Telenor's - Ericsson

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THEME «« connecting machines «« the transformation ▶ 30 EBR #3 2010 “Telenor is involved in a project where we are tracking 10,000 sheep in the wild. There is no limit to what M2M can be used for.” So, it’s not a change just in terms of product offering, but also processes and technical infrastructure. The overall mindset needs to change too, because you are switching from being local to global. Operators tend to be local by nature, while m2m customers are mostly global. Additionally, you really need to understand the verticals of the industry you are talking to. If m2m means growing data traffic and a much lower arpu, is there a risk of a “revenue gap” emerging – that network costs will outstrip revenues? SIMONSEN: Generally, most m2m applications generate small amounts of data, so that is not really a problem. In the longer term, they might drive more traffic; so then it’s about being able to scale. But it’s not at all comparable to the voice business. Most m2m is about large volumes of connections, but relatively small data volumes per connection. However, there is also an opportunity to generate new types of revenue tied to services supporting pure connectivity – some examples include monitoring and surveillance, lab and field testing, and service-level agreements. HAUGLI: Perhaps the main challenge is this: When the average revenue per object (apro) is significantly lower than for voice, you can’t afford to spend a lot of time on phone support per object. That might be an issue for the consumer market unless everything is automated, but for the enterprise market, it is not an issue, because you generally don’t handle individual objects. How is it possible to handle the large number of ip addresses required? SIMONSEN: First of all, ipv6 will take care of the increased demand for ip addresses. When you talk about 50 billion devices, you are not talking about 50 billion ip addresses. There are already ways of utilizing the addresses that limit the requirements. We therefore support both existing ipv4 and ipv6, so the problem will be solved when it arises. HAUGLI: We are making a middleware layer on top of all the devices, in addition to what Telenor Connexion is offering, in some cases. The objects have names that can be a very long string that we look up and translate to a physical address. So we don’t have to do a translation to an ip address locally. And m2m devices are starting to get 12 digit numbers, corresponding to 10,000 devices per person, which should last for a long while. Telenor has created separate entities for m2m. Does that mean that this business is very different from traditional operator organization? SIMONSEN: Yes, we believe it is different and that m2m customers require something fundamentally different from what traditional telecom customers require. You need to take those needs seriously in the marketplace and that is why Telenor has taken the decision to separate the m2m business. But we also have a close relationship with the other parts of Telenor and cooperate with them on customer cases. m2m is different in almost all aspects. Customer service for instance, has to be very different than for mobile phones. When you sell telecom services, you sell it to the it people, but when you sell m2m, you need to speak to a range of people, from top management to business development to product development and operations – all depending on what the customer wants to achieve. m2m sim cards are inserted in the factory, and not by the consumer, as with mobile devices. The customer wants them to be activated when the electricity is switched on. Also, m2m needs around-the-clock availability. Every part of the chain is different, meaning operators that simply add m2m to their portfolio and believe they will succeed will have a hard time. There are different roles to play in the m2m market. Connectivity is only one. Who could challenge the operator’s role as system integrator? HAUGLI: There are at least three positions an operator can take in the m2m market. One is the connectivity position. The second is to be a vertical solution provider, making the whole solution. And the third is providing a sort of “Internet of Things” switch. Telenor has taken all three positions. In reality, the situation varies depending on your wanted position in the value chain and the market you want to enter. I think it is very difficult for a single organization to make an endto-end vertical solution for most markets and situations. And I don’t think telcos are set up to do that anyway. Historically, telcos are good at doing the same thing over and over again and doing it with high quality. But in m2m, you really have to understand the requirements and functionality to do this in a proper way, at all levels including installations and maintenance of devices. Not a single entity could do this well and that’s why we have developed a partner network. SIMONSEN: You can also see competition from other technologies, outside the mobile sphere, such as short-haul types of technologies. Let’s look at connecting meters for instance. There are alternative technologies for deployments, such as Wi-Fi networks at home, fixed networks and
power-line communications. So, if the mobile industry really wants to take its share of the pie, it is important to stimulate and not to hinder the development. HAUGLI: Telenor has taken all three positions. Telenor Connexion is strong in the gsm connectivity space. Telenor Objects is building strength for any connectivity, be it gsm, lte, or fixed broadband. We don’t really care about the communication part; we make that invisible to the application. What kind of alliances do you think are needed in the m2m market? SIMONSEN: This is an important one. Operators need to build new structures, for roaming cooperation and secure price structures that enable m2m-type traffic. And you also need cooperation to get service-level agreements and operator-level agreements in place. Best effort is not good enough and there are competing technologies. HAUGLI: If you move beyond m2m to the “Internet of Things” market, you need standard interfaces to get access to the information without having to know a lot about the connectivity and the devices themselves. You need an abstraction layer in between so getting access to device data becomes as easy as making an internet application. This will require standardization that is not in place yet. There is movement in this area, but it is not going very fast and does not cover all aspects. There are activities in etsi, telecom industry associations in the US and the gsma. We are building alliances with both device and application providers to provide a complete value chain. What projects are important for Telenor’s ambitions to be a leader in the global market? SIMONSEN: We have Daimler as a customer and Connections by vertical industry Global M2M connections by vertical industry, 2010–2015 Million connections 300,0 250,0 200,0 150,0 100,0 50,0 0,0 the transformation «« connecting machines «« THEME that firm needs a global service that works in all their markets, which is putting high demands on us. Another example is Securitas Direct, which wants one standardized solution for alarms that needs to be implemented for international rollout. HAUGLI: We are part of a value chain in Denmark that will be tracking some 3.5 million flower racks with rfid (radio-frequency identification). We will soon deliver similar service for tracking 1,3 million plastic pallets in Norway. These are examples of “design wins” in a segment, which needs to be replicated across many segments. What kind of things do you predict will be connected by 2020 and controllable by mobile devices? HAUGLI: In terms of devices, I think most things we care about that will be targets for m2m, in particular things related to health, lifestyle, your car, cat or dog – all things around you that you care about. As for the enterprise segment, companies want all their assets to be visible, to know where they are and their status. And there will be a lot of sharing of information between players and companies, such as in the transportation industry, to facilitate tracking of objects. As an example Telenor is involved in a project where we are tracking 10,000 sheep in the wild. There is no limit to what m2m can be used for. SIMONSEN: Many devices will be connected, but the question for operators is: what will the business model be and how can they supply m2m in the best way? And the operators must start collaborating more to make this business successful, such as signing m2m roaming agreements. The arpo will be much lower than the arpu they are used to today, so they must look at totally different processes and business models. ● 2010 2011 2012 2013 2014 2015 Source: ABI Research, 2009 Other Healthcare Utilities Transport ▶ EBR #3 2010 31
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Page 4 and 5: contents 4 EBR #3 2010 Ericsson ERI
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Page 8 and 9: details JUST ONE QUESTION ...to Sam
Page 10 and 11: cover story Lucy Küng Basic facts
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Page 14 and 15: cover story Lucy Küng One of the s
Page 16 and 17: Essentially, nobody paid attention
Page 18 and 19: details Femtocells overtake macroce
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Page 62 and 63: details 8 ▶ … OF 10 SPOTS occup
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Telenor's - Ericsson

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