More Than Just Humans Using Mobile Networks
March 16, 2011
By Jason Deign
You might get a shock if you tried listening into mobile phone conversations in 10 years' time. In Western Europe and the United States, at least, it is possible that half the time you would not hear a human voice; just the hum and buzz of data going from one machine to another.
It will not be because the human race has been partly replaced by robots, but due to a trend which is gathering momentum already: machine-to-machine (or M2M) mobile communication.
Put simply, M2M mobile communication is any situation where one machine communicates with another over the mobile network, without human intervention.
It has been around for more than a decade in the form of General Motors' OnStar vehicle communications system (branded ChevyStar in Latin America), which now has more than 5 million users and runs over code division multiple access networks.
Other common applications are in tracking systems, industrial monitoring, security alarms, and retail and restaurant point of sale devices. And last year was a big one for them.
Swedish telecommunications analysis firm Berg Insight reports shipments of wireless M2M communications units for enterprise applications soared 48 percent to an all-time high of 37 million units in 2010.
At the same time, there were 37.3 million device activations, up 55 percent on 2009, which took the total installed base of cellular M2M devices to an estimated 81.4 million units. That is almost equivalent to the number of people in Germany, the most populous state in Western Europe.
"The last users of the GSM networks will be machines."
But the growth so far is nothing compared to what experts are predicting for the future, based on a phenomenon which has taken a hold in the last year: consumer M2M mobile.
Right now, millions of consumer productsfrom e-book readers to carsare being fitted with the ability to communicate automatically over wireless networks.
In Brazil, for example, all new cars are required by law to have a tracking device. According to the International Organization of Motor Vehicle Manufacturers, the country produced almost 3.2 million cars in 2009.
Add consumer devices to the continuously growing demand from industry and Berg Insight expects shipments of cellular M2M devices to grow at a compound annual growth rate (CAGR) of 25.1 percent up to 95.7 million units by 2015.
Over the same period, the number of connections is expected to show a CAGR of 32 percent, reaching 294.1 million.
"Right now, they account for 10 percent of connections across Scandinavia, 18 percent in Sweden, and 6.3 percent in the United States," says Berg Insight analyst Tobias Ryberg. "In 10 years' time, 50 percent will be non-handset connections in the most advanced markets."
This has significant implications for mobile phone operators.
M2M communications do not usually involve a massive amount of dataalthough that may change in the case of applications such as video surveillancebut do require high levels of reliability, since a silicon chip might not think to call again if it does not get a line first time.
"If you have an alarm in your house then you have to be sure it is sending a signal," Ryberg says. This can be tricky for operators since telephone networks tend to work on a best-effort basis, he says.
Another challenge is that mobile M2M applications are often deployed on a global scale, for example in tracking systems, but mobile networks tend to be national or regional. This too makes M2M awkward to handle. And it is not exactly a money-spinner.
M2M communications tend to have a low average revenue per user, the golden measure of profitability in the mobile industry.
However, on a volume basis there may be enough margin in the business to make it worthwhile, and indeed service providers such as AT&T, Orange, Telefonica, Telenor, T-Mobile, Verizon, and Vodafone have all targeted the market.
The question they now face is how to prevent increasing volumes of low-value M2M traffic from gobbling up bandwidth on their newest and costliest networks. One solution might be to offload the traffic onto Wi-Fi, a capability that Cisco unveiled at Mobile World Congress this year.
Another might be to channel it onto their increasingly redundant GSM networks, which are more suited to M2M because they do not suck as much power from applications as newer 3G or 4G technologies.
In fact, Ryberg predicts: "The last users of the GSM networks will be machines."
Funny to think the technology that spawned the mobile industry may one day be bequeathed to a whole class of devices it helped create.
Jason Deign is a freelance writer located in Barcelona, Spain