Rise of the machines (again)

John C. Tanner
03 Sep 2009
00:00

Brisbourne offers KORE's own M2M residential power meter business in North America, which connects 1.1 million homes, as an example. "It took five years to get to that number, and in reality represents less than 10,000 actual cellular connections, because the Phase 2 infrastructure in the utility companies is all about ratios of 40:1 to 100:1 per cellular uplink."

Combine that with the ARPU per M2M connection - which Brisbourne puts at $5 a month on the high end, which works out to just $300 off that one connection over the five-year life-cycle of the device - and compare it to $3,000 per subscriber on a three-year iPhone plan, and the economics of M2M don't look nearly as attractive, Brisbourne says.

"How excited can a carrier get about taking five years to add another 10,000 connections at five bucks a month?" he says. "Then the fundamental question becomes at what point are they going to be fed up with machines not making a blip on their revenue screen, and contrast that with the complexity of front-end tools and systems, integration and relatively slow ramp time. That's the hidden curse in this."

That's not to say Brisbourne thinks carriers should stay out of the M2M business. "Carriers are contributing to M2M significantly by building out more capacity, larger footprints and better reliability, which helps M2M tremendously as we move into new areas like e-book readers, PNDs and even smartphones that can be used for industrial apps like updating tech manuals," he says.

But he maintains that carriers need to recognize that M2M is a complex business with very specialized requirements.

"Carriers can best serve customers that need very simple, vanilla connectivity. For apps that require complex business process management, that's where specialized platforms from Jasper Wireless or ourselves play an important role," he says.

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