M2M beyond the hype - Connect-World

M2M developmentThe evolving machine-to-machine marketby Robert E. Sell, Group Chief Executive, AccentureCompanies are increasingly embedding networking technology in their products and thedevices they use are steadily becoming more intelligent and interconnected. M2M (machinetomachine) communications and systems are used for security cameras, traffic sensors,navigation systems, home appliances, payment systems, healthcare devices, ticketing systems,and vending machines among others. Companies, though, are finding it is an exceedinglycomplex task to put together the right alliances and find workable business models, pricing,branding and assembling the technology platforms that provide interoperability.Robert E. Sell is Group Chief Executive of Accenture’s Communications, Media & Technology operating group, which serves clientsin the communications, electronics, technology, media and entertainment industries. Mr Sell is also a member of Accenture’s GlobalManagement Committee.Previously, Mr Sell was the managing director of Accenture’s Communications, Media & Technology North America operating unit. Inthat role Mr Sell was responsible for setting the overall vision and strategy, for sales and revenue growth, and for client relationshipmanagement in the United States and Canada. During his career with Accenture, Mr Sell has served in a variety of leadership roles,across a number of industries and has managed Accenture’s business relationships with some of its largest global clients.Robert E. Sell received his undergraduate degree in economics from Lafayette College.Technology is intended to make our lives easierand more productive. Many consumers andbusiness users are experiencing this throughthe devices they use daily, which are steadilybecoming more intelligent and interconnected.Smart thermostats capable of learning thehomeowner’s behaviour, and cars connected tothe owner’s personal social media site, wherethe car posts a message when it’s time for anoil change, are examples of how the advent of‘smart’ technologies. The advent of machines,sensors, and control equipment ‘talking’ to eachother’ - is having an enormous impact both onusers and on the wide array of businesses thathave a role in making it all possible.This is where the challenges arise. For althoughsmart technologies may make life easier, findingthe business models, pricing, branding andthe right technology platform for providinginteroperability can be exceedingly complex.The technology underlying these smartapplications is machine-to-machine (M2M)networking, where remote devices wirelesslymonitor and report their statuses to othermachines. As more physical objects developtwo-way interactions with the network, agrowing complexity of developing, deploying,and managing M2M applications is emerging.Challenges for operators aboundThe M2M revolution has certainly arrived.Just consider the numerous networked devicesnow fixtures in everyday life - such as securitycameras, traffic sensors, navigation systems,home appliances, payment systems, healthcaredevices, ticketing systems, and vendingmachines.Now, M2M is poised to revolutionize severalindustries, creating new opportunities forgrowth, efficiency and profitability. But, astypical of any technological trend at its start,standards are lacking, outdated business modelsare being revised and the role of importantplayers like mobile network operators are beingcarved out. And mobile operators will continueto be bombarded with an explosion of datatraffic in their networks, compelling them todetermine how to maximize profit in the keytraffic growth area. As an added challenge, thetechnologies involved in M2M are varied. Theyinclude SIM card-based communication, as wellas other ways to connect things to each other,by using RFID, WiFi and ZigBee, in additionto GSM, 3G and 4G, broadband, Internet andprivate wide area network (WAN) used toconnect equipment.Up to this point, mobile network operatorshave been at the vanguard of the M2Mrevolution, due to their investment in wirelessinfrastructure. However, going forward, theywill find themselves facing new challengesand opportunities that distinguish the M2M erafrom the handset era. They will need to reviewold assumptions, such as revenue metrics,usage patterns, support needs, partneringrelationships, and business models. The goodnews is rapid change leads to new opportunities,and operators are well positioned to seize thesedeveloping opportunities. However, they willface the challenge of efficiently sifting throughan abundance of opportunities and expendresources only in areas that promise the mostlucrative, long-term revenue streams.One of those potentially lucrative revenuestreams for M2M is in-vehicle connectivity or6 • Europe II 2013

M2M developmenttelematics. In 2012, U.S. wireless operatorsinked major deals with automotive giantsthat have the potential to reach into otherverticals, such as health, asset tracking andhome automation. In Europe, Magneti Marelli,part of the Fiat group, has been developingand managing digital entertainment andcommunication solutions and services- including GPS navigation, in-vehicletracking security and diagnostic systems.These systems are designed to improve theonboard driving experience for both driversand passengers in a wide range of vehicles.In the global energy sector, BP, one of theworld’s largest oil companies, has embarkedon a pilot program that enables BP to usetelematics to track rail shipments of chemicals,incorporating technologies that includesatellite communications, solar power, globalpositioning, weight, temperature, and impactsensors. Other industries - retail and health care- are poised to network their products in vastways over the next decade.Increasingly, businesses from diverse industriesare coming to the realization that M2Mnetworking is strategic to their future. However,there is a disagreement on the most effectiveapproach to bringing new, networked, productsto market. Where innovation is concerned,many approaches will coexist, and smart playerswill keep their options open.Standardizing M2M platformsInteroperability - networking across differentdevices and services - is one of the biggestchallenges in the M2M segment. Most InternetreadyTVs and automotive entertainmentsystems use a common platform that enablesnetworking. Over time, it’s expected that avalue chain will evolve that sets standards andfacilitates interoperability across currentlyincompatible platforms.Meanwhile, consumers want simplicity andinteroperability. Our research 1 shows thatconsumers with multiple Internet-enableddevices want a single supplier or source foreverything, rather than a different supplier foreach device. Depending on where they live,consumers said software companies, televisionservices providers, or their landline telephonecompanies could be single suppliers, creating anopportunity for these companies to be squarelyin the emerging M2M value chain.Core competency considerations andpartnershipsPerhaps the two most critical features of theM2M market will be establishing partnershipsand focusing on core competencies for thecommon benefit of all involved. In fact, toresolve some of the issues of delivering globalM2M network coverage, some wirelessoperators are creating alliances.For example, in an effort to reduce M2Mbarriers, one group of seven major Europeanmobile operators in recent months teamed upto form a global alliance to enhance the M2Mvalue proposition for their respective customers.The preliminary goal is to provide connectivitysolutions for roaming as well as variety ofM2M managed and value-added services.The formation of such an alliance illustrateshow operators will need to work together inorder to maximize the potential, and reducethe complexity, of connected device services.Meanwhile, consumers want simplicity andinteroperability. Our research shows thatconsumers with multiple Internet-enableddevices want a single supplier or source foreverything, rather than a different supplier foreach device. In M2M, network connectivitywill be paramount, as customers have come toexpect that their devices will work consistentlyin all conditions and convey data accurately.Despite these positive efforts, some M2Mplayers regard working with mobile networkoperators as a challenge rather than anopportunity. To address this, mobile networkoperators can:• Consider relationships with non-traditionalcompanies for sets of offerings that addressspecial needs.• Encourage and support innovation by smallcompanies, offering test kits, flexible pricing,streamlined certification, and full testingsupport.• Provide remote diagnostics that sends analert to M2M players when a device needsrepair before customers notice a problem.• Remotely deploy firmware updates toenhance device security and performance, as PCcompanies upgrade their operating systems andapplications.• Provide a store of content - such asentertainment or useful applications - that couldbe used on any compatible device, such as newsand weather uploaded to an LCD screen on arefrigerator door.• Improve customer support capabilities todetermine if a problem is device or networkrelated.Security, IT integration factorsNaturally, security is also a concern forenterprises and can have a financial impactdown the road if system requirements are notincorporated at the application and networklevel to protect the data. Imagine a truckingcompany whose competitiveness depends onusing M2M networking to route its trucks. Thephysical devices also need protection, sincestolen SIM chips can potentially be used todrive up enormous telephone bills.Currently, systems integrators may be amongthe best equipped parties to address questionson platforms, managing communicationsprotocols among M2M players, and more - andto properly integrate the necessary components,software and services from a range of vendors.These integrators have the right mix oftechnology span and business reach to helpbring M2M solutions to market.Leveraging M2M-generated dataWith more connected devices and sensorsgenerating massive volumes of data, networkmanagement and planning will play a keyrole That means, as M2M applications suchas patient monitoring, home automation andautomotive diagnostics systems evolve, therewill be an increased focus on how to bettermanage M2M generated data for strategicdecision making and in turn tailoring services tomeet specific customer needs.In fact, we will work together with GE Aviationto provide airlines and cargo carriers aroundthe world with intelligent operations services.These services will focus on improvingefficiency by leveraging aircraft performancedata, prognostics, recovery and planningoptimization solutions. As a result, operatorswill be able to utilize both predictive and realtimedata to plan and recover from potentialdisruptions with software applications thatwill include an analytics dashboard, operationsworkbench, mobile-enabled access, integrationarchitectures, and complementary technologyand services such as business process redesign,systems integration, data analysis and customerdecision support.Netting it outConsidering the surge of companiesembedding networking technology in theirproducts, M2M is poised to transform theway people, devices and systems interactwith one another. To deliver enhanceduser experiences on the one hand andcreate new revenue streams on the other,all parties involved must recognize thatmany approaches will coexist. Flexibility,and willingness to consider new businessmodels, will help pave the way to success indelivering M2M applications. •1‘Tech Forward 2011: Global Consumer Study Results,’ Accenture 2011, http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_Tech_Forward_2011_Global_Survey_Detailed_Research_Results.pdf[Europe II 2013 • 7

Internet of things - M2Mutilities, train lines, oil and gas sectors pavedthe way. Sure the equipment was clunkyand horrendously expensive - you couldeasily lose £20m on a SCADA (supervisorycontrol and data acquisition) implementationor £500k on a simple BMS (buildingmanagement system) system with specializedboxes, bespoke software and a range ofcommunication media. It had to be missioncritical or generate major payback to getfunded and implemented, but these systemswere successfully installed all over the world.Some of us have been waiting years for thetechnologies and supply economics to arriveand make economic M2M scaling possibleand practical enough to widen into the IoT.M2M / IoT is one of the hottest propositionsever seen, but there is still no way to pick thefuture leaders. Will it be today’s network andsystems heavyweights, the device incumbents- or might it be an entrant from left field that‘gets it’ and isn’t constrained by a particulartechnology focus, the market, the inertia of itsorigins, or the legacy of its brand.Current scenarioHow often have you encountered such afertile Technology, Media and Telecomslandscape? Some of you you may recallthe beginning of commercial computingand the very slow long-distance datacommunicationsin the sixties; the moveto DOS (disk operating systems), randomaccess and databases in the seventies;the advent of the PC and Microsoft inthe eighties; the explosion of personalmobile communications in the nineties;and the ubiquitous Internet and ease ofconsumer connectivity in the first decadeof this millennium?Maybe it is the hour, for M2M / IoT; Ithink it can readily outstrip all prior growthstories. I see it as the combination of all ofthe above - but with a unique 21st centuryturn. It’s global, for sure, but the marketdrivers across the world and user attitudesare notably different. It has the capacity tounobtrusively pervade society as well asindustry and commerce.We, the technologists, will createhomogeneous service offerings and makethem work, despite the great variety ofdevice types and standards for almostevery - data transport, database standards,device protocols, cloud hosted or notand more - aspect of M2M. Then too,every implementation has its own uniquecharacteristics and usage profile. Tocomplicate the situation even more, there area great number of specific applications - eachserviced by its own eco-system.In this scenario, the 65 billion connectionsprojected by 2020 will be dwarfed by thenumber and frequency of connectionsmade. There will be lots of things talkingto each other - servicing and connecting allkinds of stuff throughout the world, takinginput from anywhere and everywherethat’s relevant to the users’ needs or theapplications’ requirements.Smart or not so smartDefining the elements M2M / IoT is difficult.M2M embraces almost any machine orsensor you can think of - and so it should.The challenge is to do this within realworldsettings. Some major players haveimplemented significant pilots, but they mayhave missed the key ingredient, which isservicing a diversity of users. The approachadopted by utilities - to monitor, manageand control - although necessary, is only partof the picture. The model is too inflexibleand stifling to deal adequately with thediverse needs of, say, a city, its communities,businesses, indeed, of its society as a whole.Devices need to be added, pooled orremoved without reference to some managedscheme. Once information becomesavailable it needs to become truly availableto all and there is no telling or controllingwhat the user will do with it. This bringsmany challenges, but it characterises thecritical choice - do we want a controlled IoTor a diverse, user-led community?The corporate situationBecause you’re big and established doesnot mean you’re best. It almost certainlymeans that you have financial muscle, butthat usually comes with corporate inertia andself-preserving layers of management. It isnot easy then, to be fast moving and marketresponsive. It is not easy to have all theright products marketed in most appropriatemanner to capture this market. It is just aseasy to get it wrong and fall out of favour.In M&A (mergers and acquisitions) we’veseen a major US loss making player in theM2M space sell for more than six times theirannual sales, and small specialists are beingswallowed up by major suppliers as they fillgaps in their evolving M2M portfolio or seekto create an offering in IoT.The first stage movers are the SME (small,medium enterprise) outfits with the insightand fleetness of foot to help create themarket, identify and address users’ needs, andimplement solutions and systems that willbuild scale for the market.The successful second stage movers areincreasingly the major corporations whoeither understand the needs of the marketwell - or will acquire the best in class SMEsthat do - and roll out an aggressive strategyto tackle the wider market by expanding theexisting base of customers who trust them.This is where we are at the moment. Thecorporate world and their advisors andthe private equity players have done theirresearch and are now trawling the M2M/IoT space to find opportunities to fulfiltheir plans and generate growth of a hugelyrewarding nature.Who will become the leading, third stagemovers, and achieve a meaningful share ofthe M2M/IoT industrial scaling and potentialglobal dominance - in the manner of Google,Microsoft, Amazon and Facebook currently,and IBM, GE and GM in the past? Whoknows, the door is open to new players asmuch as it is to the incumbents.VisionSo how do we see this unfolding scenario?Perhaps Anne Mulcahy who orchestrateda dramatic turn round within the XeroxCorporation said it best. She describedthe need to communicate the “visionwith imprecision” to help delegate toand empower management in a fastchanging and challenging environment.Establishing the future for M2M / IoT isa much greater challenge than that whichAnne encountered, but her view is entirelyappropriate for its development.Today, companies are developing keyenablement technologies and strategies sothat others can bring their vision of M2M/IoT and a remotely connected world tofruition. Organizations with any product,service or business model can now connecttheir own or their customers’ ‘things’,to relevant, external ‘stuff’, uniquelyportraying their offering in the Internet ofThings. An anarchic and challenging “visionwith imprecision”, that not everyone willgrasp or be able to implement. •Europe II 2013 • 9

