It is a top-level decision: with a single resolution, the European Union (EU) has paved the way for further growth by leaps and bounds for machine-to-machine communications (M2M). It has not done so to give this particular industry a boost, but mainly because it is concerned about its citizens’ safety.
Passed in June 2012, the EU resolution states that by 2015, all new cars must be fitted with an eCall system. With the system, an in-car sensor contacts emergency services if the vehicle is involved in a traffic accident, resulting in faster response times.In the U.S., some automakers already offer their customers similar in-vehicle security systems, but there is no nationwide statutory requirement.
The EU ruling has opened the door to new markets and global revenue opportunities. In the first half of 2012 alone, 6.7 million cars were newly registered in EU member-states, and less than one percent had an in-car eCall system.
The eCall system is an example of the consumerization of M2M communications – but it’s only the beginning of the wide range of industries and applications this technology will offer in the coming years.
Global growth market
From automotive to engineering to energy, nearly all industries anticipate achieving high growth rates through the implementation of M2M. The main reasons are that mobile networks now provide nearly total coverage, and the number of possible applications is practically unlimited.
Vehicles in logistics convoys can report their location, mileage and fuel level; freight cars and packages can send their location automatically to a tracking service, and smoke alarms can notify the fire service all by themselves.
More than 100 million vending machines, vehicles, containers and other devices are already connected with each other by a mobile wireless link, and their number is set to rise to around 360 million by 2016, according to the market analysts at Berg Insight of Sweden.
The market researchers at ABI Research go even further: they forecast 453 million connections in 2017. And according to a recent Machina Research survey, the number is set to increase to 12.5 billion by 2020, with global sales generated by M2M totaling EUR 743 billion. These analysts’ figures may vary widely, but even the most conservative estimate leaves no doubt that an M2M boom lies ahead.
Opportunities for the energy industry
The M2M market is still fragmented. In German engineering and plant construction, only one in four companies use M2M applications, according to a study by RAAD Research. M2M technology’s major global breakthrough has yet to happen. The problem is said to be that it is difficult to develop standardized components for M2M communication because, according to the study, the machinery is too heterogeneous.
Individual applications currently exist wherever the developers’ imagination is especially creative. Implementing M2M solutions is not very costly and the tariffs are less expensive than the rates charged for using a cellphone. The initial extra cost of the M2M application has often been recouped within a year.
Example # 1 : In the course of an increasing transition to renewables, many applications are taking shape in the energy industry. When there is a steady, strong wind, many local wind farms generate more electricity than is needed in the locality. The problem is that if too much electricity is fed into the grid, it threatens to collapse.
To prevent that from happening, lawmakers in a number of EU countries have imposed fines of up to several thousands of Euros on network operators.
The solution to the problem is quite simple: let M2M modules on the transformers in the substations measure constantly how much electricity is fed into the grids. If it is too much, the modules simply cut off the overproduction. As a result, the M2M solution is already saving a number of cities in Germany tens of thousands of euros per year.
M2M is not only worthwhile financially. M2M applications can also help to boost energy efficiency. So-called smart metering measures not only the consumer’s electricity consumption. Smart meters also perform control functions in the home.
They can switch the washing machine on when electricity is available at low cost, for example, while a refrigerator could switch off for a while when electricity is expensive. Smart meters also relay consumption data automatically to the power utility. The bill can then show when electricity consumption was high in the home or at the company and which devices are electricity guzzlers.
More efficient processes for service providers
Example # 2 : Service providers can improve their processes by means of M2M. To maintain and service office copiers, for instance, service technicians today have to drive to the customer for a regular service appointment. That is often unnecessary – when the technician finds that the device is in perfect working order.
If, in contrast, all of the company’s copiers are connected by M2M to a central software program, they can send in a status report automatically. The service technician can then tell remotely at any time which copier is used how intensively. Once he knows that, he can decide when a service is required. Billing is made easier too. Copiers submit with their M2M status report the number of copies they have made.
From these reports the service technician can also tell his customer where there is unused potential at his company – such as a copier that is used seldom or not at all. Service will thereby both cost less and improve in quality.
Better healthcare for all
Example #3 : M2M has a special role to play in the healthcare industry. Thanks to M2M more chronically sick people can continue to live at home for longer. Their state of health is checked remotely and automatically. Sensors in portable or implanted devices monitor bodily functions and report the patient’s location to a control center at the same time. If the readings are unsatisfactory, the system sounds the alarm and notifies the mobile carriers.
Stimuli for the ‘Internet of Things’
These three scenarios demonstrate that M2M solutions can be used in a wide range of ways and in nearly every industry. They simplify workflows, improve processes, reduce costs, and make new business models possible. Cross-sectional technology will help the development of the Internet of Things – the networking and simultaneous communication between objects over the Internet, to make a breakthrough. The Internet of Things is intended to enable goods to find their way to their destination by themselves – just like data flows do in the existing Internet.
