Transcript Regulatory impact on M2M Communications

Regulatory impact
on M2M
Communications
Željko Popović
Agenda
1. M2M INTRO and OVERVIEW oF gLOBAL MARKET
2. UNDERSTANDING THE M2M BUSINESS MODEL
3. IMPACT OF REGULATION AND LEGISLATION
4. cONCLUSION
Ericsson Internal | 2012-09-29 | Page 2
A transforming industry…
Today:
Penetration 120%
Tomorrow:
Penetration 1200%
New
Challenges
Networked
Society
CAGR 60% - 80%
Automation
Self service
Flexibility
Low cost
Visibility & control
SLA
Custom process
Multi level
distribution
Ericsson Internal | 2012-09-29 | Page 3
A VIEW OF THE WORLD IN 2020
EVERYTHING WILL be connected
Drivers
- Entertainment, security, healthcare
- productivity, new revenue streams
- sustainability and regulation
Devices connecting the
masses, such as
Consumer Electronics
and Home Automation
Specialized M2M
applications across all
government, industry &
society
-
Ericsson Internal | 2012-09-29 | Page 4
Ubiquity of Broadband
Declining cost of connectivity
Propargation of embedded M2M Devices
Enablers
Connected Devices Range From
consumer to process oriented
Connected Devices
Triple Play Devices
Handsets, PC’s,
laptops, tablets
IP TV’s etc.
Consumer oriented
Ericsson Internal | 2012-09-29 | Page 5
M2M Devices
Connected
Consumer
Electronics
Devices in
Vehicles, Security
Systems, Smart
Homes,
Infrastructure,
utility meters etc.
Business process oriented
Potential m2m
services
Ericsson Internal | 2012-09-29 | Page 6
Connected devices in verticals
3B middle class consumers x 10 connected devices
30B connected consumer devices
Online
homes
Personal
network
People
Intelli
>1 billion vehicles gent
transpo
rt
Businesses
Smart
utilities
>3 billion utility meters
Ericsson Internal | 2012-09-29 | Page 7
>100B embedded
processors shipped
(cumulative)
Societies
Industry
& society
M2M global vision
networked everything
Improved process
efficiency
Improved human
efficiency
3 waves to get human efficiency
improved
Improved value
Consumer lifecycle
PC, CE & M2M
connections are
getting more
relevance
2007
2010
Ericsson Internal | 2012-09-29 | Page 8
2014
2020
M2m, THE FUTURE
Global M2M CELLULAR Connections by
technology
Global cellular M2M connections split by technology 2011-20
Source: Machina Research 2011
In 2011 there were 180 M
cellular M2M connections,
of which 69% (2G)
However predicted this
will increase to a
staggering 2.5 B cellular
M2M connections in 2020,
of which 50% (3G)
“3G will ultimately come to
dominate”
Ericsson Internal | 2012-09-29 | Page 9
Agenda
1. M2M INTRO and OVERVIEW oF gLOBAL MARKET
2. UNDERSTANDING THE M2M BUSINESS MODEL
3. IMPACT OF REGULATION AND LEGISLATION
4. cONCLUSION
Ericsson Internal | 2012-09-29 | Page 10
Vertical Applications and Horizontal
Solutions
Finance
Communication services
Media
Data collection and processing
Utility
IT & Service Management
Government
Field Force Management
Transport
H2H, H2C, H2M, M2M
(Apps) SP/
enterprise
Support diverse
applications
Industry Specific VAS & Enablement
Business process
command
Monetize assets &
simplify for apps
Business relevant
events & information
Service Enablement
Actuation
Maximize
connectivity
availability
M2M data
M2M Connectivity
Vertical Dev.Sol.
Re-use for cost efficiency and service
innovation
› Vertical applications vs. vertical solutions
› Move away from tightly integrated
solutions
– Multi-purpose device deployments
– Applications using multiple devices
› Long-tail support via re-use and cloud
› Inherent horizontals vs. “pattern
recognition”
Customer Care & Billing
Telecommunication
Generic business processes
› Similar process needs across verticals
› Process decomposition – service
enablers
– Communications services
– Media and content services
– Data capture and processing
services
– Directory services
› Work-flow orchestration in SOA
approach
Networks
Devices
Ericsson Internal | 2012-09-29 | Page 11
Standardization situation,
needs
Applications
System interfaces
Architecture
3rd party
services
• maps
• tag resolver
• location
• billing
• TSM
Service
brokering
Service
Service
discovery composition
Information
Network
enablers
• AAA
• IMS
• Policy
Communication
Access
Access
Communication
Access
Network impacts and
optimizations
Phone
Ericsson Internal | 2012-09-29 | Page 12
Unified interface to
gateways and modules
Vehicle
Home/
building
BAN
”WSAN”
M2M Industry is maturing and
taking off, good timing to act...