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M2M - adding valueM2M - beyond connectivityby Anand Gonuguntla, Co-Founder & CEO, Centina SystemsIn the coming years, M2M promises to be among the most rapidly growing uses of mobilenetworks. The return on selling connectivity alone, however, will be low. Operators mustinvest in creating value-added services that help end users turn their M2M data into valuableinformation and services. Since the ARPU for M2M is low, operator must depend upon thequality of service, flawless connectivity and bandwidth to retain customers and the efficientprocessing of large volumes to build profit margins.Anand Gonuguntla is the Co-Founder, President and CEO of Centina Systems; he has over 15 years’ experience in the telecom industry.Prior to his current role, Mr Gonuguntla was the Director of Systems and Software Engineering at Xtera. Mr Gonuguntla also heldmanagement positions in software and program management at Fujitsu. He has published papers in the Proceedings of the ACM andholds a patent in network management.Anand Gonuguntla holds a master’s degree in Electrical Engineering from the University of North Dakota, and a bachelor’s degree inElectronics and Communications Engineering from Jawaharlal Nehru Technological University, India.Machine-to-machine (M2M) communicationsare poised to take off, as the ubiquity ofmobile broadband and the adoption of cloudbasedservices and processes, continuesapace. The so-called Internet of Things,which which promises to connect everythingfrom cars and utility meters to refrigeratorsand sofas to the cloud and to each other, is avision with the power to transform industriesas well as lifestyles.To dominate M2M services effectively,operators will require a number of newOSS/BSS and back-office features thatoffer visibility into network and serviceperformance in a granular, real-time way.Operational challengesGenerating revenues with M2M requires, firstand foremost, operational efficiency. As withclassic telematics, the ARPU per device willbe small, so the business model depends uponvolume and bolstering margins by reducingcosts. Operators are moving to open-accessplatforms, networks and policies to encouragerapid service growth based upon Internetconnectedinnovation. This, nevertheless, putsadded pressure on operators to reconsider theirbusiness models and BSS/OSS investments,to drive increasing operational efficienciesand improved agility in order to capture thegrowing cloud services opportunity.M2M also drives a renewed focus onassuring the customer experience. ManyM2M deployments are mission critical:consider smart grid, remote-controlledheating and cooling systems, or connectedcars - all of these implementations havelittle tolerance for downtime. Operator whocannot guarantee service levels, connectivityand bandwidth to support these services willnot survive in this market.Many of these services will be running onmobile data networks - a finite resource. Asthe proliferation of M2M devices escalates,operators will need to employ a performancemanagement solution that gives them controlover network resources, so that they canbetter correlate data consumption to networkcapacity, thus ensuring maximum payback ontheir network investments.Further, according to a report from theCarbon War Room, a big barrier for serviceproviders trying to roll out new M2Mservices is a lack of performance data -this makes it difficult to prove ROI to endusers. “Potential clients need to understandM2M technologies’ value proposition asthese technologies often require significantEurope II 2013 • 11

M2M - adding valueupfront investment,” the report said. “Actualdata and analytics for making projectionsand monitoring results have not been fullyintegrated into products or sales”.Thus, operators must work to build datacollection and analytics into their offerings.“By creating and updating tools to providerobust metrics, companies can help maketheir value proposition more apparent topotential clients,” the firm said.Assessing the marketAs of today, there are about 1.5 billion WebconnectedPCs and fewer than one billionWeb-connected phones. Famously, EricssonCEO Hans Vestberg predicted last year thatthe Internet of Things would reach 50 billionendpoints by 2020. That roughly translatesinto seven devices for every single personon the planet, and generally suggests thateverything - and that means everything - willbecome a wirelessly connected device, fromgas pumps to refrigerators to cars.More near-term, however, the scope of theopportunity is significant for the operatorwilling to take the operational challengeson head-on. A recent study from JuniperResearch has found that the telematics andconsumer electronics sectors are rapidlybecoming the two anchor industries for theM2M market, challenging the heretoforedominantposition of smart metering as thearea with the most actual deployment. Thereport forecasts that the market for M2M andembedded devices will reach 400 million bythe end of 2017, up from a little more than110 million at present.Analysts are beginning to agree when itcomes to the rate of growth for machineto-machineconnections worldwide. IMSResearch for instance expects the marketto more than triple by 2016 compared to2011, reaching around 326 million devicesas carriers look for growth opportunitiesby rolling out new tools and platformsto facilitate the development of mobilebroadband M2M applications. Berg Insightessentially agrees, forecasting 359.3 milliontotal M2M connections in 2016.Juniper Research predicts that revenue fromproducts and services delivered via embeddedconsumer electronics devices will reachUS$6.4 billion in 2014. According to IMS,operators will be looking for more waysto get revenue out of the M2M market as itexpands; the research firm estimates that only10 to 30 percent of the overall value in theM2M market comes from carriers providingactual connectivity for devices. As such,carriers are looking to get more revenueproviding value-added services to solutiondevelopers as well as end-to-end applicationsto end-users.Operators with the right operationalinfrastructure can find added value beyondpackaging devices and connectivity together.“Mobile operators are not simply providingmanaged connectivity services to the cellularM2M market but increasingly are connectingthe dots among M2M ecosystem players,including suppliers and developers - andthis benefits the market as a whole,” saidIMS analyst Sam Lucero. “Examples of thisproactive role by mobile operators rangefrom establishing module supply programsto developing partnerships with platformvendors and solution suppliers to reduceoverall complexity in the value chain”.While connectivity is critical for M2Madoption, the challenge is for M2M telcos toprovide both connectivity and the intelligenceto improve customers’ productivity.“The key to revenue in M2M space is inthe intelligence component of the M2Mequation”, said Frost & Sullivan seniorindustry analyst, Yiru Zhong. “Becauseintelligence has different meanings andvalue to different customers, Frost &Sullivan expects an M2M telco marketleader to emerge by tailoring a menu ofM2M intelligence for a broad spectrum ofcustomers - including small and mediumsizedenterprises (SME) - and by offeringboth communication and computingcapabilities to simplify customers’ M2Madoption processes.”A solid OSS foundation with granular,near real-time visibility into the customer’snetwork and service performance is one biglinchpin to achieving that kind of intelligentnetwork approach to the M2M opportunity.Market lessonsTier 1 machine-to -machine (M2M) telecomservice providers in Europe are seeking waysto move beyond basic connectivity to avoidcommoditization, particularly given the entryof operators focused on providing wholesaleM2M capacity - that is depressing pricing inEurope already.Frost & Sullivan’s Zhong points to DeutscheTelekom’s M2M Marketplace platform asan example of how to find new revenuesources as the average income fromM2M connections declines. DT’s M2MMarketplace approach is unusual; it promotesa technology- and user-agnostic tradingmarket aimed at bringing buyers and sellerstogether, indirectly allowing the DT platformto cover a wide range of customers.Other operators, including Telefónica’s O2,Orange Business Services and VodafoneGlobal Enterprises are also pushing forwardwith their M2M strategies, according to Frost& Sullivan, but Zhong warned that whilemany European operators have strong ITcapabilities that lets them precisely monitorservice performance, only a few have clearand consistent capabilities that match theirmobile footprint.“The first measure of success was winningmajor car original equipment manufacturer(OEM) contracts and smart meter projects,”Zhong said. “The challenge is to convertthese relationships into more than M2Mconnectivity contracts.”Juniper Research’s Anthony Cox noted thatcompetition is set to get steeper. Russia’sMegafon and Sweden’s TeliaSonerawill use cloud-based infrastructure fromEricsson to support fresh M2M initiatives.He said that what operators really need inthe M2M environment to bolster revenuesand profitability is the ability to activateand manage devices without incurringsignificant cost.“Appreciating the unique challenges thatM2M holds has led a host of players inthe M2M industry, from module vendorsto operators, to create the applicationprogramming interfaces (API) that reallybring value to M2M,” said Cox. “M2M,after all, is as much about creating valuefrom the information that connected devicesfeed back (to humans and other machines) asconnecting them in the first place.”Despite the rapid pace of change andinnovation, savvy operators can tailor anOSS strategy for M2M that involves notjust guaranteeing connectivity, but also thecustomer’s experience across a plethora ofdevices. Operators will need to provide theirM2M end users with a full range of analyticsand leverage that information to provideadditional IT-oriented managed services. Thisrequires additional software investment, butas 2013 promises to see a growing wave ofM2M adoption, it’s an investment operatorscannot afford to pass up. •12 • Europe II 2013

M2M challengeThe M2M potentialby Kurt Groth Bager, Chief Executive Officer, NetopM2M growth has accelerated recently because of inexpensive electronics, the Internet,cloud-based connectivity, and cheap sophisticated devices that can collect data easily. Thisdata - stored, analysed or forwarded as needed - is becoming a basic building block of BigData. Among today’s major users are utility companies with smart meters for remote readingand control. M2M is increasingly used to monitor the elderly and bed-ridden. Smart cars arealready available; Google is testing its driverless car on public roads.Kurt Groth Bager is Chief Executive Officer of Netop. Mr Bager has extensive experience in sales and marketing of IT solutions and manyyears of international leadership experience in several European countries.Kurt Groth Bager is an Electronic Engineer; he also holds a Bachelor of Commerce degree in Management Studies, Management &Cooperation and Public Economics.Although the Terminator film franchise is farfrom the world of reality, it is an indication ofone possible future and perhaps the ultimateM2M nightmare. Others obviously feel itis possible; Cambridge University has beencommissioned to investigate the likelihoodthat machines could destroy the human race.Machines that can communicate are far fromnew. M2M communication has long beena feature on factory production lines wheresimple networks of sensors and controlmodules have been in place since the early20th Century. Not quite the world dominationthat Arnold Schwarzenegger acted out, butsome significant industry analysts that in timemachines of various sorts will outnumber justabout everything.The Internet of thingsSince the creation of information technology,use of M2M communication has beengrowing. What has changed is the availabilityof inexpensive electronics, the use of Internetprotocol, and connectivity in the form ofcloud computing and modern ubiquitousnetworks. This perfect storm of technologyhas enabled sophisticated, but cheap, devicesto collect data easily. This data can be stored,analysed or forwarded as needed. It is thestart of the capture of base information thatwill form the building blocks of the currentlyfashionable Big Data, and has driven a hugestep forward in M2M adoption.There are already thousands of smartdevices around the world, all with sensors,all connected and all sending informationsomewhere. If you haven’t heard it before,the term the ‘Internet of Things’ (IoT) willsoon become commonplace and the ‘things’ itdescribes are those very smart devices.Opportunities and challengesAlthough no one is really certain, ifanalysts’ predictions come true, theestimated five billion devices currentlyin operation could grow to more than 50billion by 2020. The true numbers areaffected by uncertainties in the definition ofwhat an M2M device is, but whichever wayyou define it, it is going to be big.However, while this growth will uncovernumerous opportunities, it will also presentsome challenges. We need new legislationto address new issues particularly regardingprivacy, legacy equipment and societyin general. Security will also need to beimproved, and as M2M communicationbecomes more pervasive, businesses andsocieties will become increasingly importantto each other in order to provide informationto users.A growing number of governments havealready initiated projects that utilise M2M,as they recognise the potential for economicand social development. Many will providemonitoring for public services such asweather monitoring or transport. There arealso applications for health services - anotherarea of great potential.However, progress will inevitably createsome legacy challenges including for theEurope II 2013 • 13

M2M NetworkA living networkby Mario Rizzante, Chairman, ReplyThe world of M2M, the Internet of things - as well as the other Internets of people, energymedia, service and the many yet to be invented - depend upon the pervasive, ubiquitous,availability of networks. The Internet, in all its forms, will be the operating system of oursmart cities and therefore, our lives connecting us with all ‘things’ around us. We still needto build applications and services to serve us better; it’s a living network a work in progress!Mario Rizzante is the Chairman of Reply, a consulting, systems integration and application management company, specialising inthe design and implementation of solutions based on the new communication channels and digital media. Prior to Reply, he workedfor Digital where he developed his conviction that the key element for a company’s success lies in its service management. Earlier, asan entrepreneur Mr Rizzante launched the System Integration company Mesarteam. Mr Rizzante started his career in Fiat, where hemanaged several plants automation projects.Mario Rizzante is a Computer Science graduate from the University of Turin.The ‘network’, the Internet, has been thefoundation of our businesses since itsinception. On it we have built our presentand are building our future. The Internet isevolving and we are involved in the work ofthe future Internet, as defined by the FutureInternet Public-Private Partnership, whichsees a proliferation of different internetsand, specifically, an Internet of Things (IoT),Internet of People (IoP), Internet of Energy(IoE), Internet of Media (IoM) and Internetof Service (IoS). The vision is to drive amerger of a common global IT platforms, ofdifferent networks and of connected people,computers, smart objects, smart vehicles,homes and ‘things’ in general.IoT and Machine-to-Machine (M2M)are terms that have often been usedas interchangeable expressions, but inreality M2M is a subset of a much largerecosystem. M2M refers to a system,normally wireless and with a SIM, wherea device (sensor or meter) communicatesa parameter (temperature, energymeasurement, etc.) to an applicationthat turns the information into an action.Think of a modern vending machinecommunicating to the central systemthat its stock of soda cans is runninglow. Internet of Things refers instead toan infrastructure of physical and virtualobjects that communicate, self-configureinto networks that are interoperable andhave a ‘sense’ of the environment and thecontext in which they operate. In this sense,IoT is not simply a pervasive computingsystem, a communication technology,RFID or a Wireless Sensor Network, but anintegrated ecosystem of all of the above andmuch more.The Internet of Things has been the focusof Research and Development centresaround the world. Very large investmentsare in place to develop knowledge, specificexpertise and assets to best serve clients inneed of an end-to-end solution applicableto their business. We have seen thelaunch of a few proprietary platforms anddifferent vertical solutions, each dedicatedEurope II 2013 • 15

M2M Networkto a specific application in a given targetmarket. The issue with some of these earlierproprietary implementations is that they areclosed to other systems and uses.It is not possible to make use of theseapplications or the data they generate forother purposes, or even interact with similarsystems. A glucose meter that communicateswith my smartphone and stores the data ona server somewhere in a format not readableby other systems is of limited use. Given theneed to respect a patient’s privacy, the datashould be available to authorised doctors, thelocal hospital or health care system that havean electronic patient record.Applications with similar purposes shouldbe interoperable with similar sensors,independently of the brand or application.To accelerate the development of customsolutions, we need software and hardwareplatforms that maximise the reuse ofstandardised key components and usestandard protocols to remain interoperable.The use of standards such as TCP/IP, WebServices and communication technologiessuch as WiFi, NFC, and ZigBee is essentialto produce standard and interoperablesolutions. The use of open source hardwaresuch as Arduino or Raspberry PI allows forrapid prototyping and low cost solutions.The goal should be that the rest of thenetwork sees each object as a service - inparticular, a web service, so that manydifferent simpler services can merge or meshtogether to seamlessly create higher level,more complex, services.By 2020, billions of devices willcommunicate, interact and most likelyhave a digital image of their status onthe network. This will not only create amassive amount of data, but also the needfor powerful engines to make sense ofthis staggering quantity of heterogeneousinformation. The latter has been thedriver of the development of contextawareness technology, which we believeto be the essential attribute of a trueInternet of Things.Context and location are fundamental inputsto make sure the billions of connecteddevices collaborate to produce value addeddata for higher-level services. Sensors,objects and their services generate data inneed of correlation and contextualization.For example, the temperature going up in aroom can mean completely different thingsdepending on the context: an alarm if it isrising at an unusual rate; the fact there is ameeting, if a projector is functioning andmore people are inside, etc. Understandingthe context, and automatically takingdecisions derived from the analysis of datacoming from different and heterogeneoussources, is at the root of M2M technology.In the aforementioned example, based onthe context, the central building automationsystem can decide to intervene with a fireprevention action or simply turning up theair conditioning. Imagine a smart irrigationsystem capable of deciding on its own notto water one day because of forecasts of rainthe next. This system puts together sensors inthe garden with weather info web services.Imagine a painting in a museum, or your ownTV, communicating with your smartphoneto enhance your viewing experience andproviding additional, personalized andcontextual information. All of this is not farfetchedand has been part of the deploymentof IoT commercial solutions.The above examples show how the Internetof Things is closer to reality than mostpeople think. The journey ahead is still long,but many solutions have real commercialviability now. Take mobile payment platformsas another example. The idea that, dependingon the situation I find myself in, differentways of paying for goods or services willbe presented, is a great convenience for theend user. If close to a bus stop or at a movietheatre my digital wallet proposes the optionto buy a ticket for that specific use, theticket is immediately delivered in its digitalform to my wallet. Utilising this method, Ihave greatly simplified my purchasing andpayment habits and, at the same time, createdan opportunity for a business ecosystem(banks, credit cards, services, business,loyalty programs) to develop.Cars are another interesting and concreteexample of smart objects, which will gofrom just receiving information (GPS, radiobroadcast), to becoming two-way smart nodesof our cities. Next generation infotainmentsystems already on the market willcommunicate with central data aggregatorsor vehicle-to-vehicle, to exchange criticaldata and services. From CO2 emissions tobattery status, from remote door lock/unlockto remote maintenance, to e-call in the caseof an accident, these are all real life examplesof the value of a connected car. We alreadypay tolls electronically on many highwayswithout stopping, or congestion charges inmajor metropolitan areas and using the samesystem to pay when parking our cars.Today, connected vehicle systems integratesmartphones and tablets with the local carnetwork, allowing the exchange of services.Compatibility among systems is insuredby common operating systems. An LTEsmartphone connection to the network willallow us to enjoy our favourite streamingradio broadcast or movie in the backseat, whilst the modem inside the car willcommunicate mission critical data, such asmalfunctions, or will connect to the PublicService Access Point to get help in the caseof accident.Furthermore, another large part of thisinvisible digital layer, on which we arebuilding the cities of the future, is the SmartGrid. The network infrastructure that willclose the gap between the utilities networkand the Internet, allowing energy to begenerated, transported, stored, when it’sneeded and where it’s needed, and boughtand sold at the best possible price. The datarelated to this process will follow the samepath and serve both businesses and privatecitizens at the same time.Smart electrical meters are already a reality,gas and water smart meters will followshortly; in home displays will aggregate andgive feedback to us as accurately as possibleon how much, and how, we are using ourenergy in real time. The very next step willbe to implement demand/response systemscapable of closing the gap between whoproduces energy and who uses it, takingaction on the feedback received. Profiling theenergy user and controlling the environmentaland climate parameters allows the generationof energy only when it’s needed and also tocoordinate and manage the distribution ofenergy coming from different, preferablyrenewable, sources. The availability of thiskind of data generates new commercialopportunities for agents, such as traders andvirtual energy operators.We think of the Internet, in all its differentforms, as the operating system of oursmart cities and therefore, our lives. Thisoperating system will continue to evolve andbecome part of our daily life, connecting all‘things’ around us. It’s up to us to build itsapplications and services to make it serveus better. We are working hard at building aliving network! •16 • Europe II 2013

