Monday, 26 September 2011

Vodafone and DTAG tied on 5 million M2M connections each in Europe?

The M2M Alliance's fourth meeting in Bergheim was, by all accounts, a great success. There were a few announcements that I've covered elsewhere but of interest was the fact that DTAG and Vodafone reportedly indicated that they have about 5 million M2M SIMs each in Europe. Always good to get a few figures every now and then, so I thought I'd flag it up.

Saturday, 24 September 2011

Women: an untapped mobile opportunity and engine for economic growth

I was watching World Bank President Robert Zoellick give his annual assessment of the global economic situation the other day. I'll skate over the gloomy economic picture that he was painting for now, although it is relevant. One thing he mentioned was that there was effectively a massive emerging market in the world that can be an engine for economic growth: women. What he was saying made a lot of sense. I won't go into it in detail. I'm sure you can google it.

However, for my purposes the interesting thing was thinking about mobile penetration. OK so nominally just about every country has a 100% mobile penetration but we all know that's hogwash. Not everyone in the world has a phone. Multiple SIM ownership is widespread for cheaper off-net calling, there's a lag in ceasing counting old SIMs that have stopped being used, and there is a lot of multiple ownership due to business/consumer use, mobile broadband etc. From a personal standpoint, I suspect I'm still counted as 2 Indian mobile phone subscribers.

So I began wondering what the likelihood was that mobile penetration of women was lower than men and I suspect there's a strong chance. Probably not in Europe and the US, but potentially in Africa and Asia. It has to be said that in some developing countries I've visited the village phone is always controlled by a matriarch. However, there's some difference between that and personal phone ownership. According to the excellent report Women & Mobile: A Global Opportunity from the GSMA: "a woman is still 21% less likely to own a mobile phone than a man. This figure increases to 23% if she lives in in Africa, 24% if she lives in the Middle East, and 37% if she lives in South Asia. Closing this gender gap would bring the benefits of mobile phones to an additional 300 million women".

While looking into this I also read an article from the Cherie Blair Foundation, which reiterates the idea that GDP grows 0.6% for every 10 percentage point increase in mobile penetration. So, increasing mobile penetration amongst women should boost GDP.

I also read an interesting paper on the impact of mobile phones on the status of women in India. The author Dayoung Lee concludes that "mobile phones significantly decrease both men and women's tolerance for domestic violence, increase women's autonomy in mobility and economic independence" and draws the startling conclusion that owning a mobile phone is "in some cases equivalent to more than five extra years of education".

It seems therefore that there is a huge amount of circularity about this issue. Higher mobile ownership by women creates a higher degree of economic independence, reducing the barrier to mobile phone ownership. It also provides a much (and I mean MUCH) needed economic boost. Of course, cultural factors may still prevail. It is the job of government to break these down. Not because it's right to empower women (although implicitly that's a good thing) but because it's good for business and good for the economy.

This has been a very superficial look at this intriguing topic. I'm sure I'll return to it in the not-too-distant future.

Tuesday, 20 September 2011

Telekom Austria's M2M launch (and others like it) threaten Vodafone's partner arrangements

Telekom Austria has announced the establishment of a dedicated M2M business unit. The press release is here. I don't really need to regurgitate what's in that, particularly as the launch was trailed back in June/July. However, I am intrigued by a number of the issues associated with this launch. Most particularly the change it may herald in relations between Vodafone and some of its partner operators as their interest in M2M grows.

Up until now the major noise in the M2M market has been made by the big boys. Vodafone, OBS, AT&T, VZW, Telenor (OK, so they're not huge in Europe but their Asian assets mean they're #7 in the world by subscribers) etc. The TA announcements indicates that they want to be taken seriously in this space. I'm sure other mid-tier MNOs will follow suit.

And it makes sense to do so. Clearly there's some money to be made from M2M. The question is whether the smaller players will lose out at every turn to the big boys? Well, yes and no. In some applications all that matters is national coverage. Smart metering being the prime example. TA will, I'm sure, dominate that market in Austria and take a strong share in other footprint markets.

