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M2M: Paradigm shift for operators!

M2M: Paradigm shift for operators!

Posted by Ashruti SinghMay 12, 2011

M2M is one of the most important technologies and business trends which will change how we work, travel and live. It will have a far reaching impact, not just on the consumers but also on the business ecosystem. The M2M value chain spans across module manufacturer, application developer, network operator and solution reseller. In this chain, network operators will play a key role and significantly impact the delivery of solution to the consumer.

To enable an end-to-end M2M solution, the biggest challenge for fixed or mobile network operators will be to support innovative business models. M2M will spur partnerships between network operators and many new industries and verticals. It will push operators to manage a fragmented M2M market and quickly respond to the evolving requirements of varied verticals like automotive, retail or even finance. Business models for each of these verticals will be unique with respect to pricing, charging and managing services. These will not be limited to standard pay per use or post pay plans, but will be based on different combinations of device rental, connection fee and recurring fee. There can also be a cost of managed services like customer care, monitoring and reporting. Data usage fee can possibly be based on usage volume, device type, active time, time band, QoS, destination or traffic signature, to list a few! Due to the huge volume of traffic, charging will be at a granular level, unlike what it is today.

A high scale of connections, long term contracts and low churn of M2M contracts make it impossible to overlook this business but at the same time, M2M transactions typically are low value. Network operators will have to keep their high value-low volume business and low value-high volume business distinct.

They will also need to protect and prioritise the premium revenue stream over M2M traffic and provide a high quality of service at a very low cost. An example is one of Volubill’s operator customers, who spends approximately $5 per user to support data services. According to a report by Analysys Mason, M2M ARPU per SIM will be as little as $5-7!

Operators can strive to strategically evolve, innovate and reduce operational costs by making sure that their O/BSS systems are flexible and open enough to adapt to the growing M2M industry. These systems should support an open environment, so that M2M partners of an operator can manage their tariff plans, add connections and check usage reports without depending on the network operator. Carriers themselves should be able to quickly add and modify plans and charge flexibly through plans based on device, usage, network or time. To reduce deployment cost, the solution architecture should be such that many applications can be hosted on a common, logically partitioned hardware and to lower network cost, MNOs should evaluate offloading the M2M traffic at the edge.

It is indeed easier said than done, but as Andy Grove of Intel puts it, “There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment – and you start to decline.”

For more info on how Volubill can help you deploy an M2M solution please visit

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Ashruti Singh

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