M2M early days
(pre 2011)
Market
demand
Current situation
(~2011)
Future
(2014-)
Increasing
Significant
› Growing M2M volumes –
CCE increasingly
important, utility &
transport still large
› ~100 M connections
› Significant M2M volumes in
CCE, transport, utility
› Health/other verticals growing
› 300+ M connections and
growing
Reactive
Exploring
Positioned
› Mostly reactive with
little focus on M2M
› Most operators still
reactive
› Advanced operators have
realized potential and are
taking larger roles e.g.:
› Models will vary across
operators, markets and
verticals, e.g.:
Low
› Low M2M volumes primarily transport and
utility
› <100 M connections
Operator
strategies
Ericsson Internal | 2012-09-29 | Page 13
– Building M2M divisions
– Partnering eg
– Some in integrator/ solution
provider role vs. enterprises
(e.g. AT&T in health)
– Some cooperating to create
scale and reach
– Some passive, rely on e.g.
MVNO’s to drive traffic and
e.g. MVNE’s/SI’s to serve
enterprises
m2m... It’s A fragmented industry
with varying roles in the value chain
M2M VALUE CHAIN
CHIP/
MODULE
DEVICE/
MACHINE
CONNECTIVITY
SERVICE
ENABLEMENT
BUSINESS
SOLTUTION
APPLICATION
AREAS
EXAMPLES
Cons. Conn
Electr.
<10
Cams, TV,
Gaming,
eReaders,…
Incar sol,
asset
tracking,…
Transport
Smart
metering,
…
Utilities
Gov/Security
Surveillance,
alarms, …
PoS
Payment
terminals,
…
Health
#players
Portable
diagnostics,
process aut, …
#players
Other Enterprise
Banking,
vending
machines, …
› General chipset
› M2M specialized
Ericsson Internal | 2012-09-29 | Page 14
› Operators
› MVNOs
› Aggregators
› Small size M2M
specialized SW
vendors
› Few large SIs
› Long tail of small local
M2M specialized SI
Operator Role: ~10-15% connectivity share of
M2M revenues, need for innovations
M2M VALUE CHAIN
CHIP/
MODULE
DEVICE/
MACHINE
CONNECTIVITY
SERVICE
ENABLEMENT
BUSINESS
SOLUTION OR
APPLICATION
OPERATOR ROLES AND SHARE OF POCKET
LEVEL OF INVOLVEMENT
+
VALUE ADDED
SERVICE PROVIDER
90-95 %
ENABLER
PROVIDER
20-40 %
CONNECTIVITY
PROVIDER
-
PASSIVE
WHOLESALE
PROVIDER
Ericsson Internal | 2012-09-29 | Page 15
10-15 %
<10 %
Business Model: Connectivity is key
element in smart metering & smart grid
solutions
M2M VALUE CHAIN FOR SMART METERING
CHIP/
MODULE
DEVICE/
MACHINE
SERVICE
ENABLEMENT
CONNECTIVITY
- GPRS
-Meter
-Meter mgmt automation,
meter data mgmt
BUSINESS
SOLUTION
- CRM, billing etc
COMMUNICATIONS NETWORKS
Connectivity Ownership
› Utility owns communications network:
– Utilities own IP backbone
– Energy Australia has acquired LTE license for
building own communications network
› Use operator’s network:
– Utilities such as ACEA Italy and Utility in NA
Canada are using operator networks
– KPN planning to build dedicated CDMA 450
network for utilities
› Utility MVNO network:
– On-going discussions with utilities
Ericsson Internal | 2012-09-29 | Page 16
Technology
› Fiber
› Power line communications (PLC)
› GPRS
– Often used for smart metering
› LTE
– Technically fits for smart metering & grids
› CDMA 450
– Cost efficient (less base stations required)
– Good indoor coverage (bandwidth)
› Satellite
– GAP filler in remote areas
M2M is different from
consumer business
› Big customers with large volumes & many devices/SIMs
› Volume per device is typically low
› Typically small sessions/messages
› Generally no voice
› Primary use of GPRS
› Part of a solution (embedded)
› Value per bit differs according to application (fire alarm…)
› M2M is about connecting devices and systems and turning
machine data into valuable information for applications
…and M2M customers need to be served differently!
Ericsson Internal | 2012-09-29 | Page 17
Profitability issues, M2m is often
high volume & low ARPU business
ILLUSTRATIVE
High Growth
50B
Low Average Revenue
Per Device
THINGS
PEOPLE
5
0.5
X
PLACES
1875
›
›
›
›
›
›
›
›
1900
1925
1950
1975
2000
-
Low Cost
???
2025
A B2B market with lower cost
COMPERABLE METRIS
M2M
Optimizing
the M2M
Business
ProcessWIRELESS
for profit!