The Fraunhofer Institute, a German research organization, has demonstrated with the aid of M2M how this can be done. At its Dortmund Institute for Material Flow and Logistics (IML) a supply chain is taking shape that will in the future be able to control itself – from the producer to the customer.
A Self-regulating supply chain
The Dortmund research scientists begin by simulating M2M use in the warehouse by means of several dozen so-called multi-shuttle moves. Self-propelled containers handle all tasks, from removing goods from the bay to delivering them to an order picking station. Thanks to their built-in software they can be located – and they know what they have loaded. The containers can relay this information.
That is how they find their way to right order picking station automatically. They also communicate with each other, thereby ruling out collisions in warehouse transportation.
In the warehouse and in production, self-controlling material flows could be a standard practice toward the end of the decade, the Dortmund researchers say.
Interfaces between warehouse and truck, in contrast, are a bottleneck in the development of the Internet of Things. It is not yet clear when self-controlling material flows will be customary in this area.
Mobile network operators (MNOs) have a key role to play in M2M applications. It is not just that faultless mobile data transmission is the precondition for any M2M solution and for progress by the Internet of Things.
Established MNOs also have advantages in efficient processing of the new data torrent. They can guarantee data protection because it has long been a concern of theirs and they offer many certificated encryption methods. For many companies with M2M applications it matters, for instance, where their data is stored, and Deutsche Telekom for one uses high-security data centers.
MNOs also have an entirely new and additional role to play in the development of the Internet of Things. Instead of just providing SIM cards and connectivity, their role in the multifaceted M2M market is that of new technology enablers and of a link between the many players – ranging from their customers to hardware and software providers.
Robust M2M solutions
Take outdoor solutions, for example, where M2M solutions must be significantly more robust than in a climate-controlled warehouse. Unreliable solutions would lead to a breakdown in the Internet of Things. Conventional SIM cards and cellphones are not suitable for setting up an automated supply chain. Cards are only designed for temperatures of between -10 and +40° Celsius. Shocks and vibrations, humidity and corrosion can also interrupt the contact between SIM card and circuit board, so these cards are unsuitable for harsh environmental conditions.
Components of this kind have already proved their worth in logistics. They are fixed to the shell of overseas containers for purposes of tracking and tracing goods. A solar panel powers their battery and supplies the module with energy that lasts for up to two and a half years even if there is no sunshine.
The example from shipping is by no means exotic. Similar chips are used in the on-board units of thousands of Deutsche Bahn rental bikes that rail customers can usually book by cellphone for their onward journey from the railroad station. Chips used in cars can also withstand extreme fluctuations in temperature.
Technically, individual M2M solutions are fully mature. So what has yet to be done to make further innovations possible and head this booming industry in a sustainable direction?
From standalone solutions to uniform standards
We will only make full use of M2M’s potential if we no longer insist on using standalone solutions at companies and in industries or countries. That is why alliances will in future play a much larger role than hitherto. Operators are collaborating in international programs with hardware and, above all, software providers in numbers that increase by the day. Their aim is to provide users and market participants with uniform technologies and service level agreements that ensure constant availability of the devices and to offer additional service functions as a basis for further innovation.
Telecom providers can drive innovation and collaboration by enabling manufacturers and dealers from around the world to offer their hardware, software, apps and complete M2M solutions on a single platform. Many small innovators do not always have the financial clout to take their inventions to market maturity. They need somewhere centralized where they can look for partners.
Cooperation – a priority for the future
Strong growth in readiness for partnerships between MNOs must exist for M2M to flourish. The Machina Research analysts agree. In a study, they postulated six criteria by which MNOs must, in their view, be excellent if they are to succeed, and partnerships head the list.
We need clear roaming agreements and common standards and platforms. The MNOs’ task is to ensure that infrastructures are as uniform as possible. That can only be achieved internationally and by collaborating. The Global M2M Association (GMA) has already made a start. A cooperation arrangement between Deutsche Telekom, France Télécom and Sweden’s TeliaSonera, it aims to improve quality of service and standards for M2M communication – by means of network interoperability, joint certification of modules, and harmonization of software interfaces (APIs), for example.
The M2M Alliance, to which nearly all of Europe’s leading MNOs belong, takes a similar approach. Telekom is going with the flow because countless exciting M2M applications and development of the Internet of Things will revolutionize the way we live and work in the future. We are at the dawn of a third industrial revolution.
Jürgen Hase is vice president M2M Competence Center, Deutsche Telekom, which has an M2M SIM portfolio includes M2M SIM chips, or MFF-SIMs, in addition to plug-in SIM cards and the MicroSIMs used in smartphones.