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The future of M2MPutting M2M in perspectiveby Jim Morrish, Director and co-founder, Machina ResearcMost device s used by businesses, industries and individuals are stand-alone mechanismsthat cannot be accessed over a network or the Internet. M2M promotes an environment wheredevices connected through the Internet can share virtually any type of information. This alsoprovides an incredible amount of information, Big Data, that if ‘mined’ or ‘harvested’ couldfundamentally change the way companies and individuals conduct business. M2M with nearfield communications can help get information to the right place at the right time.Jim Morrish is a Director and co-founder of Machina Research, a specialist telecoms research and consulting firm focusing principallyon the emerging opportunity associated with new forms of connected wireless devices. Mr Morrish has over 20 years experience ofstrategy consulting, operations management and telecoms research in more than 25 countries worldwide.Mr Morrish’s previous experience includes strategy consulting for Booz & Co, project management and board membership at Cable &Wireless, Head of Department at the BBC and also work as a freelance consultant.Jim Morrish holds an MA in mathematics from Oxford University.M2M is going to be hugeOver the coming decades, Machine-to-Machine connected devices are set to pervadeall aspects of our daily lives. Exactly howmany connections there will be and whenis the matter of some debate, but withoutexception all forecasts of M2M anticipateextremely rapid growth.A significant element of the variation inM2M market forecasts is due to the fact thatthere is no agreed definition for M2M. Themost useful technical definition of M2M is“Connections to remote sensing, monitoringand actuating devices, together withassociated aggregation devices”.Based on this definition, M2M connectionsworldwide will grow from 2.4 billion in 2012to 18 billion in 2022. In 2022, the IntelligentBuildings sector will represent 37 per centof connections, Consumer Electronics 32 percent, Utilities (particularly smart metering)ten per cent and Automotive eight per cent.Healthcare will represent a further five percent of connections, and Smart Cities andPublic Transport another four per cent. Inrevenue terms, M2M represents a US$1.25trillion opportunity in 2022, of which US$780billion relates to device sales, US$60 billionrelates to installation and US$400 billionrelates to services.Some M2M sectors are already mature,others will grow rapidly in the next fewyears and many are still in their infancy andwill not truly take off for decades. It is clearthat M2M connections will continue to growstrongly for many years.It is also worth noting that not all M2Mconnections are equal. It’s not just the numberof connections that will be increasing overtime, but the level of sophistication of thoseconnections. The most basic M2M connectionswill be device-centric and may only providebasic information on a reactive basis. It is onlythe most sophisticated and advanced M2Mconnections that really have the qualities thatare often associated with our ‘connected’ future.That ‘connected’ future is discussed in moredepth later in this article, but it may be useful tointroduce here our hierarchy of M2M .Stage Description Comments1 Reactive information • Devices can be polled for information, or provide information according to a set timetable2 Proactive information • Devices communicate information as necessary3 Remotely controllable • Devices can respond to instructions received from remote systems4 Remotely serviceable • Software upgrades and patches can be remotely applied5 Intelligent processes • Devices built into intelligent processes6 Optimised propositions • Use of information to design new products7 New business models • New revenue streams and changed concept of ‘ownership’8 The Internet of Things • Publishing information for third parties to incorporate in applications18 • Europe II 2013

The future of M2MSo, whilst we are not expecting quite so manyconnections as some market observers, we doexpect that both the number of connectionsand the sophistication of those connectionswill be growing strongly for decades tocome. In 2020, the market for M2M willstill be young. By 2050 it may be mature.In many ways the debate around how manyM2M connections there will be in the comingdecade distracts from the fundamentalchanges that M2M will usher in over thecoming several decades.It is worth noting the technology skewpresent in the connected future: 73 percent of M2M connections in 2022 willbe short range in nature (including WiFi,Ethernet, in-building powerline, ZigBee anda range of other standards). Cellular willaccount for 2.6 billion M2M connectionsin 2022. Although an impressive number,this figure represents only 14 per cent ofM2M connections. In turn, cellular M2Mconnections will represent 22 per cent of allcellular connections in 2022.While the figure of 2.6 billion is theexpected cellular M2M market size for2022, we recognise that there are biggeropportunities for wireless operators: by2022 there will be four billion non-cellularconnections for which wireless wide areatechnology could add value to applications,and a further one billion connections forwhich wireless wide area technologiescould compete on the basis of price. So theactual number of wireless wide area M2Mconnections in 2022 could be over 7 billion,or 40 per cent of all cellular connections.The key to unlocking this potential liesin the level of pro-activity that mobileoperators bring to bear when targetingM2M applications, potentially extending todeveloping a recognised sector expertise,such as in the fields of healthcare or security.Other tactics open to communicationsservice providers include leveraging existingdistribution channels (particularly high streetshops for consumer M2M applications)and enabling the cellular M2M modulesindustry to gain scale through standardisationor investing in new wide-area wirelesstechnologies.Big Data: ‘Subnets of Things’ will trump the‘Internet of Things’Another area where we need to lookbeyond the hype is Big Data and theInternet of Things. I group the twoconcepts together, since Big Data analyticswithin M2M really only exists within thecontext of heterogeneous informationsources which can be combined foranalysis. And, in many ways, the ‘Internetof Things’ is exactly definable as anetwork of heterogeneous devices.Right now, the world of connecteddevices could best be characterisedas multiple ‘Intranets of Things’. Forexample there are increasing numbersof connected smart meters, but the datathat these produce is generally used fora single purpose (analysing, pricing andbilling for power consumption).The next step must be to integrate ‘islands’of connected devices to create a ’Subnets ofThings’. These would typically be driveneither by a single point of control, singlepoint of data aggregation, or potentially acommon cause. For example, it is not hard toenvisage an emerging subnet of things arounda smart city: local authorities would oftenhave access to data relating to congestioncharging, public transport, parking spaceavailability, air pollution and potentially awhole range of other data sources.Healthcare is another front-runningcandidate for emerging ‘Subnets of Things’and where the Continua Health Alliancestandards and Qualcomm’s 2Net are bothcandidates for forming the kernels ofconnected device ecosystems.The potential benefits of such ‘Subnets ofThings’ are immeasurable, including (andby no means limited to): streamlining publicservices; reducing carbon footprints, and;massively improving healthcare provision.To move from these ‘Subnets of Things’ toa full ‘Internet of Things’ environment willbe a difficult step. It will involve aligningdata points from a huge range of disparatedevice types, ideally at an individual user,or individual device level. Cue all mannerof privacy and standardisation issues.Establishing a fully-fledged ‘Internet ofThings’ will be far harder than establishingsimple ‘Subnets of Things’. And it’s notclear that a fully-fledged ‘Internet of Things’is really much more useful than a limitednumber of ‘Subnets of Things’?Near field communications need rather morehypeRight now, the overwhelming focus in thearea of near field communications is aroundpayments solutions and NFC as a technology,but that’s missing the point. There are many,many, more things that can be done withnear field communications technologies,not least bootstrapping for higher leveltechnologies such as WiFi and Bluetooth.An example of such a system is Sony’s OneTouch, and Qualcomm are working to bringan equivalent ‘open’ (manufacturer agnostic)standard to market. And there is a wide rangeof technologies that can support near fieldcommunications applications, even including,and for some applications, printed codes.Ultimately, it is a range of near fieldcommunications technologies that will leadto connectivity engrained in our daily lives.Wide area technologies will, of course,play a strong supporting role, particularlywireless technologies. But, ultimately, it isan individual’s interaction with their localenvironment and the way in which thatlocal environment reacts to the presenceof that individual that will characterise our‘connected’ future. And the essentially localinteractions that are required to bring aboutthat future ‘connected’ experience will, in themain, be supported by various kinds of nearfield communications technologies.Clearly, then, the opportunity for near fieldcommunications, (the concept) needs to beanalysed in the context of an understanding ofthe range of technologies that can substitutefor NFC (the technology) in differentsituations, and also an understanding of allof the things that can be done with near fieldcommunications type technologies.This is not a simple analysis to undertake. Forexample, it is clear that functionally similarapplications using a (true) NFC solution and a QRcodebased near field communications solutioncan have vastly different ‘cloud’ and supportinginfrastructure needs, and will have vastly differentattendant security and privacy issues.Even within the NFC’s commonlyrecognised domain (i.e. payments ofdifferent types), current thinking needs tobe pushed further. There is the real prospectof NFC-type solutions ultimately leadingto a (near) cashless society. Of course, thisvision of a cashless society lies a long wayin the future, but now is an appropriatetime to start considering the dynamics andimplications of that future environment.And also the potential of near fieldcommunications as a concept, rather thanNFC as a technology standard. •Europe II 2013 • 19

White space M2MThe new M2M paradigm and the Internet of Thingsby Professor William Webb, CTO, NeulM2M is a technology whose time has come - almost. M2M is based upon communications,but almost none of the existing communications technologies is fully suitable for the majorityof M2M applications. Weightless is a proprietary, royalty-free, open standard for wirelessmachine-to-machine communications using TV white-space spectrum. The standard wasdesigned to minimise cost and power consumption, it uses a chipset costing less than US$2,and has a range of up to 10km and a battery life of 10 years.Professor William Webb is the CTO of Neul, a company focusing on machine-to-machine communications using TV white-space spectrum.Dr Webb has been a key figure in shaping spectrum policy across Europe through his work at Ofcom, the UK Communications regulator.As Director of Technology Resources, William managed Ofcom research and development and led a number of key policy initiativesincluding the Spectrum Framework Review, the development of Spectrum Usage Rights and most recently cognitive or white space policy.Professor Webb has published eleven books, eighty papers, and four patents. He is a Visiting Professor at Surrey University andDeMontfort University and a Fellow of the Royal Academy of Engineering, the IEEE and the IET where he is a Vice President. Dr WilliamWebb has a first class honours degree in electronics, a PhD and an MBAYou don’t have to be at the forefront oftechnology to have been touched by thefundamental shifts in the way we areglobally embracing Smart Cities, SmartGrid, Smart Meters, Big Data, M2M and theInternet of things.Today’s developments will continue toevolve way beyond what we can imaginetoday. But, at the start of 2013, it’s clear thatwe are already seeing themes and patternscoalesce and models being deployed torealise the visions that have been buildingover the last few years. 2013, more thanany other, is set to be the year we will startseeing the promises unfold into reality.We will see the early evolution of trueSmart Cities across the globe with almostevery country in the developed worldannouncing plans for at least one and inmany cases several. Even in the developingworld we will see multiple examples andinterpretations of what a Smart City is andwhat it means to its citizens and commerce.Smart Grid and Smart Metering arehigh on the agenda of every utilitycompany worldwide with the inevitablepainful process of consumer acceptancedominating certain sectors of themedia, right now in the US - a goodindication that the technology has movedconvincingly from the laboratory intothe real world. All of these phenomenaultimately have one unifying factor.They require connection. Connectionsbetween the elements that make up thesystem whether they are a utility meter,a traffic light or a society are the key tomaking intelligent systems work. Theremight be a hundred nodes (or terminalsor edges depending on your industry) inany system that needs to be connected tomake it intelligent. Once the infrastructureto connect multiple elements is in placethe number of connections will acceleraterapidly until everything is connected.What is the technology that will enable theseconnections to take place and what will holdit together? One thing is for sure, it will bewireless. The sheer number of connectionsmeans that wired connections will simplynot serve the needs of most systems anddistance will often makes traditional LANsinappropriate. There are many short-rangetechnologies that come closer to the pricesneeded for commercially feasible machinecommunications applications, includingWi-Fi, Bluetooth, ZigBee and others.These, however do not provide the rangeand coverage needed for applications suchas automotive, sensors, asset tracking,healthcare and many more. Instead, theyare restricted to machines connected withinthe home or office environments. Even inthese environments a wide-area solution isoften preferable. For example, an electricitysupply company is unlikely to connect theirmeter via, a Wi-Fi home network; werethe home owner to turn this network off,fail to pay for their broadband subscriptionor change the password on their homerouter, then connectivity could be lost.Restoring the connection could be slow and20 • Europe II 2013