(Illustrative and not associated
with specific
Service
SERVICE
Low customer acquisition cost
Less need of device subsidy
Less marketing cost
SIM within the device for many
more years
Low churn
Automated service management
One customer, many devices
Low network usage per device
› Customer management per customer, not per device
Revupper
Subscriber
$3,00
$50,00
› Average
Simple set
of tailored
customer contracts
› Optimized end-2-end provisioning & service delivery
Customer Acquisition Cost
$0,75
$13,00
› Management of subscriptions in bulk
› Service
Enterprise
self-service
portal
Delivery
and Customer
$0,15
$10,00
› Mgmt
Remote
device
Cost
per management
Subscriber
› Online charging control
› Network
One bill Usage
per customer,
per not per device $0,60
$ 5,00
Subscriber
Ericsson Internal | 2012-09-29 | Page 18
Provider)
Source: Current Analysis Inc, 2010
Agenda
1. M2M INTRO and OVERVIEW oF gLOBAL MARKET
2. UNDERSTANDING THE M2M BUSINESS MODEL
3. IMPACT OF REGULATION AND LEGISLATION
4. cONCLUSION
Ericsson Internal | 2012-09-29 | Page 19
Regulations
important market driver for M2M adoption
› Regulation plays an important role for M2M market growth, particulary in smart
metering and telematics
– The Energy Services Directive (EU directive on nenergy end-use efficiency and
energy services 2006/32/EC)
› 80% of European cosumers are expected to have smart energy meters installed
in their homes by 2020
– eCall directive
› The European Commission is aiming to have a fully functional eCall service to be
in place throughout the EU by 2015
› The eCall initiative aims to deploy a device installed in all vehicles that will
automatically dial 112 in the event of a serious road accident, and wirelessly
send airbag deployment and impact sensor information, as well as GPS
coordinates to local emergency agencies
›
Ericsson Internal | 2012-09-29 | Page 20
Impact of Government
initiatives on M2M standards
› eCall project
– 3GPP developed two specifications to address eCall requirements
(3GPP TS 26.267 – eCall Data Transfer, In-band modem solutionGeneral description; 3GPP TS 26.268 eCall Data Transfer, In-band
modem solution-ANSI-C reference code)
› EC M/441 mandate on smart metering
– Standardisation mandate to CEN, CENELEC, and ETSI to provede
the set of standards needed to deploy interoperable smar metering
systems.
Ericsson Internal | 2012-09-29 | Page 21
Numbering options for
M2M applications
› In the current mobile number range, most
countries will not have enough available numbers
› ECC/CEPT evaluated four possible solutions to
the scarcity problem:
– Option A: Existing mobile number ranges, including
possible expansion of them (E.164 numbers)
– Option B: A new number range for M2M or similar
applications (E.164 numbers) (for example longer
numbers than normal, however maximum 15 digits
according to E.164)
– Option C: An international numbering solution (E.164
numbers)
– Option D: Network internal numbers
Ericsson Internal | 2012-09-29 | Page 22
Structure of IMSI
MC
C
MN
C
MSIN
3 digits
2-3 digits
max of 10 digits
max of 15 digits
•
•
•
MCC = Mobile Country Code (DK = 238)
MNC = Mobile Network Code
MSIN = Mobile Subscription Identification Number
•
MNCs can only be assigned to
”Recognised Operating Agencies”,
i.e. Network operators
M2M issue: privacy
›
Concerns about the Internet of Things
Source: Machina Research, Latitude, Council, Info.nl
2011
›
›
›
Imagine that 5 years from now, most of our physical surroundings – our
cars, home appliances, buildings, roads, natural resources, etc. – are
connected through the Internet of Things. What do you think might be
potential problems or concerns associated? [Free text response] (Source:
Machina Research, Latitude, Council, Info.nl 2011)
Ericsson Internal | 2012-09-29 | Page 23
Top issue amongst a survey of
industry experts
A lot of (very) personal
information is already shared
Concerns re: use by
government, law enforcement
and businesses
They’re concerned too!
Regulatory issues facing the global
deployment of M2M communications
› Most regulatory assumtions to date are based on domestic
deployment of M2M devices resulting in regulatory
frameworks that are inadequate to accomodate
deployment on a global basis
› Issues such as roaming, numbering, lawful
interceprtion, technical regulation and regulatory
barriers could impede the deployment of M2M
communications in different jurisdictions
Ericsson Internal | 2012-09-29 | Page 24
Conclusion
› M2M related technologies are in place and the market has
massive potential for growth
› Standardization is essential for long term development of
the technology and for interoperability of networks and
services
› Operators, integrators and vendors have expressed the
need to standardize end to end M2M
› Regulation in Europe, USA and Asia is pushing for a
standards based solution
› It is essential to have globally compatible standards
Ericsson Internal | 2012-09-29 | Page 25