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Huawei Technologies

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2/5Win-Win/ JAN 2010

Perspective

By Bob Emmerson, European Editor of M2M Magazine

M2M: the Internet of 50billion devicesMachine-to-Machine (M2M) communications is a healthy sector thats expanding rapidly and generating

signicant revenues for mobile network operators (MNOs). Devices outnumber subscribers by an order of

magnitude, but the term doesnt do justice to the concept and the market it represents.

rose by any other name would smell as sweet(Shakespeare), but we really need a denitionin order to convey the breadth and depth o theM2M concept. Tis one (edited slightly) comes

rom Numerex:M2M uses a device (sensor, meter, etc.) to capture

an event (temperature, inventory level, etc.), which isrelayed through a network (wireless, wired or hybrid)to an application (sotware program), that translates the

captured event into meaningul inormation (e.g., itemsneed to be restocked).here are many more devices than people so we are

talking about an enormous market in which numerousopportunities are opening up or vendors, solutionproviders, systems integrators and MNOs. Its openingup because M2M technology will increasingly underpinkey areas o the economy, or example, the smart (green)grid, networked homes, healthcare in the home andtransportation (usage-based auto insurance and theemergency eCall system or cars).

MNOs play a pivotal roleUntil recently most MNOs have taken an indirect,

albeit pivotal role in the value chain. heir networkstransport the data trafc rom the sensors to the back-ofcesystems, i.e. they carry the bits. But M2M technology ismoving into consumer sectors such as smart meters in thehome, so the numbers shoot up and there is an emergingbusiness case or a direct role and thereby a more protableposition in the value chain.

However, in order to be a direct player, MNOs need

a middleware platorm, hence the recent partnershipannouncements between A& and Jasper Wireless, KPNand Jasper Wireless, and -Mobile and Sierra Wireless.Vodaone has developed a platorm, which it launched inJuly 2009, and both Orange and elenor have their ownplatorms.

Migrating rom being an indirect player to a directplayer like Orange and elenor will take time, so we canexpect to see the process speeding up via acquisitions, e.g.

platorm vendors will be bought. MNOs also need systemsintegration resources to become a direct player in theenterprise space.

The value chain

he M2M value chain is somewhat complex and atypical solution can involve ve or more vendors. Sensorsare used to measure a particular parameter and theycan operate independently, e.g. switch lights on and oand they can communicate directly with other sensorsover short distances. However, an embedded module isnormally used to transmit the measured data and in awide-area wireless scenario the communications mediumwill be a cellular network.

Application sotware running on an M2M platormis then used to convert raw data into useul inormation.For example, the application might display the location ovehicles on a map or it could aggregate the input o tens othousands o smart meters and transer the result to a backofce billing system.

here are numerous vertical applications and theybroadly divide into six categories: elematics/Fleet

A

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humidity (5%-95%), shock, air pollution and congestedwireless network trafc.

Firmware Over-the-Air (a technology that xes devicesotware remotely) is an interesting eature. In additionthere are multiple interaces that allow connection toother devices, voice and SMS services, and support ormainstream operating systems such as Windows 2000, XP,Vista and Linux.

Te primary task o an embedded module is to convert

analog sensor data into IP packets or transmission over acommunications medium, e.g. GPRS or 3G. In additionthere are intelligent wireless modules that allow part othe application to run in Java directly on the embeddedbaseband processor. For example, the application may sendhealthcare data at regular intervals, e.g. every 15 minutes,but i the measured parameter exceeds a pre-set limit thenlocal intelligence will kick in and an alarm will be sentimmediately.

Embedded SIMs

M2M SIMs have a smaller chip than those used orregular mobile communications. hey are embedded inthe device or on the wireless modules and they providethe identity o the networked devices (aka assets). heycan be connected via a socket or be soldered to the printedcircuit board. Te environmental parameters or SIMs arethe same as the modules, i.e. temperature range, vibration,humidity tolerance, etc.

SIM vendors as well as MNOs are working with ESIand 3GPP on nalizing the specications or a new ormactor. A compromise o both removable and solderedsolution is under study in order to address compatibility

Management; Consumer; Healthcare; Energy/Utilities;Security and Industrial/Building Control.

Self-powered sensors

Sensors need to be powered and batteries are otenemployed, but a technology known as energy harvestingtakes the necessary power rom its surroundings: orexample, rom linear motion, light, or dierences intemperature. Te amount o energy obtained in this wayis enough to send a wireless signal a short distance (10to 30 meters inside buildings) and perorm a task, e.g.turn on a light. Eicient energy converters, ultra-low-power electronic circuitry and a reliable wireless protocolcharacterize the technology.

