M2M presents challenges for cellular companies

M2M presents challenges for cellular companies


M2M, or machine-to-machine communications, presents an interesting situation for cellular companies. M2M is used in everything from telemetry, traffic control and data collection to offsite diagnostics and fleet management. It is estimated that machines that could talk to each others outnumber human users who could by an order of magnitude. Cellular technology makes M2M more accessible and accessibility is the key to the spread of M2M.

So where is the problem? The financial markets. Human users represent $50 per month per user. M2M usage may only be $10 per month for the same usage. The challenge is how to present that decreased revenue as a good thing to the markets which are so interested in revenue per user numbers.

ABI Research offers a couple of strategies for how companies can present M2M strategies to the markets. One way is to own a gateway, like Orange does in the UK and Europe. By being able to offer the gateway, bandwidth and branded service companies can offer a complete solution.

A second possibility is for carriers to sell bandwidth to MVNOs. Those MVNOs can concentrate specifically on the M2M business, leaving the carrier to enjoy M2M revenue without openly participating in the lower revenue per user business.