For other application categories, such as automotive or transport & logistics, geographical coverage is vital. Of course MNOs have access to roaming deals (although in some prominent cases these have been withdrawn for M2M by some cunning MNOs) but these have two drawbacks: (i) they cost more, which may matter depending on the application and its margins; and (ii) it's not as easy for the service provider to support their clients without 100% transparency of the network elements.

It is also important to note that M2M is not a stand-alone service. It tends to be provided to companies that are also wider corporate customers (and important ones at that) of the telco. Failing to provide an M2M service could have implications for the wider ability to sell to verticals. If TA fails to support the M2M requirements of its major customers, and in particular large corporates based in Austria, then it may lose them as customers to the likes of Vodafone.

This raises an interesting issue. Mobilkom Austria is a Vodafone partner operator. In M2M these partner players offer VF the ability to extend their reach into non-footprint markets, often with great transparency over network elements. Some of the partner operators are supported on Vodafone's GDSP platform. However, I suspect there will be a backlash from these partners simply because Vodafone knows too much about their customers and operations. The solution for Vodafone is fairly simple though. They need to hive off the GDSP platform into a separate company (a la Jasper Wireless). This will allow them to support third party carriers (such as TA) without TA fearing for its wider corporate customer base.

We at Machina Research will be exploring this and many similar issues in our M2M Benchmarking Study which will compare the capabilities of major CSPs across the world in providing M2M solutions.

Monday, 19 September 2011

MNOs should take a leaf out of the utilities' book on load balancing

As I'm sure you know I've been focusing a lot of attention on smart metering as a major M2M application. Our report from back in May predicted 1.5 billion smart meters worldwide by 2020, up from about 100 million today. One of the major benefits touted is the ability to carry out load balancing on the electricity network. Since it's hard to store electricity efficiently utilities have to ramp up and down generation capacity as demand grows or declines. This is also very inefficient. Smart meters should allow utilities to smooth that demand by reducing the price of electricity at off-peak times, encouraging users to consume at those times and reduce consumption at other times. The aim is not so much to reduce the overall usage (although hopefully this will happen too as people become more aware of how much power they're using) but to smooth out the peaks.

The same is true for mobile network operators. They also have to provision their networks based on peak demand despite the fact that for a lot of the time the network will be underutilised. As a result investment in RAN is typically inefficient. MNOs are rolling out LTE so people can get better speed at the new busy hour but that infrastructure will remain underutilised the rest of the time. I've previously examined (here) the need to focus on particular geographical areas rather than rely on the macro network. But MNOs also need to think about the timing of usage as well as the location.

The key for MNOs is to follow in the footsteps of utilities by spreading demand, rather than just increasing supply. The time of heaviest usage for mobile broadband is 11pm-midnight. And most of the traffic is adult video. I'm not going to speculate on the ability of MNOs to time-shift the consumption of that type of content. That's a thorny subject indeed. I'm not sure a "specialist gentlemen's content" happy hour from 3pm-4pm would really work too effectively. However, other options might include local caching of content, throttling of video content during the busy hour or charging a premium for usage during that time. No easy solutions but potentially a cheap way to better balance network load.

Machina Research's report Mobile Broadband Global Forecast & Analysis 2010-2020 will be published later on this month including our forecasts for the growth in MBB connections and traffic in 54 countries.

Tuesday, 13 September 2011

M2M will give a massive boost to satellite communications providers

According to this article in yesterday's Total Telecom, almost one-third of the connections to Iridium Communications' satellites are M2M. To be exact 32% of its commercial connections were M2M and 21% of government (with government accounting for one-tenth of its subscriber base).

M2M offers satellite providers such as Iridium an opportunity to go beyond the satphone market where the opportunity was always limited (mostly to the CIA, oil workers and journalists). M2M connections are, by definition, remote. In some cases VERY remote. For this reason satellite has a big part to play. I've recently been looking at a number of sectors where satellite has a big opportunity including mining and transport.

One of the categories of connectivity that we cover in the Machina Research Connected Intelligence Reports is Satellite. We're currently in the process of pulling together the global figures for all the M2M sectors we've been forecasting. Once we've done that we will have a comprehensive view of where the satellite M2M market (as well as every other M2M market!) is heading. Don't worry, we'll be pushing it hard, so you're bound to hear about it.