White space M2Mcostly and maintaining security on a homenetwork might also be difficult. Short rangetechnologies are not the solution.Optimal connection regimesThere’s the obvious network carrier -traditional telephony based cellular orGSM/3G/4G technology, and this is whatmany current machine communicationsolutions use - and it works. Sort of.The M2M market has not reached itspotential. The commercial opportunity isan order of magnitude greater than thatof traditional telephony based cellulartechnologies. Tens of billions of devicesare projected to be connected - an order ofmagnitude greater than that of cellphones.That’s more than ten per person on theplanet and potentially worth more than atrillion dollars by 2020 - so what’s goingwrong? Why isn’t the telephony modelright for machine communications? Thereare several definitive and fundamentalreasons: cost, power consumption and signalpropagation characteristics.Cost is absolutely critical in any systemwith some tens of billions of terminals.GSM and derivative technologies carry asignificant cost throughout the value chain -the hardware cost at the terminal end aloneis typically about US$20, depending on thecellular technology used. Subscription costsare about US$10 per month to amortize thecost of the network infrastructure. These costsare unsustainable for many applications.Power consumption for a wireless device isfrequently critical. It’s critical because bydefinition the device is remote, or at least notcommercially feasible to attach to the grid.That gives rise to the need for, in virtuallyall cases, battery power and that makespower consumption a critical parameter.GSM based protocols are designed for acompletely different regime and are illsuitedto the short message sizes in machinecommunications. They result in extremelysignificant overheads associated withsignaling in order to move terminals frompassive to active states, report on status andmore. Additionally, GSM based technologiesnecessarily require sophisticated processingpower at the terminal end of the link toprovide for seamless handoff between cells,roaming and high bandwidth applicationssuch as streaming video - and this comes atthe expense of power consumption.So while traditional GSM basedtechnologies can capture a smallpercentage of the market it cannot meet therequirements of the 50 billion plus devicemarket; if it could, it would have done soand there would be no further debate aboutthe need for new standards.Free spectrum is the game changerA new option has emerged for spectrumaccess. This is the use of the whitespace spectrum - the unused portionsof the spectrum band in and around TVtransmissions. White space meets all of therequirements for M2M communications: itis unlicensed, so access is free; It is plentifulwith 150MHz of spectrum available in mostlocations - more than the entire 3G cellularfrequency band; it is globally harmonised- the same band is used for TV aroundthe world; finally, it is in the perfect lowfrequency band which enables excellentpropagation without inconveniently largeantennas in the devices. White space isthe paradigm shift; access to this spectrumprovides the key input needed to make thedeployment of a wide-area machine networkeconomically feasible.White space access requires specific networkand terminal design characteristics in order tocomply with stringent regulations. These callfor interference free sharing of frequencieswith the primary users of the spectrum, TVbroadcasters and to a lesser extent, wirelessmicrophone operators. Relatively low outputpower is specified, an order of magnitudelower than telephony based cellulartechnologies (GSM/2G/3G/LTE). The FCChas specified just four Watts for base stationsand 100mWatts for terminals. Stringentadjacent channel emissions are specified.White space devices must not interfere withexisting, primary users of the spectrum. Theenergy that they transmit must remain almostentirely within the channels that they areallowed to use. The FCC has specified thatadjacent channel emission need to be 55dBlower than in-band emissions, a specificationmuch tighter than most of today’s wirelesstechnologies. And finally channels areallocated according to geographicallocation to further eliminate interferencesince different frequencies are used by TVtransmitters in different locations. Devicesmust consult an over the air database to gainchannel allocation data and to rapidly vacatea channel if it is needed by a licensed user.Design rules for M2MThere are many benefits to the designof a standard specifically for machinecommunications. Machines are verydifferent from people and the system designneeds to accommodate these differences.Machine communications typically havea much shorter message size that humancommunications - with the exceptionof SMS text messages. Most machinesonly send a few bytes of information ona periodic basis whereas a human maydownload megabytes of information ortransmit many sequential data packets forvoice communications. Machines are moretolerant of delay - most are unaffected bya few seconds of delay whereas this wouldquickly become frustrating to humans. Andfinally machines have generally predictablecommunications patterns that send data atregular intervals and so can be pooled onthese occasions. Human communications aretypically unpredictable and, so, must oftencontend for access resources.Systems made specifically for machinecommunications can be designed for muchgreater efficiency and offer greater capacitywith lower cost and power consumption thanwould otherwise be the case.About ‘Weightless’Weightless is a proprietary, royalty-free, openstandard for wireless machine-to-machinecommunications using TV white-spacespectrum. The use of white-space spectrum,together with the unique characteristics ofM2M traffic, compared to human traffic,means that the use of existing standards isfar from optimal. The Weightless standardis optimised for this specific scenario andprovides TDD (time-division-duplexing)operation with a wide range of provided datarates depending on the application, rangeand operating environment. The standardwas designed to minimise cost and powerconsumption, featuring a chipset cost of lessthan US$2, a range of up to ten km and abattery life of ten years. •Europe II 2013 • 21

MessagingGoing to the web - the transformation service deliveryby Jorgen Nilsson, CEO, AcisionMobile operator messaging is running into stiff competition from a variety of over-thetop(OTT) services. OTT services delivered over the Internet are generally free; traditionalSMS and MMS services delivered over mobile networks and are paid for. Internet serviceproviders, device manufacturers and a world of messaging application developers now offermessaging services. Among the players are Skype, BlackBerry, Apple, WhatsApp, Googleand Samsung. Mobile operators are finding that it might be better to collaborate with thenewcomers than fight.Jorgen Nilsson is the Chief Executive Officer at Acision; he has more than 30 years’ experience in Senior Executive roles at leadingblue chip companies including Ericsson and Compaq. Prior to joining Acision as COO, Mr Nilsson worked at Ericsson where his mostrecent position was Executive Vice President and General Manager of Vodafone’s Global Customer Unit. Mr Nilsson was also part ofEricsson Group’s Extended Executive Team. Other roles at Ericsson included, Head of Sales & Marketing for North America. BeforeEricsson, Mr Nilsson worked at Compaq, where he held various global sales, marketing and operational roles and at Telia, part of theTeliaSonera Group.Jorgen Nilsson holds a diploma in Economics from Celsius College. More recently Nilsson completed the Corporate Executive programfor Science of Strategy & Execution at Columbia University Business School.In recent years, the mobile landscape hasevolved at a remarkable pace. We havewitnessed the adoption of a new breed ofservices and applications; all powered bysmart devices and ever-faster IP networks.As part of this mobile evolution, driven bydisruptive, innovative technology, we arealso experiencing a transformation of mobilemessaging - hitting an inflection pointwhere more and more over-the-top (OTT)messaging apps are inundating the marketfuelled by ever more sophisticated digitaladvances and devices.Internet players, device manufacturers and aworld of messaging application developersnow infiltrate a space once predominantlyled by mobile operators with messagingservices such as SMS and MMS. Playersincluding Skype, BlackBerry, Apple,WhatsApp, Google and Samsung have allsucceeded in developing their own mobileorientatedapplications; they capitalised onthe smartphone’s capabilities as a personalInternet access device and triggered amessaging revolution.While SMS is still the most popularmessaging service today, generating hugeamounts of revenue, these new breeds ofmessaging services are taking the world bystorm. The enriched user experience and theuser’s perception that these services are free,is driving rapid market uptake; this has putincreased pressure on operators’ messagingrevenue as users opt for these ‘free’solutions when online, over other methodsof communication.It is interesting to note that in this new realmof Internet messaging, the very notion of howthe mobile user perceives a message is nolonger the same as it once was. Whether text,multimedia or video, a message is a message- there is no difference in the content. Afterall, in today’s world when using the Internetto deliver a message, which is largelyperceived as free, why would the consumercare about the message content as long as it isdelivered? Unlike traditional platforms, youdon’t need to pick a service based on the typeof content sent; this and its no cost price tagincreases the service’s uptake.22 • Europe II 2013

Messaging“Today, it is important for operators to evolve by combining the services they already have,such as SMS and MMS, while exploiting the new potential of their IP/LTE networks and thesmart device, to deliver something truly different that resonates with the user the style of anOTT offering - a messaging service that offers enhanced value which can be monetised. ”One should also understand that while OTTservices grow in popularity, they are allreliant on a broadband connection and thiscreates something of a paradox. The morerich features included in the messagingservice, the more Internet bandwidth theyrequire to function. With all other OTT appproviders competing for the same bandwidth,it is highly probable that when using theservice on a mobile broadband network,users might experience diminished servicereliability and, potentially, diminished qualityof service resulting from network congestion.If a service is seemingly cost-free or costsvery little, then loyalty normally reflects thisas consumers are more likely to constantly trynew services/apps as long as they are free. Asa result, and with so many services to choosefrom, it is inevitable that only a few will gainwide commercial usage.However, while OTT messaging serviceshave many advantages, we see a greatopportunity to evolve the SMS customerexperience by incorporating the stickinessof the OTT apps. Operators can sell theirreliable service credibility; SMS and MMSworks across any phone, network, oroperating system - so mobile operators have aclear advantage to build on.Today, it is important for operators to evolveby combining the services they already have,such as SMS and MMS, while exploiting thenew potential of their IP/LTE networks andthe smart device, to deliver something trulydifferent that resonates with the user the styleof an OTT offering - a messaging servicethat offers enhanced value which can bemonetised.We are already seeing a few operatorslaunching their own IP, rich messagingservices, such as RCS (rich communicationservices), based on the GSMA’s standards andbranded as ‘joyn’, but this is only a start,an introduction, for the richer services tocome. As the true owners of the entire mobilelifecycle, the operator can tailor, deliverand drive the sort of quality of experiencethat meets consumer’s expectations. Theyhave control over the IP/LTE networkinfrastructure with key insight into trafficanalytics and network performance andhence can build a service with better reachand capabilities than OTT players can.This, underpinned by SMS, will allow themto provide an optimum service that caninterwork across all messaging platforms, andworks anywhere, at any time and across anynetwork. All this gives them the competitiveedge and creates a new mobile ecosystemthat in addition, can serve as an excellentmechanism to reduce retention costs anddrive incremental revenue.In addition, operators might also collaboratewith relevant OTT players with which theyshare commercial interests, to build newvalue propositions. In the past we have seencollaborations between operators and musicproviders, including the likes of Spotify,to offer consumers the option to selecta payment bundle with unlimited musicstreaming. Such innovative collaborationsare not unheard of; they not only enhancean operator’s offering, but most importantly,they instantly transform the OTT service froma competitive threat into a valued businessassociate. In such collaborations both playersincrease their revenues. It is clear that OTTservices are here to stay, so we expect tosee operators, in some cases, seek suchrelationships to package new services thathelp maintain subscriber loyalty, improveretention and build new business models.The mobile world is currently going througha time of unprecedented change, yet onething is certain, mobile messaging, as weonce knew it, has been revolutionised. Theopportunity that the OTT players have createdby turning the consumer’s appetite towardssomething interesting and new is, at the sametime, a challenge for the operators. A mobilemessaging and service ecosystem will unfoldover the coming years, but how it will lookremains to be seen. Staying relevant andat the forefront of tomorrow’s messagingservices in today’s fast paced, servicesorientatedworld is all about providingvalue to the consumer. To survive means tocarve out a niche role in rich messaging byproviding a service that is a step ahead ofthe rest and that attracts market and mindshare by constantly evolving and neverresting. Service providers that listen to theircustomers and provide high levels of servicereliability, user experience and innovationwill become the service delivery winners bycreating a workable commercial model in amobile Internet world. •Connect-World now onFacebook & TwitterConnect-World, the world’sforemost discussion forum forleaders in the ICT industry, is nowavailable on Facebook and Twitter.The world’s top ICT decisionmakers express their opinions inConnect-World. They use clear,non-technical, English to discusshow ICT helps shape regionaland global development. Thearticles essentially examine theinfluence that ICT products andservices have on the way peoplelive and do business. Withseparate editions for each ofthe world’s regions, the reportshighlight the most important ICTtrends and issues influencingsocio-economic growth.Connect-World is now availableto follow on Twitter (http://twitter.com/#!/ConnectWorldICT) andFacebook http://www.facebook.com/connectworld.ictAlso, it is still possible, for FREE,to directly access all past andpresent Connect-World articles,ICT Industry press releases,eLetters, ICT News and more atwww.connect-world.com.Europe II 2013 • 23

Network crunchThe one trillion device questionby John Aalbers, CEO, VolubillThere will be a trillion M2M devices by 2020 - virtually every thing around us will beinterconnected via a network. In theory, we will even be able to lace human organs with Nanosensors to report on our health in real time. With everything connected the networks will behard pressed to keep up, and a distress call from a patient’s pacemaker will need priority oversomeone’s TV re-run; policy controls will have to be at the center of M2M’s success.John Aalbers is Chief Executive Officer at Volubill, a real time Policy Management and Data Charging vendors. Mr Aalbers previouslyserved as the VP of Charging and Billing Products at Intec Telecom Systems.Prior to joining Intec, he built successful businessesin EMEA and APAC for CGI (Computer Generation Inc.) culminating in the sale of CGI to Intec. He has direct experience in salesand business development, strategic and product marketing, delivery and support, acquisition integration and customer and partnermanagement. He serves as an Executive Director of VoluBill S.A.John Aalbers holds a Bachelor of Science degree in Computer Science from the University of Melbourne.When I think about the evolution of M2M,a line from the hilarious American TV showThe Big Bang Theory springs to mind:“Everything is better with Bluetooth.”That’s an over-simplification of M2M, butit does somewhat illustrate the sentiment ofthis movement. A better way to truly imagineM2M’s potential is this: look around theroom you are in and imagine that virtuallyevery thing you see is able to autonomouslycommunicate with every other thing, eventhings on the other side of the world, via adigital connection. Such a grand promise,however, is not without its challenges.By 2020, there are likely to be more than onetrillion connected devices, equivalent to morethan 250 times the current number of mobilephones in the entire world. And althoughM2M traffic is predicted to account for onlyabout five percent of all global mobile datatraffic, Cisco forecasts that traffic from M2Mwill increase 22-fold by just 2016.But what does such an increase in data trafficmean for telecom operators? What are wegoing to use one trillion connected devicesfor? What is required to keep these devicessecure, reliable, and useful?Some of these questions are more easilyanswered than others. But, even as we canimagine some of M2Ms uses even now, fullycomprehending how we will use trillions ofnew connected devices is all but impossible,and thus understanding the full impactthat M2M will have on how to managecommunications networks is equally opaque.As cultures become more digitally-driven,entire economies and new industries may bebuilt around the Internet of things, each withtheir own set of new needs and priorities. Onething, though, is certain: to make the mostof M2M, we must understand its potential,complexities, and what solutions are neededto make this important technology work.M2M opportunitiesFive percent of all mobile traffic may notsound like much, but within that volumewill be some of the most importanteveryday communications for society. Thebest example of how mission-critical M2Mis likely to become is found, in my opinion,in healthcare.A couple of years ago, I attended aconference at Berkeley University where aspeaker said that it would soon be possiblefor nano-technologies to emit and receivedigital signals. Even more amazing is thatone of the theoretical uses for this is tolace human organs with Nano machinescapable of independently monitoring andreporting on various health conditions inreal time. Likewise, other medical deviceslike pacemakers, blood pressure monitors,even hip replacements, could be turned intodigitally-communicating machines that wouldbe able to, for instance, automatically call an24 • Europe II 2013

