Regulation, and particularly permanent roaming, promises a significant impact on M2M and IoT in 2015

Matt Hatton, Founder & CEO, Machina Research

At the start of January 2015, Machina Research issued its predictions for the ten defining trends in M2M and IoT in 2015. One such prediction was that there would be a “crunch on regulation” in 2015. Specifically, regulators are set to focus much more attention on M2M and IoT this year. As noted in the predictions, this is both good and bad. There is what Machina Research has termed a “quicksand of regulatory uncertainty” threatening to hold back M2M deployments, in particular around permanent roaming. At the same time, however, we will also see more regulators wanting to adopt a nurturing approach to IoT and M2M, as illustrated by the approaches of regulatory bodies in India, Singapore, the UK and many others.

Our regulation prediction is based on extensive research in the area. In November 2014, Machina Research launched its M2M & IoT Regulation Research Stream, and currently it profiles the regulatory regimes for M2M and IoT issues in 68 countries around the world. Back in August we published a summary of our findings based on over 30 regulatory environments. Having expanded that geographical coverage substantially, we thought it was worthwhile re-examining the global regulatory environment, based on that much-expanded sample.

The single most important regulatory issue that is likely to have a direct impact in 2015 relates to the extra-territorial use of e.164 numbering, or ‘permanent roaming’ as it has been dubbed. Many mobile network operators make use of roaming SIMs to support M2M connections around the world. The use of roaming, rather than the need for local SIMs in all territories, massively simplifies the supply chain process for providing connectivity. It also allows MNOs to use foreign SIMs in any given territory to take advantage of national roaming.

However, in some countries there are rules prohibiting the use. Arguments in favour of prohibiting permanent roaming include the possible exhaustion of number ranges, challenges with number portability, national regulatory oversight, customer protection and lawful intercept. Arguments against focus on the free movement of trade (e.g. within the EU), the interruption to existing services, and the fact that these practices have existed for many years with no significant problems. However, as M2M/IoT becomes more important, the light-touch regulation that dominated in the past may not be deemed appropriate. The issue of disrupted services is a particularly challenging one. By their nature many M2M deployments are distributed and have a disproportionately high cost associated with swapping out SIM cards.

Of the 68 countries studied, only 2 had explicit rules prohibiting the practice. In another 11 it was permitted. In the remaining 55 the regulation was unclear, albeit that Machina Research would categorise the vast majority (52 vs 3) as being generally accepting of permanent roaming. The full breakdown is illustrated in the chart below.

machina-graph

Figure: Regulatory attitudes to permanent roaming [Source: Machina Research, 2014]

In over 80% of countries there is significant uncertainty about the regulatory situation. Even where the regulator has laid out explicitly that it is prohibited, such as in Brazil, permanent roaming continues to be used and the regulatory situation continues to be the subject of much discussion. This uncertainty leads to additional costs, as connectivity providers seek to ensure that their offerings are future-proofed against future prohibition. And there is the looming prospect of additional restrictions. In Europe, in particular, the topic of permanent roaming is being discussed quite openly within regulators. Machina Research will be speaking at a meeting of CEPT (the European regulatory organization) on exactly this subject in January.

Another implication of the prohibition of permanent roaming will be to encourage the adoption of eUICC/subscription management, whereby SIMs can be remotely localized. This will solve the permanent roaming challenge, albeit at a cost and with no help for legacy devices.

Machina Research’s M2M & IoT Regulation Research Stream currently includes profiles of the regulatory environment in 68 countries around the world, as well as analysis of the prevailing global trends. The profiles examine key areas such as permanent roaming, national roaming, numbering, spectrum licensing, data sovereignty, and licensing.

Machina Research will host a free webinar on the 20th January 2015 at 11am GMT to share some of the key findings of its research in this critical area. Visit http://machinaresearch.com/events to register.

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