group targets for standardization is subscriber identity module (SIM) cards, because they are an impediment to the proliferation of low-cost, ubiquitous M2M.
“Often M2M modules are hermetically sealed, such as in the connected car or smart meters. You can’t get to them,” Peterson said. “We needed a specific non-removable SIM that can be embedded into the M2M device at the point of manufacture, which can later be remotely provisioned with the profile of the mobile provider that is providing the connectivity.”
GSMA published an embedded SIM specification for M2M services, which enables remote over the air provision and management of embedded SIMs in M2M devices.
“The purpose of this specification, which is backed by the world’s mobile operators and suppliers, was to ensure interoperable technical solutions to further accelerate the M2M market,” Peterson said. “The GSMA’s Embedded SIM specification promotes a common global architecture that will reduce costs, drive efficiencies.”
In October, AT&T became the first operator in the United States to launch the GSMA Embedded SIM specification. Just as important, several global carriers — Etisalat, NTT DOCOMO, Telefónica and Vodafone Group —– and a number of SIM and module manufacturers have launched solutions compliant with the GSMA Embedded SIM specification. Ericsson has also committed to the standard.
“The announcement confirms that the industry is moving toward a single, common and interoperable specification that will accelerate the M2M market, reducing fragmentation caused by proprietary solutions,” said Alex Sinclair, GSMA CTO, in a press release.
Also in October, GSMA published guidelines for the Internet of Things (IoT) market that outline how devices and applications should communicate via mobile networks in the most intelligent and efficient way. The report, “IoT Device Connection Efficiency Guidelines,” received the backing of major mobile operators worldwide.
The guidelines include best practice in areas such as data aggregation within devices, non-synchronous network access, application scalability and guidance on managing signaling traffic from de-activated or out-of-subscription SIMs. GSMA is continuing its work on an industry agreement on privacy, tax and permanent roaming for the M2M SIMs and to complete it by February 2015.
There’s an M2M App for That
The U.S. market currently has 85 million LTE mobile connections, which is the most 4G users in the world. But, with 300 million in population, there is only so much growth that is going to be possible from consumer sales.
The appeal of M2M is not the size of the ARPU but the breadth of applications in the consumer and industrial sectors.
“There are so many use cases that we have not even thought of. There are infinitely more possible connections on the machine-to-machine side,” Peterson said. “The future seems to be extremely bright for the next five to 10 years.”
A GSMA report “Driving Innovation in Connected Living – The U.S. Flags the Future of M2M” expands on the key areas of opportunity.
• The United States has 250 million cars on its roads — the largest addressable market for future M2M growth, such as for in-car connectivity and services such as fuel consumption, safety monitoring, real-time news, maintenance and even pay-as-you-drive insurance subscriptions.
• With more than 43 million smart meters installed nationwide, smart grids can track energy consumption in real time and enable a homeowner or business to remotely monitor their use of power and tap into home automation that enables remote control of heating, air conditioning, lighting and even individual appliances, such as security cameras or burglar alarms.