Network crunchambulance in an emergency. With people’shealth and wellbeing hanging in the balance,there are few applications where M2M’simmediate benefits are more apparent.There are, however, ones that are lesstheoretical. In more rural communities likein the American Southwest and in someplaces in Australia and Africa, energycompanies often find it difficult and costlyto maintain their infrastructure. To knowwhether equipment is working, utilities musteither wait for something to go wrong, orproactively send trucks and technicians outto inspect things. In most instances, though,the equipment would be ok, and all the utilitycompany would get for its efforts was a fuelbill and a request for overtime pay.As technologies have matured that canharness renewable sources of energy likesun and wind that are often abundant in suchregions, grid operators have started to deployself-sustaining power generation plants inthese communities equipped with M2Mtechnology. Like the medical devices that canautomatically monitor and communicate inemergency situations, these sustainable powerstations can report on how each component isoperating, and even alert the utility that a partneeds maintenance in advance of somethingtruly going wrong. These solutions are savingthe utilities operating costs and ensuring thatcustomers have a more reliable power source.The trucks and fleet drivers that theseutilities and other logistics and transportationcompanies operate are themselves anothergreat opportunity for M2M. Even now,many fleets are being equipped withM2M technologies that keep their parentorganizations continuously connected todrivers, control the amount of bandwidth theycan use, and the sites they are able to access.In the future, this might extend to offeringdrivers the ability to purchase their own dataplan to use for personal and non-businessrelated functions - all controlled from acentral location so the enterprise can moreefficiently manage its resources.At a more grassroots level, in the very nearfuture ordinary cars will sport more M2Mtechnologies as the vision of the ‘connectedcar’ is realized. The very beginnings of thisare already being seen as car manufacturerslike Hyundai, Tesla, BMW and others haveintegrated their in-car navigation systemswith Google Maps.A direct extension of this can easilybe imagined as, in keeping with theirenvironmentally-conscious brand, Tesla couldthen integrate its navigation systems withpollution sensors, traffic monitors, and evencharging stations. If pollution in a congestedpart of town becomes particularly bad, thenavigation system could route the driveraround the problem. Moreover, because thepollution was likely being caused by hightraffic volume, avoiding that congested areawould likely also save the driver time anddriving range, changing where they mightneed to next charge up their car.Smarter machines need smarter controlsDelivering an M2M solution requires lotsof different systems and providers to allwork in automated harmony: hardwaremanufacturing, hardware customization,application development and support,system integration, network connectivity,provisioning, billing, solution monitoring,mobile network operators, application andmiddleware vendors, device manufacturers,and even retailers. And let’s not forget thatproviders’ data traffic volumes will continueto grow significantly over the coming years -even without M2M’s growth fully considered.So while the societal benefits of moreconnected devices are abundant, thesesmart services will require both betterautomation of all the elements supportingthem, and also smarter management of thedata they will create and that must run overtelecommunications networks.A popular sentiment for solving networkcapacity crunch problems, especially in themobile arena, has been to simply add morecapacity. When 2G was around, we were allassured 3G would solve our problems. When3G got crunched, 4G was hailed as the savior.In November 2012, though, the UK regulatorOfcom declared that “the mobile dataspectrum already earmarked for 4G servicesin the UK will not be enough to head off aserious capacity crunch in the next decade.”Ofcom’s solution? 5G!5G may indeed free up more space, but itignores the bigger problem: capacity crunchis an ongoing trend, and for M2M servicesthat will also grow in abundance well in tothe future, a smarter, longer term solution tobandwidth management is needed.These network types themselves presentanother hurdle for M2M management. IfM2M communications require transmittingdata across international borders, systems willbe needed to ensure interoperability betweena continent like Africa, which delivers largelya mix of 2G and 3G service, and Europe orNorth America where networks are mostly3G and 4G. Factor in Japan, which usescompletely proprietary network technologies,and things are yet more challenging. Evenwithin more developed countries, a hugemix of network types exist - 3G, Wifi, LTE,WiMax, Bluetooth, etc.This level of complexity requires centralizedpolicy controls to develop and enforce a setof rules that will ensure these connecteddevices, networks, users, and transactionsystems all work in the automated way that isneeded to make them useful.Policy controls are not only required tosimplify great complexity, though. Anenormous benefit of using policy controland enforcement engines for M2M is theway it allows companies in the M2M valuechain - especially operators - to managedata traffic through prioritization andquality of service (QoS). When operatorsfirst embarked on their journey to solvethe capacity crunch a few years ago, theysoon learned that addressing the problem byusing heavy-handed controls could damagetheir customer-friendly image. Comcast’ssubjective throttling of subscriber connectionspeeds that resulted in a ban of such practices,and AT&T’s iPhone-Effect reaction, are twooften-cited examples of how blunt, defensiveuses of policy to solve the capacity crunchdid not go over well.Now though, operators in some regionsare coming at the capacity crunch fromthe other direction; creating services thatoffer incremental value to the consumerthrough prioritization of certain data typesor applications in return for incrementalnew revenues. This is crucial for M2M bothfrom the perspective of needing to managetraffic effectively, and understanding thatall data is not created equal: as much as Ilove The Big Bang Theory, a Hulu video’sdata simply doesn’t deserve prioritizationon the network over a distress call from apatient’s pacemaker!I believe M2M’s future is big and bright, andthat policy controls will be at the center of itssuccess. With a trillion devices connectingus in ways only science fiction may haveimagined for us, smarter networks, smarterservices, and smarter machines will become acrucial part of our lives. •Europe II 2013 • 25

SAVE 15% ON A GOLD PASSUse code PLJE4Sat tmforum.org/mw13CWReader SpecialMay 13-16, 2013Nice, FranceYour Roadmap to Success in the Digital WorldThe digital revolution is rewriting the rules of business. Continuous innovation, new partner-based business models and agile andefficient IT are the new tickets to play. In today’s complex market, meeting the demands of consumers and enterprises, deliveringgreat services and making reasonable profits, is getting harder every day.Navigating a successful business and technical path is critical to your future success. TM Forum’s Management World 2013 helpsyou find your way, bringing together more than 3,500 like-minded individuals from leading industries in the digital economy. Witheight conference Forums featuring essential case studies, unique insights, inspiration and new connections, Management Worlddelivers your roadmap for success in the digital world. Forum topics include:Enabling Enterprise CloudM2M & Digital ServicesSecurity and PrivacyCustomerExperienceManagementRevenue ManagementCableAgile ITBig Data AnalyticsManagement World is your place to network, debate,learn and collaborate with successful service providers,suppliers, enterprises, analysts, the media. Don’t miss200 expert speakers, including the Keynotes –the Expo – Official TM Forum Training andCertification – Networking Activities –The Executive Program – and much more!Be part of the action!Learn more and register at:Email: register@tmforum.orgPhone: +1 973 944 5100For more information on the conference, trainingor to register today – visit:www.tmforum.org/mw13CWJoin the conversation! Tweet #mwniceand follow @tmforumorgFeaturing 200 speakers, including 50 C-level executives andkeynote presentations from:Hallie HarenskiChief Marketing OfficerAIGMichael HarteChief Information OfficerCommonwealth BankBhaskar GortiSenior Vice president &General ManagerCommunications GlobalBusiness UnitOracleEric KlinkerChief Executive OfficerBit TorrentSteve MillsChief InformationOfficerRackspaceGervais PellissierChief ExecutiveOfficer DelegateFrance Telecom-OrangeSteven ShurrockGlobal ChiefCommercial OfficerTelefonica DigitalHans WijayasuriyaGroup ChiefExecutiveDialog Axiata

M2M developmentM2M in three phasesby Hugues Sévérac, VP for M2M and Internet of Things, Orange Business ServicesM2M seems likely to evolve through three phases. Today, the first phase is characterised M2Mimproving existing processes, in fields such as equipment asset tracking, remote monitoringand fleet management and smart meters. Next, the ‘connected society’, will bring moreintense connections between people and machines in healthcare and in the automotive sectorwhere ‘black boxes’ will be required by law on all new European automotive vehicles. Thethird M2M phase, ‘virtual things’, will help us interact with everyday objects.Hugues Sévérac is the Vice President for M2M and Internet of Things at Orange Business Services; he has had extensive experiencelaunching innovative services on the Internet and in multi-national e-commerce. Mr Sévérac has occupied various managing positions inhigh growth startups, pioneered e-commerce at the L’Oréal Group, and launched VoIP for France Telecom.Hugues Sévérac graduated from Ecole Polytechnique, IEP Paris and ENSAE.In recent years, Machine-to-Machine(M2M) has attracted a lot of hype due tothe new opportunities it promises to offerbusinesses, as well as its potential to changethe way we live our lives. Much of the prerequisiteinfrastructure required for M2Mto proliferate is already here. The McKinseyconsultancy suggested in 2010 that everyobject, from our cars to washing machines,should have microprocessors with the abilityto communicate embedded.Despite this, there has recently been a debateas to whether M2M has truly moved beyondthe hype. Yet there have been a myriad ofapplications suggesting that M2M is verymuch alive.The global M2M market as a whole, isnascent, but expanding rapidly. Accordingto Berg Insight, a M2M dedicated researchhouse, 140 million cellular M2M deviceswere active globally in 2012. The GSMAestimates that global M2M revenue willincrease at a compound annual growth rateof 23 per cent from 2010 to 2020, reaching714 billion Euros. We have characterisedthis evolutionary process in three distinctphases. The first phase is characterised byorganisations using M2M to improve existingprocesses, reduce inefficiencies and enablesome vertical offerings in fields such asequipment, asset tracking, remote monitoringand fleet management.There are already a number of organisations,particularly in B2B sectors, which arealready realising the benefits of M2M.Openmatics, a manufacturer of an opentelematics platform already delivers aservice that lets transport companiestrack their trucks and buses remotely viaan on-board unit embedded with M2Mconnectivity services.Data recorded and received by the on-boardunit is transmitted over a network betweenthe vehicles and a Web-supported portal. Withthis service, the location and status of trucksand busses can be monitored anywhere, apps,configurations and media files can be sent tothe vehicles anytime.Whilst enabling fleet operators to plan andmanage their businesses more efficientlyproved to offer direct benefits, M2Mnow becomes a catalyst for innovation.Openmatics’ open platform ambition is toenable third party companies and vehiclemanufacturers to develop their ownEurope II 2013 • 27

M2M developmentsoftware applications to further leverage theconnectivity within the units.Whilst asset management for vehicles mayseem an obvious application for M2M, ithas also found itself in the most unlikely ofplaces. Last year the coffee brand, Nespressolaunched two coffee machines for thehospitality sector, which would become theworld’s first connected coffee machines.These models use embedded SIM cardsthat enabled the machines to communicatewith the Nespresso Customer RelationshipCentres, enabling remote machine diagnosticsand preventative maintenance visits. Throughthis, Nespresso benefitted from costsavingsby minimising the need for visitsby engineers as well as the ability to offer avalue-added service.Whilst these implementations demonstratethat M2M can be readily integrated toimprove a certain aspect of an existingoperation, some organisations are stillstruggling to recognise the benefits andtackle some of the perceived complexities ofM2M implementation.M2M has very broad potential andorganisations must recognise the importanceof evaluating proposed projects againsttheir overall organisational objectives.One approach is to identify key areas of abusiness where an M2M implementation isboth feasible and will deliver a good returnon investment.The next phase of the M2M evolutionarytimeline is the ‘connected society’, ascenario where the connections betweenpeople and machines are more intense thanever before. To some extent we are seeingthe first green shoots of this phase in keyverticals; this suggests that we are already atan early stage of this phase. We see this inthe healthcare sector, which we foresee willroll out a great variety of M2M services inthe coming decade.A case in point is the Italian medical productsproducer, the Sorin Group that recentlylaunched a remote monitoring solution inEurope for patients with implanted cardiacdevices. This service sends essential cardiacdata to healthcare providers in real-time.Similarly, QualcommLife is leveraging usingnetworks to offer health care providers andtheir millions of patients, secure, holisticremote monitoring of chronic diseases. In bothcases, connected M2M services have removedsome of the geographic and labour barriersassociated with delivering quality healthcare.The second vertical where we envisagegrowth is that of the transportationindustry with the rise of the connectedvehicle. Black boxes, once the preserveof the aerospace industry, will be installedon all new European automotive vehiclesstarting in 2015 as a result of newEuropean Union legislation.To support such applications, networkproviders have traditionally offered backbonetechnologies such as IPv6 IP VPN, areliable mobile network and global roamingcapabilities. However today we are buildingmore sophisticated M2M applications that, insome cases, are at the heart of entire businessmodels. Organisations must thereforeensure that their network providers have thecapability and understanding to work end-toendthroughout their service infrastructure asopposed to providing backbone services only.The third phase of M2M’s evolution is thatof ‘virtual things’; these will let us interactwith the everyday objects in our lives, andopen the way to information-driven servicesbased on information stored in the cloud.The main bearer of the service will be thesmartphone interacting with digital tagsidentifying the objects.Certainly within the next decade, we predictthat there will be a paradigm shift towardsthis phase where the Internet of things,indeed more a collection of intranets ofpeople, things and machines, will bringsimplicity and ultimate comfort to everydaylife. Consider holistically connected mediaappliances in the home, monitoring devicesin health and RFID tags as standard onconsumer products.In some respects, the vision of smart cities hashelped create the impetus for innovations thatcan be potentially service entire communities.In recent years, we have seen utility companiesleveraging M2M to control and monitorenergy consumption through smart metering.For instance, in 2011, ‘M20 City’ in LeHavre, Veolia Water launched a city-widesmart metering offering, allowing the utilityfirm to automatically read over 100,000 watermeters from a single platform. For Veolia,this delivered cost savings as well as betterservice, but for the customers, this delivered anoverall, convenient, empowering experienceby enabling them to monitor their usage.In 2010, Plastic Omnium developed anext generation waste collection service,based upon a highly secure M2M solution,utilising geo-location, analytics and telemetrytechnologies which maximised the efficiencyof refuse collection.Inevitably, there was a need for a M2Mdevice on the waste truck, as well as anecosystem to support it. For instancesolutions to gather information on roadtraffic conditions, weather and populationgrowth patterns. So as we move towardsM2M applications that span cities andindeed society, the focus for networkproviders will shift towards key partnershipswith infrastructure providers in deliveringthis ecosystem.Today, network providers are alreadyproviding the pre-requisite infrastructurerequired for a number of M2M applications.However the key challenge is in educatingthe market, providing standards to enable itsproliferation and securing its confidence.For M2M to be truly holistic for allbusinesses, it is essential to define standardsthrough cross-vertical collaboration andpartnerships. Network providers play acrucial role bringing together this ecosystemto drive innovations and co-design serviceswith players from other industries.As an example, Orange Business Serviceschairs some of the key technical committeesat the European TelecommunicationsStandards Institute, which are developing thefuture standards for M2M. Through this, weare in a multilateral roaming agreement withDeutsche Telekom and Telesonera with anaim to secure the availability and reliabilityof M2M roaming services at a global scale.Furthermore, Orange’s International M2MCenter of Excellence (IMC) in Brussels is yetanother reflection of the importance networkproviders are placing on the technology.It would be certainly be lack of judgementnot to recognize that M2M has progressedbeyond the hype at this relatively early stageand, indeed, some of its applications aretestament to its potential for businesses, forsociety and for more connected lives.Whilst we need to be cautious and considerthe practicalities of M2M implementation,as well as its technical limitations, it isessential that we do not lose sight of theendless possibilities it can offer as thetechnology evolves. •28 • Europe II 2013

M2M the operator’s opportunityMachine-to-machine (M2M) beyond the hypeby Frédéric Lhostte, Director M2M Integrated Solutions, Belgacom GroupThe growth potential of machine-to-machine is driving operators to invest in this domain.To capture most of the M2M opportunity, telecom providers must step outside of theircore business areas and engage a transformation to address convergence in all types ofconnectivity (mobile, fixed, in building LAN, short range - WiFi, ZigBee, RFID, etc.), offerend-to-end solutions in selected verticals through partnership and put a particular focus onvalue management. In other terms, evolve from M2M connectivity to the ‘Internet of things’Frédéric Lhostte is the Director of M2M Integrated Solutions at the Belgacom Group (Belgium); he has more than 13 years experiencein telecommunication. Mr Lhostte joined the Belgacom Group in Product Management. Since then, Mr Lhostte has progressively movedwithin the Group to different senior positions in operations, strategy and business development. Mr Lhostte created the Belgacom M2Mcompetence centre, of which he is currently the Director for M2M Integrated Solutions. Mr Lhostte is also President of the Board of thecompany Mobile a wholly-owned subsidiary of the Belgacom Group, that develops innovative mobile payment solutions.Frédéric Lhostte earned his degree in Applied Economic SciencesM2M is a strategic domain not only formobile operators, but also by a wide varietyof other companies like original equipmentmanufacturers (OEM), application softwaredevelopers, vertical solution providers,systems integrators and the like.Mobile operators consider M2M to be a significantgrowth opportunity compared to traditionaltelecom markets currently under pressure.At yearend 2012, M2M was growing ata 30 per cent yearly; it seems likely toreach approximately 225 million cellularconnections worldwide in short order.Analysts predict 2.1 billion cellular M2Mconnections by 2020 (source: MachineResearch). Moreover, from the enterpriseperspective, companies ranging from automanufacturers, to utility companies, retailorganizations, healthcare solution providersto industrial and consumer electronicsmanufacturers are beginning to see use casesfor M2M that reduce costs, increase businessprocesses efficiency and enable the creationof new value-added services.With regards to the revenues, the addressablecellular M2M connectivity revenueopportunity over the period 2012 shouldreach 6.2 billion € worldwide and shouldgrow to 35 billion € by 2020 (source:Machine Research).Today, there is one M2M cellular connectionfor every 30 person-to-person connections,but M2M only accounts for a modest onehalfper cent of mobile operators’ revenues. IsM2M all hype?In truth, mobile operators need to stepwell outside of their core business areasto capture these new revenue streams, butmost operators still address M2M using theirtraditional methods:M2M uses a device attached to a machine tocapture an event and relay it through the mobilenetwork to an application that translates theevent into meaningful information.This implies:1. The use of cellular M2M connections -appropriate for many use cases and easy to report2. Connectivity revenues only - mobileoperators provide only connectivity and notvalue added services, devices, applications, etc3. Connecting ‘cost saving’ applications- M2M is only viable when companiesimplement M2M solutions to cut costs orEurope II 2013 • 29

M2M the operator’s opportunityoptimize business processes, etc.4. Win-at-all-costs strategy - big volumesneeded to survive in this low margin businessThese ‘more of the same’ approaches cannotwork. M2M does not answer the needs ofclassic telecom consumers or enterpriseservices, so it needs to be addressed in adifferent way.Analysts predict, at least, 50 billionconnected objects by 2020, but only smallpart of these will be connected using cellularM2M technology. So, mobile operators haveto change their way of working and movefrom Machine-to-Machine to the ‘Internet ofthings’ (IoT).M2M is a technology, but the IoT is a conceptthat includes a blend of devices, applicationsand network technologies (mobile, fixed,in building LAN, short-range technologies:WiFi, ZigBee, RFID, etc.).IoT forecasts predict 12 billion objectsconnected by 2020 (source: MachinaResearch) including the 2.1 billion cellularpoint-to-point M2M connections. Operatorswith converged mobile and fixed networkswill find it simpler to evolve from M2M andimplement the IoT.From cellular to converged technologiesCellular M2M technology provides point-topointconnections. For convergent operatorsusing a fixed network is appropriate for highdemand M2M bandwidth connections (e.g.camera surveillance, digital signage, etc.).However, the future IoT will not only be pointto-point;it will involve one or more steps ofaggregation and only some connections will becellular or fixed point-to-point.In the future, IoT solutions will combine awide variety of network, device, software andapplication technologies to meet the user’sneeds. Today, we tally M2M connectionsbased on telecom operators’ reports ofM2M cellular connections or the number ofdedicated SIM cards. In the coming years,though, M2M reports will be able to detail thenumber of connected objects and give clearlydefined performance measurements.From connectivity to a solution-centricapproachTo maximize the M2M/IoT opportunity,telecom operators need to adopt a solutioncentricapproach to the market. Telecomoperators provide the connectivity layerscentral to the M2M value chain. Telecomoperators are also forging worldwidealliances to extend their connectivity beyondtheir home regions.Today, for each end-to-end solution sold, 15per cent of the value is for connectivity, 30per cent for the device and 50 per cent for theapplication. Moreover, market pressure androaming regulations are pushing down thepricing and transforming connectivity into acommodity so telecom operators have to sellmore than connectivity to build revenue.Telecom operators should offer:• smart connectivity using a web-basedplatform to manage and control M2M cellularconnectivity;• a reinvented pricing strategy;• an enriched servicing platform withdevice management functionalities;• an ‘easy to connect’ integration layer forapplications;• new go-to-market and partnership models,developed jointly with solution providers,to offer integrated end-to-end solutions thatinclude device, application, connectivitycapabilities, service delivery platforms, SIM/device visibility and troubleshooting.Given the large number of M2M applicationsin each vertical sector (automotive, energy,healthcare, intelligent buildings, consumerelectronics, security, smart cities andtransportation, etc.) it will be a challenge fortelecom operators to pick the right battles.Telecom operators will be able to capturepart of the application revenues throughinnovative partnership and business modelsand through a disciplined acquisition strategyin niche solution providers with a specificexpertise. We have already seen differentmoves form telecom operators in thisdirection such as AT&T and Xanboo, Verizonand Hughes Telematics, and Vodafoneand Zelitron. More M2M mergers andacquisitions are expected. This strategy willhave to be correctly balanced with existingpartnerships to avoid or manage possibleconflicts with other solution providers in thesame sector.National and international channel strategieswill also be a key selling point depending onthe capabilities of the alliances.Last but not least, the value is not in thetransport of the data but in the data itself! Bigdata can drive a significant part of the newrevenues. Legislation covering the usage ofthe data collected, though, is likely to have asignificant impact not only on the way the datacan be used, but upon its commercial value.Cost saving solutions or value-added servicesM2M solutions have been in use for morethan a decade, helping companies to optimizetheir business process and reduce theircosts. Most M2M solutions are in place tomeet essential needs - tracking and tracingof delivery processes or transport services,vending machines refilling or technicalintervention, alerts, billing data, energymetering and the like.Cost savings will remain a key driver ofM2M solutions, but it also opens a newlandscape for innovative solutions thatgenerate sources of service revenues.M2M will ease people live and change howcompanies operate.Education of potential users regarding thecapabilities of M2M will be essential. A goodexample is the ‘smart city’ concept, wheregreat amounts of data can be collected andaggregated using different technologies toenable, for instance, traffic management,green traffic lights for ambulances, sensorsto trigger public lighting networks, rain andsnow detection, work-order management,service dispatching and so forth.Value managementIn the past years, telecom operators focussedonly on connectivity and fought to do deals atany price. Considering the above points, and thecommoditization of M2M connectivity, telecomoperators will increasingly focus on effectivedelivery - key M2M success factor- and theprofitability of end-to-end solutions. Telecomoperators, though, will have to go beyondconnectivity and move-up in the value chain byoffering end-to-end solutions including device,smart connectivity, application and support.This will require strong partnerships and/orselected acquisitions.M2M is a strategic necessity for telecomoperators with converged networks. M2Mcan deliver a growing source of revenuesif operators transform themselves and stepoutside their core business and then evolvefrom the machine-to-machine technology to afull-scale ‘Internet of Things’ strategy. •30 • Europe II 2013

Device collaborationBusiness intelligence with M2Mby Martin Poppelaars, Vice President, EMEA and LAM Sales at LantronixMost equipment used by businesses, industries and individuals operate as stand-alonedevices that cannot be accessed or managed over a network or the Internet. M2M promotesan environment where devices connected through the Internet can share virtually any typeof information. This also provides an incredible amount of information that if ‘mined’or ‘harvested’ could fundamentally change the way companies and individuals conductbusiness. The promise of M2M is getting information to the right place at the right time.Martin Poppelaars is the Vice President, EMEA and LAM Sales at Lantronix; he is responsible for the strategy and planning ofsales activities in the European, Middle Eastern, African and Latin American markets. Prior to this role, Mr Poppelaars servedas Director EMEA Sales and earlier as a Sales Manager with Lantronix. At Red Band Venco B.V., Mr Poppelaars worked as anInside Sales RepresentativeMartin Poppelaars completed the upper secondary vocational education in Business and Administration and graduated NIMA-A fromthe Dutch Marketing Institute.Despite the unprecedented level ofcommunication and data collaboration,there are billions of pieces of equipment invirtually every business sector from inventorymanagement and point-of-sale equipment tophysical security and facilities managementsystems that operate as stand-alone devices,that cannot be accessed or controlled overa network or the Internet. Most businessescould benefit significantly by adding networkintelligence to those products. In today’smarketplace, organisations need up-to-theminute,relevant, and accurate businessintelligence that improves operations and thebottom line.The challenge for businesses with nonnetworkedequipment lies in finding aneffective, affordable, way to generate andcapture data from machines. Currently,solutions built on open networkingtechnology standards that are prevailing.Conversely, Forrester identified rigidarchitectures and proprietary interfaces asfactors that ‘limit interoperability and crampcollaboration’. All agree, however, thatsuppliers of non- networked legacy devicesare not only unable to participate in bidsfor new installations, but risk losing theirloyal customer base to competitors whocan provide more modern equipment withnetworking capabilities.Fortunately, the advent of machine-tomachine(M2M) communications coupledwith advances in device-networkingtechnology now provide a way to connectalmost any peripheral device to a networkor the Internet. By connecting isolateddevices, one can access, evaluate, share, andinteractively utilise data from these individualpieces of equipment in real time. It alsomeans that managers can monitor, diagnose,and control devices and their performancefrom any location at any time.Device networking is the technology thatmakes M2M possible. It enables devicesthroughout a facility to communicate over alocal area network/wide area network (LAN/WAN) or the Internet and be accessible fromany computer on the ‘net’.With M2M enabled devices, networkingtechnology streamlines operations, maximisesefficiency, reduces overhead, and improvesservice. Adding networking capability topreviously isolated devices makes them‘future-ready’, increases their functionality,extends their useful life and accelerates theirreturn on investment (ROI).M2M also makes‘predictive maintenance’ a reality, preventingdowntime by using automated alerts and selfhealingtechnology.Why now?In the 1980s, the demand for a personalisedcomputing environment gave rise to therapid proliferation of personal computers(PCs) in the workplace. In the 1990s, costeffectivenetworks and open systems drovethe connection of PCs to corporate networks.This ushered in a new era of informationavailability, an explosion in personalproductivity and, as well, the beginning ofperson-to-person Internet connectivity.The PC focused largely on making peoplemore productive in the office and field.The technology focused on facilitating theinteractions between people. We have nowpassed to the next revolution - one focusedon machines communicating with other32 • Europe II 2013

Device collaborationmachines and with people. The basic issuesnow are how best to manage networkedmachines and how to productively processand make use of the information M2Mgenerates and collects. M2M will connect ahuge variety of things from simple sensorsto highly complex building and industrialautomation equipment, from medical devicesto tracking equipment on trucks, to securitysystems, retail/POS equipment, IT/telecom,A/V equipment, power/utilities and more.M2M promotes an environment wheredifferent types of devices connected throughthe Internet can share virtually any type ofinformation. The seamless automated flowof data facilitates services and allows remotemanagement and device control. BecauseM2M data can be captured from practicallyany machine, environment or market, M2Mcan potentially reshuffle entire industries,creating a windfall for technology enablersby making possible an array of solutions thatdeliver new levels of ‘smart services’.M2M stakesThe stakes in the M2M sector are enormous.Some estimate that nearly 50 billion devicesaround the world can benefit from M2Mcommunications. That figure is nearlyten times the number of people on Earth.According to ABI Research1, M2M isattracting intense interest as businessesand equipment manufacturers begin tounderstand the multi-billion dollar potentialthey represent. By the end of the decade,analysts expect the M2M market will increaseby a staggering 40 per cent annually. Giventhe scale and scope of M2M opportunities,companies are beginning to positionthemselves for wide-scale adoption.M2M is also leading to significant opportunitiesfor technology companies. By network-enablingtheir products, equipment makers can now offerunprecedented levels of customer service andsupport at a fraction of the cost required for nonnetworkeddevices. With the ability to maintaina continuous tap into a device’s data stream,companies can now track and service a devicethrough its entire lifecycle. This technology isredefining the scope of customer relationshipsand business operations, where companies canensure better and more appropriate service tocustomers by anticipating and responding toproblems as, or even before, they arise. Some ofthe most innovative companies have discoverednew revenue-generating opportunities byconnecting to their devices. In all, M2M has thepotential to unleash great productivity gains andeconomic growth.Companies are looking beyond theopportunities arising from product sales andaiming to capitalise on the benefits of finallyowning customer relationships. By trackinga device through its lifetime, a companycan acquire significant data and insightnot only into its product’s performance incircumstances, but also into the customer’sneeds and behaviours. This information canyield optimised services and solutions forcustomers, significant profits for suppliers,and improved relationships betweencompanies and their customers.Who benefits?M2M is poised to unleash a wave ofproductivity and efficiency and triggergreat increases in corporate investment.Companies can make significant gains sellingthe hardware, software and services thatwill keep the M2M world running. Devicemanufacturers and service providers willprofit from the ability to proactively trackdevices, keep them up and running, andoffer better customer service in a highlycompetitive market. End users will benefitfrom having products and devices that arealways accessible and functioning properly.Combining M2M technology with devicenetworking adds an unprecedented levelof operational intelligence to business,helping to reduce maintenance costs andopen opportunities for additional revenuestreams. For equipment repairs, a customertypically has to contact a call centre wherean attendant takes the call, logs it into adatabase, sends it to the service centre,which deploys a technician with the correctparts and equipment. With M2M, deviceserver detects a problem automatically and,often, remotely diagnoses and repairs it.If a service call is required, the technicianleaves knowing exactly what is wrongand equipped with the proper parts andequipment to fix the problem.Reducing truck rolls and costsThis new level of intelligence and controldelivers a wide range of tangible benefits.For example, imagine an electronicdevice for a security system, commercialrefrigeration unit, or medical diagnosticequipment with technology for selfdiagnosisand self-healing. When connectedto a networking the equipment can verifyif it is functioning properly. Often, ifsomething is wrong, a simple settingor switch adjustment might be all thatis required - diagnosing and correctingproblems over the network often eliminatesthe need for a service call to resolve atrivial issue.This sort of technology can:• Resolve equipment failures beforethey happen, saving time and money withproactive maintenance;• Eliminate unnecessary service calls;• Alert technicians before they leave theservice centre regarding exactly what theproblem is and the equipment and partsneeded to fix the problem.• Let technicians at a service centredetermine the status and operating conditionsof remote equipment located anywhere in theworld.• Increase customer satisfaction andgenerate additional revenue through up-salemarketing offering remotely managed, valueaddedfield service.The numbersThe numbers are staggering, regardless ofsource. Berg Insight reports the total numberof M2M wireless device connections willsoar to 359.3 million in 2016. Shipmentsof mobile M2M devices increased 35.3 percent in 2011 to 50.8 million units. Adjustedfor churn, there were 29.3 million M2Mconnections net added in 2011. Ericssonhas repeatedly cited a number of ‘50 billiondevices in market, ready to be connected’.Network connectivity itself is expandingwith new technologies such as IEEE 802.11n,which enhances safety with improvedsecurity protocols and by lower cost networkaccess. As a result, more devices areconnecting via the Internet and reaping therewards of M2M communications.While it’s exciting to think about futuristicM2M consumer applications, the businessopportunities for M2M are staggering. Forexample, hospitals can now connect infusionpumps to the network, so they can sendinformation to the hospital’s IT system andcheck pharmaceutical information to validatethe dosage levels for the given patient. Inindustrial applications, a technician mightcheck the status of a robotic welding machineno matter where in the world it is located.There is an incredible amount of informationthat if ‘mined’ or ‘harvested’ couldfundamentally change the way companies andindividuals conduct business. This is the basicpromise of M2M - getting the information tothe right place at the right time. •Europe II 2013 • 33

M2M - coming of ageM2M - from promise to practiceby Macario Namie, Vice President, Marketing, Jasper WirelessM2M has been on the horizon for years. Now, though, technology costs, the system, thenearly ubiquitous availability of mobile connectivity and the push by utilities, insurancecompanies, auto companies, governments and service providers have all come togetherto bring M2M to the public. Within the next few years, our cars will be connected forentertainment and emergency services, our homes for smart metering, security, assistedliving for the disabled and elderly. Our forks might even be wired to count calories.Macario Namie is the Vice President of Marketing at Jasper Wireless; he has worldwide marketing responsibility for product, corporateand web marketing for both the Jasper Wireless and M2M.com brands. Prior to Jasper Wireless, Mr Namie was Director of WorldwideProduct Marketing at WebEx. Mr Namie has also held senior marketing roles at ePeople and Lycos and formed his own company focusedon staff augmentation for customer support organizations.Macario Namie hold a B.A. from the University of California, Berkeley.Machine-to-machine (M2M) communicationshas a long and colourful history. Sincewireless M2M connections came intoexistence in the mid-1990s, countlessconcepts have sprung up around theinnovative and inventive ways they canenhance or even save our lives. With thegrowth of M2M usage, the number ofconnections around the world has grownextremely quickly. Seeing this pace ofprogress, analysts are predicting anythingfrom 20 billion to 50 billion M2Mconnections by the year 2020. Ericsson’sbold forecast of 50 billion connected devicesby 2020 raised a few eyebrows a couple ofyears ago, but it has been quoted far andwide ever since as the benchmark to whichwe’re all working.These predictions speak volumes about thepotential impact of M2M for all of us - notjust in terms of a revenue opportunity forbusinesses and mobile operators, but as atechnology that will genuinely revolutioniseour lives. Some of the wilder concepts of thelife-changing potential of M2M may seemfar-fetched to many, like the apocryphalrefrigerator that will order your groceries, orthe driverless cars that will ferry us about.Perhaps, the futuristic vision of a metropolisof self-driving cars is not so far away;we’ve already seen that Google’s driverlesscar has been certified to drive on roads inNevada, and the Institute of Electrical andElectronics Engineers (IEEE) predicts thatself-driving vehicles will make up 75 percent of traffic by 2040. When it comes toways of using M2M, unlike other mobiletechnologies it is not limited by the numberof humans on the planet - we are really onlybound by our imagination.In Europe, Frost & Sullivan expects M2Mrevenues for European operators to grow asapplication adoptions widen. The industrieswhich are currently taking off in terms ofimmediate enterprise opportunities in Europeare the utilities sector, automotive, securityand health care. Frost and Sullivan also seethe consumer electronics market as one withstrong future revenue opportunities.The connected lifeWhilst M2M is simply the interconnectionof devices, it enables a connected life.Connected life applications could include34 • Europe II 2013

M2M - coming of ageanything from the connected car, to remoteclinical monitoring; assisted living; homeor business security; pay-as-you-drive carinsurance; smart meters; traffic management;electric vehicle charging, or buildingautomation. Many of these connected homeapplications are already in use across Europeand future cases are limited only by the scopeof your mind’s eye.Machina Research, the specialist M2Mresearch and consulting firm, on behalfof the wireless carrier trade organisation,the GSMA, predicted that connected lifeapplications will have a US$4.5 trillionimpact on the global economy by 2020in terms of new revenue streams, newbusiness models, efficiency savings andimproving service delivery. Further tothat, Machina believes that the marketis currently worth US$2.5 trillion andoperators could potentially realise US$1.2trillion of this revenue.In order to understand why these projectionsare so high and assess the real impact M2Mis having today, it is essential to look atwhat real technologies and use cases arecurrently underpinning the huge numbers ofconnections. We can pinpoint a few verticalsectors that are accelerating more than theothers. In particular, as we step into 2013, anextremely hot area of growth is the connectedcar, which is especially taking off in moredeveloped regions such as Western Europe.The connected carOf all the connected life applications,the connected car is arguably the mostwidely applicable example, relevant almostubiquitously around the world, acrossdisparate regions, markets and societies.Every automotive original equipmentmanufacturer (OEM) now has a strategy forthe connected car, and it is only a matter ofa few years until their strategies are fullyrealised. Machina Research predicts 90 percent of cars sold in 2020 will have some formof embedded connectivity, a massive increaseon the ten per cent sold with connectivitytoday. This has a ripple-down effect uponsuch downstream service providers as Netflix(content streaming service born in Americaand recently launched into the UK) andAmazon, who ready themselves to cater forthis ecosystem.Traditionally, the connected car is thought ofas a vehicle that could have on-board vehicletelematics for diagnostics and safety featureslike remotely managed and controlled doorlocks. Indeed, ABI research states that thereare already 89 million insurance telematicssubscribers worldwide and predicts that by2017, 49 per cent of new vehicles will shipwith safety and security telematics.There are numerous other examples of whata connected car might lead to. Pay-as-youdriveinsurance promises more accurate,fairer schemes. Electric vehicle charging is avital component of a society moving towardsgreener, renewable energies.The EU initiative, eCall, a system that makesan automatic call to the emergency servicesin the event of a collision, and brings rapidassistance to motorists involved in accidents.eCall aims to bring the emergency services tothe scene of an accident within a rapid timeframe. As well as automatically calling theemergency services if a car is in a collisionthe eCall system can wirelessly activateairbag deployment and send GPS coordinatesto local emergency agencies. eCall will be amandatory requirement for all new cars madeafter 2015.There is also satellite navigation, stolenvehicle recovery and driverless cars, eachserving a clear purpose. Finally there arecar-sharing services such as ZipCar, whichis already live in Europe. These servicesenable users to locate cars located close totheir location and rent them on an hourly ordaily basis.But the hottest element of the connected carphenomenon lies in infotainment services.Passengers can enjoy longer journeys thanksto the ability to watch movies downloadedfrom the Internet, play games onlineor stream music. A recent study by theUniversity of California found that connecteddrivers with in-car infotainment systems arehappier than their unconnected counterparts.This is no surprise in the context of aworld where we have access to on-demandentertainment wherever we go, and are almostpathologically bored if we are without suchstimulation. As LTE starts to gain tractionaround the world, the reliability and speedof in-car infotainment services will increase,as will the breadth and quality of servicesoffered to consumers, and this will driveuptake. To put some figures around this, ABIresearch expects automotive infotainmentshipments to reach 50 milion by 2017.Business modelsWhile the revenue opportunities in M2M areundoubtedly significant, the business modelsfor how such services will be monetised arestill in flux. For example, if you take theconnected car, there is debate over how bestto charge consumers. As consumer appetitefor content remains strong and will only growin tandem with in-car infotainment service,there is a leaning towards novel transactionalmodels and away from subscription-basedmodels. This is because consumers todaywant the flexibility to buy content andservices at a time and place that suits, asthey do when buying songs over iTunes - soif someone has to make a long journey oneweekend, they can sate their appetite forentertainment on the spot. Whereas, if thatsame person were asked at the beginning ofthe every month if they would be happy tocommit to £25 in advance for the promise ofsome great content in return, or at the startof a year to commit to 12 x £25 per month,they would most likely steadfastly refuseto add another subscription to a long list ofmonthly bills. So, micro-transactions enableconsumers to purchase digital content ondemand,and everybody in the value chainstands to benefit from impulse buys.This is also a good example of where twosidedbusiness models may offer the bestapproach for players in the value chain.Mobile operators and over-the-top (OTT)content, service or app providers are lookingto partner together to make more appealing,bundled offers to consumers and jointlygenerate revenue. But striking the happybalance is not easy, and there is a way to gountil operators and OEMs are in harmonywith one another regarding the best way toprice these services. Yet what is certain isthat there are consumers to be satisfied inthe M2M-enabled infotainment market, andmoney to be made in doing so.The auto vertical is just one area where theopportunities for innovation are abundant,and where the business strategies aresteadily being consolidated. If you look atan exhibition like Barcelona’s Mobile WorldCongress 2013, you’ll see a plethora ofconnected devices on show, from the soon-tobecommonplace smart meter, to the bizarrecalorie-counting connected fork. It’s nothard to prove that M2M is well on its way tobringing to fruition the potential suggested byyears of increasing hype. Many of us alreadyare, or soon will be, living a connected life. •Europe II 2013 • 35

Business modelsBeyond the SIMby Brian Cappellani, Chief Technology Officer and Vice-President of Engineering, Sigma SystemsThe telecommunications service provider’s market is at a crossroads. The growth of newservices, such as M2M, has been a mixed blessing. M2M devices, despite potentially hugevolumes, generate relatively little revenue. To thrive, service providers, will have to partnerwith a host of specialised applications and device developers to meet the needs of a widevariety of individual and business users. Service providers will also have to reorganise toadminister the needs of their new partners and customers alike.As Chief Technology Officer, Brian Cappellani is responsible for the architectural and technology vision and deliverables for thecompany’s award-winning Service Management Platform and Solutions Suites. Named one of the Top 25 most influential people in theBSS/OSS market by Billing World magazine, he is a 12-year veteran in telecommunications with an extensive background in designing,architecting, and building large-scale operations and billing support.Prior to joining Sigma Systems, Mr. Cappellani worked for Accenture in numerous roles of increasing responsibility, including seniorlevelarchitecture, engineering and development management positions, held both internally and with Accenture’s telecommunicationspractice, focusing on the wireless and satellite industries. Mr. Cappellani also served as an Advisory Director to the TM Forum’s Board ofDirectors. TM Forum is the world’s leading trade association that provides leadership and guidance, technical and business innovation,and education and training to improve the way telecoms, media and information services are created, delivered, assured and charged.Brian Cappellani holds an Electrical Engineering degree from the University of Waterloo in Waterloo, Ontario.M2M has been talked about as a futuregrowth engine for many years and someapplications have been around forever, but itis only now that we are really starting to seethe market begin to take off.Manufacturers and analysts alike arepredicting an exponential increase in thenumber of connected devices in the nextdecade; according to a recent report byMachina Research we can expect M2M’sshare of cellular connections to grow fromtwo per cent to 22 per cent in the next tenyears, from 146 million connections at theend of 2011 to a projected 2.6 billion in 2022,and most will be non-phone devices.In the same research, Machina estimatesM2M revenues will rocket to USD 1.2trillion in 2022 1 , a CAGR of 18 percent, herein is an opportunity for serviceproviders if they can strike the right businessmodel and investment.You could say we’re in The Year of M2Mor an inflection point, but what are serviceproviders’ plans to capitalize on theopportunity, and how will they approach it?Not all analysts agree on the overall volume,but they do all agree that the growth seenover the last couple of years will continueto accelerate. M2M will eventually overtakeconsumer connections as being thelargest proportion of the market, so whereshould the providers hedge their bets? Withthe M2M market spanning many differentvertical applications, all growing at differentrates, some due to regulation, such as smartmetering within utilities, others by consumerdemand to stay connected as with automotive,and others by progress in automation andmonitoring - healthcare and security forexample. Many European service providersare riding this wave, to name but a few, KPN,Teliasonera, Vodafone, Deutsche Telekomand many more, proving that M2M has a partto play in driving new revenues.What’s interesting for a service provideris how they can play a part in the wholecustomer experience of the smart home - theyhave much more experience in this area thando utilities, security firms, home applianceproducers, etc. Coupled with the need toinvest massively in new network technologylike FTTH & LTE to remain competitive, and1Total revenue includes: Device costs where connectivity is integral to the device, module costs where devices can optionally have connectivity enabled, monthly subscription, connectivity and traffic feesEurope II 2013 • 37

Business modelsthe rise of serious over-the-top competitionthere’s a bit of a perfect storm for manyservice providers as they battle to retaincustomers and remain profitable. Serviceproviders are in a unique position to seize onthese new opportunities to provide servicesas industry adoption rates grow, and to forgelong-term partnerships in different verticalsby aligned communications expertise withindustrial know-how. But can they go beyondthe SIM, to take ownership of the smart homeof the future and serve the end customer aswell as the underlying M2M connectivity?We have already seen that M2M is a uniquebusiness, or more accurately it is a wholerange of unique businesses. To supportthe low revenue per connection services,operators must ensure that they are very‘hands off’ in the management of thoseconnections. The M2M application andhardware providers must be able to monitortheir devices and manage their connectionsby themselves - and the communicationsservice provider must give them the tools forthem to do this. The hardware manufacturersin M2M are effectively the equivalentof handset manufacturers in mobiletelephony, but with much wider range ofdevices. Each industrial application has aunique set of application requirements thatrequire industry knowledge to produce andsupport. This is why M2M is different fromtraditional consumer, business or wholesaletelecoms - the industrial uses of the servicesare just so varied and each one is specialised.The scale of M2M can be daunting. Serviceproviders cannot afford today to investin systems that can support billions ofconnections. Instead, they want to be ableto easily grow as the market develops.Faced with increasing commoditization andstagnant growth of their core services, theyneed to ensure they can cost-effectivelyprocess the volumes.New complexity, new challenges, andunknown devices all pose a threat, but thekey to success could lie in the lucrativevalue-added service of home/business devicemanagement, over and above simple gatewayand transport services. The service providermust be able to provide the tools to supportthe devices. Some providers are creatingin-house expertise in certain verticals, butwe mostly see many partnerships formed.This means that the service provider mustbe able to manage those partnerships, fromboth an administrative and a revenue sharingperspective. This is a new model for many.It’s a model that could swamp the serviceprovider, so tools and platforms, which willenable the provider to scale, grow and profit,are vital:• Administrative and end user portals;providing self-service access to a broad setof M2M applications, with an experiencecloser to Facebook, enabling users tomanage subscriptions with network andcloud services.• Back office provisioning and ordermanagement tools that allow providers toautomate, create and coordinate orders withexisting back office systems, on-networkservices and M2M applications.The ability of service providers to rapidlyonboard and integrate new M2M app vendorsin weeks rather than months is critical. Theservice providers do this through automatedsystem tools, which facilitate the businessrelationship between the service providerand the app vendor and jump starts theprograms for branding, pricing, and businessrelationship administration.It is essential that service providers havea scalable, repeatable, and economicprovisioning solution to manage M2M andVAS offerings. Whether for consumers orbusiness customers, unlocking revenuesrequires launching new services in weeksrather than months. Open APIs andecosystems, integration with existing legacysystems, integration with leading M2M appand VAS vendors and portals to support selfcareby users and administration staff arealso crucial to service provider profitabilityin this market.Given the great number of M2M cloudapps being developed, can there really be adifferentiator for service providers? Well,with hundreds of millions of dollars beingpoured into the cloud XaaS [‘x’ (anything)as a service] market by investors, tappingthat innovation successfully can plug theARPU gap the service providers are facing.It’s unlikely that service providers willnecessarily become market place vendorswith thousands of applications for consumersand the small and medium business (SMB)market. What they need to do is focus on a setof value added services that take advantage oftheir network, system investments and uniquein-home or commercial business experiencewhich will position them uniquely for theirtarget markets.The new M2M, OTT and SaaS vendors donot have a lot of automation in their ownback offices to support the delivery of theirservices through third-party channels. Theremoval of the ‘integration tax’ requiredto bring those technologies into a serviceprovider’s ecosystem is critical to successfuland profitable services. Service providers canbe a trusted advisor to the SMB/SME marketin this space and look for opportunities toaggregate applications and services. Thereare literally thousands of cloud services andapplications in the market place, many ofwhich are likely to disappear as the marketmatures. Service providers will be lookingfor sets of services that are equivalent incapability and reliability to the services theyprovide themselves.If service providers, SPs, are to manage thesenew M2M services efficiently, they need tooffer following:• an extensible OSS platform thatautomates order management, serviceprovisioning of core services, and of newvalue-added services;• configurable solutions in the form of prepackagedproducts for each type of servicewhich they wish to offer;• a focus on customer enablement andself-sufficiency, by arming customers withtraining and knowledge management toolkits,(The most successful service providers in theM2M business have self-sufficient customersthat use the service provider’s systems,to implement routine changes - withoutengineering support);• a platform that allows service providersto work with a multitude of third party M2Mapplications aimed at supporting specificmarket verticals.While service providers have always facedsimilar issues, inefficiencies could be maskedin the past by the higher margins serviceproviders achieved. However, in today’slow-margin market, service providers mustcontinue to offer innovative services, anddiversify into new markets to positionthemselves for the journey ahead withautomation and customer self-management askey strategies.The profitability of new M2M serviceswill be elusive without automation anduser control. •38 • Europe II 2013

M2M ecosystemTapping the M2M marketby Rachel Ginzberg, Director, M2M, AmdocsMachine-to-machine (M2M) services and applications are growing rapidly; huge numbersof devices will soon connect to networks worldwide. Some network operators only offerconnectivity, leaving the rest to M2M partners, but ARPU is likely to be small - US$2-3/month - per device. To increase M2M revenues operators can offer smarter services: policyand security enforcement or IT services including BSS, Big Data and analytics as well asmarketing and reselling, device management, application development, bundled services,joint-partner ecosystems, and more.Rachel Ginzberg is the Director of Amdocs’ M2M unit; she leads both product development and marketing for this strategic market.In her previous position, as Director of Product Management, Ms Ginzberg laws responsible for Amdocs Enterprise Product Catalogstrategy. Prior to that, she was a Development Manager for Amdocs customer ordering for data products. Earlier, Ms Ginzberg was theManager of Amdocs Document Designer.Rachel Ginzberg holds a Bachelor of Science degree in Mathematics and Computer Science from Bar Ilan University, Israel.No matter whom you ask - industry analysts,small and large-scale service providers,basically any telecom stakeholder - they willall tell you that machine-to-machine (M2M)is ramping up, and fast, with huge numbersof devices soon to connect to the network andchange our lives.The most generous forecast is for 50 billionconnected M2M devices by 2020 (Ericsson,2011), but even more modest predictions -such as Machina Research’s estimate of 18billion connected devices by 2022 (M2MGlobal Forecast & Analysis 2011-2022) -clearly demonstrate this huge opportunity.This is why we’re seeing service providersacross the globe establish M2M businessunits, in which the service provider acts asan M2M wholesaler, supporting hundredsof different M2M partners, each withspecific requirements.Service providers may initially see their rolein this value chain as their traditional one- that of connectivity provider, leaving theapplication side of the business to their M2Mpartners, but the opportunity for the serviceprovider is much greater.According to Machina Research, only 14.5per cent of M2M devices will connect viacellular networks. And when you add to thisGartner’s estimation of M2M ARPU as beingonly $2-$3 per month, then the opportunityfor service providers who are just providingconnectivity is quite small. For this reason,many service providers are looking for otherways to increase their share of the M2Mrevenue pie, so they are investigating moreinvolved engagement models.The fact is that service providers havea lot to offer their partners in additionto just connectivity. They can providesmarter network services such as policyand security enforcement or IT servicesincluding BSS, Big Data and analytics. Otherservices that network operators are wellpositioned to provide include marketing andreselling, device management, applicationdevelopment, bundled services, joint-partnerecosystems, and more.This type of engagement between serviceproviders and M2M partners will enable theM2M partner to focus on what they do bestEurope II 2013 • 39

M2M ecosystem- providing their specific M2M service (suchas smart grids, etc.), while generating greaterrevenues for both the M2M partner and theservice provider.Service providers and M2M enablementSo, with the industry landscape undergoingrapid change, service providers need anopen and flexible approach to M2M goingforward, as new services are constantlybeing introduced that need to be supportedby highly complex engagement andpayment models.Service providers seeking to support M2Mpartners need to be able to address a numberof mission-critical requirements that area must for the enablement of the M2Mecosystem. Dealing with partners withdifferent lines of business means a varietyof requirements, technical and business,that service providers will have to makeavailable to better compete.There are six principal layers of requirements:• Device management - Support for deviceconfiguration, Firmware Over The Air(FOTA), and device certification• Partner management - SDK (softwaredevelopment kit)for M2M retailers to supportand enrich their M2M applications, andprovide open integration for partners’ IT stack• Global agreements - A unified andpredictable global roaming capability, basedon roaming settlements with global carriers• Subscription management - M2Mfocused real-time BSS/OSS (businesssupport system/operations support system)platform, including business processes andbest practices, supporting various businessmodels: B2B, B2C, and B2B2C• Network connectivity - Connectivityand policy enforcement capabilities thatare tightly connected to the subscriptionmanagement system• Professional services - Consulting andsystem intergration services to supportpartner on-boarding and integration,cross-vertical ecosystem operations anddevelopment, and operationalization ofbusiness intelligence and predictive insightsfrom Big DataIndeed, this broad set of requirements mustbe available in a modular manner to meeteach partner’s unique requirements; theymust also be available on the cloud, reducingthe service providers’ initial investment toa minimum. With these capabilities serviceproviders into a one-stop shop for their M2Mpartners, with the flexibility to provide eachpartner with exactly what they need, fromsimple IP connectivity to more complexpartner and device management.Service providers should also look tointegrate their M2M services with theirretail BSS environment. This can create anopportunity to develop rich service bundlesby combining M2M and communicationservices, as well as offer greater continuityof care for the end user through responsibilitysharing models between the service providerand its M2M partners.Connected homeOne particular vertical market, whereM2M meets consumer, is the connectedhome. A hybrid of M2M and wirelinetechnologies, the connected home is agrowing opportunity for service providers,but it still needs to add layer of consumerfacingapplications. Service providersshould look to cloud-based solutions togive short time to market to launch prepackagedhome and business serviceslike remote security, energy, health andmultimedia. These services can considerablyreduce development times and backofficeinvestment costs such as inventorycontrol, billing and customer care.Unlike the siloed offerings of over-thetopproviders, cloud solutions can beeasily integrated with existing businessand operational support systems andcore network elements; this gives serviceproviders an opportunity to leverage theirintimate knowledge of their customers’behaviour with regard to all the servicesthey use and offer an unprecedented, unified,experience.With regard to health services, for example,‘ageing in place’, in their own homes withonline health monitoring can help elderlypatients feel more comfortable and secure.Doctors and other healthcare practitionerscan readily access real-time data and alertsat remote monitoring centres - or even giverelatives and other caregivers’ remote accessto monitoring devices - and react as neededin a timely manner. This will help the elderlylive independently, longer.All these offerings use cloud platforms.The practicality, cost-effectiveness andflexibility of these platforms make it easyfor a service provider to include value-addedservices on top of the connectivity it sells.Other considerationsIn addition to addressing their system andtechnical capabilities, service providers mustask themselves a number of key businessquestions, such as:• What are the key M2M use cases and forwhich segments are they most relevant?• What are the liability issues for differentM2M services and vertical offerings?• What is the best practice for customersupport for on-premise equipment?• How do I effectively bundle M2M withmy existing communication services?• What are the optimal price plans fordifferent M2M services?• How do I maximize the businessopportunity of the long tail of M2M partners?• How will M2M impact my existingbusiness processes?It’s only after creating the right business andoperational models to answer these questions,with the right partners, that a service provideris truly ready to enter the promising, dynamicM2M market.Keeping an open mindOverall, to be able to partner and beprofitable in the M2M market, operatorshave to integrate two important elements:an understanding of the M2M organizationand business process that are able to supportpartners and masses of devices.Operators need to focus on keeping theirminds - and their organizations - open.Penetrating the M2M market or expandingexisting operations will differ depending onthe region and operator, and at this stage,the market is continually changing. Withno one line of business or formula so farhaving emerged that can guarantee M2Msuccess, operators must keep their doorsopen, not to lock themselves into a certainapproach, and experiment. •40 • Europe II 2013

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Building the marketM2M - growth pathsby Judi Gill, Director of Market Analysis & Strategy, ClarityThe machine-to-machine (M2M) market will challenge communications service providers’(CSPs), in ability to meet the demands it will make on networks, back office systems andbusiness strategy. The M2M market is still in its early stages, trying to prepare for the futurethat requires full integration between CSPs, customer organizations and end users. CSPswill need all their expertise in networks and large-scale operations to deal with competitionfrom utility companies, local authorities, insurance companies, dedicated M2M providersamong others.Judi Gill is the Director of Market Analysis and Strategy at Clarity, where she is responsible for the company’s go-to-market positioningand activities. Ms Gill has worked in the telecommunications IT sector for over 20 years. Ms Gill started her career at Accenture, andhas since worked at operators and software providers around the world including BT, Optus, ADC, Bharti Airtel, MTN and Telcordia.Judi Gill holds a Bachelor of Commerce from the Australian National University, and a Diploma of Business Administration from theAustralian Graduate School of Management.It’s easy to get carried away with M2M andthe vision that the Internet of things willenable every device to connect with eachother to integrate all the strands of users’lives - from their household appliances,to the transport they use and the servicesthey consume. However, achieving thatseamless environment in which every devicecommunicates ubiquitously with everythingelse that can have a chip installed is complex.Add to that the burgeoning M2M applicationsin the business-to-business market andthe management and assurance burden isincreased. What is clear though is that this isa large opportunity for all involved even if thedetails are obscure today.Although the business models are unknown,there will be many ways to generate revenuestreams from M2M services. There are twoextremes of the M2M market in its currentform. At one end there are low ARPUpropositions that typically involve greatnumbers of deployed devices but need littlebandwidth, such as logistics where a vehiclecan report its location every couple of hours.Communications service providers, CSPsoften facilitate such services by providingthe network, but third party M2M specialistsprovide the service. One-stop M2M serviceproviders handle the business from provisionto activation to monetization, while the CSPderives revenue from the capacity consumedby the services. This business model is wellestablished and the CSP and M2M serviceproviders work together to offer simple,low cost and effective solutions. There is noreason why a CSP would seek to change thatsituation, although there is nothing to preventthem replicating the services offered by M2Mspecialists. Typically such a model is pay-perunit,with fairly flexible payment operationsand the providers have the knowledge andexpertise to continue to deliver them to thesatisfaction of customers and users.At the other extreme, there are sectorspecific,highly sensitive, solutions deployed,for example, to monitor oil pipelines or aperson’s health. Although these types ofsolution may not require great bandwidth,they require an extremely high level ofreliability and security across the networksof multiple CSPs. Given the critical nature ofthe service, it will generate premium revenueseven if it doesn’t clog the network.42 • Europe II 2013

Building the marketRegulations are likely to drive many M2Mapplications. In the EU, energy regulationsnow require the installation of smart meterin 80 per cent of European homes by2020. The European Commission aims tohave the automotive industry build ‘eCall’functionality built into all new cars by 2015;eCall provides automated emergency callingservice in the event of an accident. In thefuture, similar regulatory mandates are likelyto drive the growth of M2M in the healthcaremarket. Regulatory mandates are likely tocreate a number of other markets.Over time, many consumer devices willhave integrated M2M. Whenever a consumerbuys a refrigerator or an air conditioner,some party - an appliance manufacturer, aretailer or a utility - will offer an integrateddevice and M2M communications andservice package. CSPs might, then, offerpackages for a range of domestic devices,smart meters and the like, using theirexperience with intricate rating modelsthat combine fixed, recurring and usagecharges. Third party applications might alsooffer management services for multipleM2M-enabled home devices, allowingthem to communicate via domestic WiFi,for example. Interestingly, a new report byMarkets and Markets estimates the totalEuropean smart homes market will be worthUS$3,267 million by 2015, with NorthernEurope continuing to dominate the EuropeanSmart Homes Market.In some situation, several parties might beinterested in the information from a device. Ifyour air conditioning is M2M-enabled, bothyou as the end user and your energy utilitymight want to monitor its consumption andthe manufacturer might also be interestedin the unit’s performance to guide newproduct development or trigger preventativemaintenance. In the future refrigerators maybe able to re-order products from retailersaccording to parameters set by the consumer.In that scenario, the appliance maker mightoffer the service as added value or retailersmight pay for this functionality to drive theirown sales.These are ideas for the future, but thebusiness models M2M will ultimately use -and who will pay - are unknown. A healthprovider could pay for a medical applicationthat monitors heart rates so the patientdoesn’t have to come to a clinic to have theirpulse checked by a nurse. The clinics costsavings should easily offset the costs of theM2M service.Complexity - an enemy of profitabilityHigher value M2M business models arelikely to involve CSPs to a greater extentbecause of their expertise in reliablymanaging high-volume mission-criticalservices from end-to-end. However, CSPsthemselves need to prepare themselves toefficiently offer such service. CSPs will needto develop an end-to-end view of the serviceacross the entire network, not just the M2M‘last mile’. They must avoid the needlesscomplexity of building another operationalsilo to support M2M by maximizing the useof their in-place infrastructure and processesto enable an integrated view of both CSP andthird party service providers’ performance.M2M applications such as healthcare needa lot of monitoring to properly prioritisespecific types of traffic.Although most M2M communications willinvolve low bandwidth consumption, theproliferation of devices creates challenges forCSPs in terms of the signalling load this vastarray of devices may place on the network.CSPs have the skills to reduce signallingby the refining the software and operatingsystems; they are accustomed to managingsuch issues at the great scale involved.The stakes are high for CSPs and M2Mproviders. Complexity is the enemy ofprofitability in such a high volume, lowmargin sector. Margins are so low that, ifanything goes wrong and a customer calls,profit from a terminal might be wiped out forthe next two years or more. For that reason,M2M is an area that needs extremely closemanagement. Operators might be able to reusecomponents they already have in place tosupport M2M, but only if those componentsare geared to do so and are upgraded toprovide a common support platform for allthe CSP’s services.M2M SIM card provisioning shouldfollow the same process currently usedfor other service activation components.Once the industry starts to addresscritical applications at greater scale, theinfrastructure will have to be standardisedto facilitate end-to-end service monitoring- services cannot be efficiently fragmentedacross multiple systems.The M2M market is clearly maturing,particularly in Europe, where, accordingto Frost & Sullivan’s telecom analyst YiruZhong, the number of connected devicesgrew by 60 per cent over the past year. Thisstatistic, together with Gartner’s view thatthe market is continuing to grow at a rateof 30-40 per cent per year, suggests that theEuropean M2M market holds much promise,but it is still a long way from maturity.The telecom industry is still migrating from2G wireless to 3G and 4G and incorporatingother technologies such as WiFi and WiMax.Significantly, today M2M communicationis typically one way from a device to acentral control or vice-versa. We can foresee,though, that as the market matures deviceswill communicate with each other, usingpredefined rules and user preferences tomanage day-to-day tasks. For example,if a user places a cap on their electricityconsumption, a smart meter may recognizethey are approaching the limit and, since thehouse’s burglar alarm is armed, may powerdown the air conditioning system. In thisscenario, three systems are communicatingwith each other; they might evencommunicate using a domestic WiFi networkat negligible cost, even though the valuedelivered to the consumer may be significant.Another example of how to integrate M2Mapplications to provide users with greatervalue might be in-car device communicationswith the car park at an airport. As the vehicleapproaches it can signal the car park operatorto reserve a parking space and interface witha loyalty system to award the driver with aspecial deal or a priority space depending ontheir status.As with any immature market, businessmodels are yet to be fully defined. CSPs willhave a role to play thanks to their expertisein networks and in handling processesat great scale. However, a raft of otherorganizations from utility companies - manyof which already have network capacity, tolocal authorities, insurance companies anddedicated M2M providers will all have partsto play.As M2M matures and accelerates over thenext decade there will be mass-market uptakechanging the ways in which we all live.To get there, common support platforms,integration across multiple networks andtechnology types, a greater understanding ofthe value chain and all those involved as wellas a continued focus on cost efficiency willneed to be achieved. •Europe II 2013 • 43

44 • Europe II 2013

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