Te EnOcean Alliance has created an open specicationdesigned to ensure interoperability between sel-poweredsensors. Te receivers/gateways are wired powered as theyare constantly awake listening or traic. EnOceanclaims that sel-powered sensors enable businesses toachieve savings up to 40% in energy and operating costs.o date components that employ this technology are inuse in more than 100,000 buildings worldwide.

Embedded modules

Modules, both wireline and wireless, are normallyembedded inside equipment and in many cases theenvironment will be severe. For example, Huaweis EM7003G embedded module, the world s rst industrial strengthM2M embedded module, has been designed to endureextreme conditions, such as temperatures ranging rom-30C to +75C. It is also resistant to very high and low

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Perspective

wi th bo th th e ex ist in g SI M su pp ly ch ai n as we ll asautomated pick and place systems.

In the uture we are likely to have a product range thatdivides into three sectors: (1) consumer grade SIMs orregular applications; (2) reinorced SIMs or use in harder

environments where removability, device compatibility andtime to market are the decision drivers; and (3) industrialgrade devices or use in extreme/harsh environments.

Middleware platforms

Middleware platorms establish a link between thenetwork and companies business processes, therebyproviding real time visibility and control to the customer.In a nutshell, the primary purpose is to give sotwaredevelopers an application view o the end-to-end M2Mdata, i.e. platorms remove the need to understand what isgoing on at bits and bytes level.

Middleware is basically a set o services; you can thinko it as an M2M operating system, albeit a proprietary oneright now. Functionality will typically include provisioningthe devices, activating and deactivating SIMs remotely aswell as routing, buering, ormatting and managing theM2M data ow.

MNOs can and have built their own platorms, but itrepresents a signicant investment. Moreover it takes timeand the market isnt going to wait, hence the prognosis thatwe can expect more partnerships ollowed by acquisitions.

Te platorm may also have a graphical user interacethat allows customers to see how their devices areperorming and when relevant it provides detailed analysiso network behavior and makes sense o the data that hasbeen collected at all levels o aggregation.

Wireless Logic provides a similar ac ility via a webportal known as SIMPRO that works alongside thecompanys our main Virtual Private Networks (VPNs),which run over the networks o O2, Orange, -Mobile andVodaone. Functionality includes the ability to monitor,activate, and produce real-time data reports or all installedSIMs.

MNOs tapping the marketTe global M2M market is healthy and expanding, so

there are endless opportunities or all parties in the valuechain. MNOs are particularly well placed since they playa pivotal role and they can maximize the opportunitywithout making additional inrastructure investments.However, there are underlying challenges that shouldbe addressed, principally the need to look beyond theirtraditional business and operational models.

Cellular communications

M2M data can be communicated over any regularmedium. Ethernet, or example, is employed in actoryloor scenarios as well as Wi-Fi, but or wide areadeployments cellular is the obvious preerence, particularlythose that are international and where the assets may be

mobile.Each module in a cellular deployment has an IP

address. In uture, when homes have smart utility meters,there will be millions o devices communicating with acentral acility. And this is just one application. Tus, itsclear that M2M is going to generate a tremendous amounto data traic, which is why MNOs are getting seriousabout this space. However, there are issues.

In most applications there will be short bursts o data atregular short intervals. Tereore when a million and moredevices are going on an o line to carry short bursts o datait becomes impractical to allocate IP address in the regular

dynamic way. Te overhead is ar too high; thereore thedevices are given a static address. Tis means that the datais transported over a secure VPN.

As more and more M2M appl ications are deployedaround the world the number o communications-enableddevices will run into tens o billions. One widely quotedstatistic is a igure o 50 billion devices by 2010 versus6.5 billion people. Tereore MNOs will migrate to IPv6,which supports 2128 addresses, in order to accommodatetomorrows trafc.

As well as having a gigantic address space, IPv6 hasadditional eatures, one o which is network security. Te

Internet Protocol Security (IPsec) is integrated into thedesign o the IPv6 architecture and IPsec is mandated as aundamental interoperability requirement.

Ubiquitous access and global connectivity

Cellular networks provide ubiquitous access and globalconnectivity, but MNOs are just one playeralbeit animportant onein the value chain.

As in di ca ted ea rl ie r, most MN Os have pl ayed anindirect role in the development o M2M applications;their role has been that o a bit pipe. Te key link in thevalue chain is the middleware platorm and the companieswh o hav e cre at ed a pl at o rm in or de r to pr ov ide amanaged, secure, wireless data service.

hese companies are oten called Mobile VirtualNetwork Operators (MVNOs), but this term can beconusing. Regular MVNOs buy wholesale airtime romMNOs, which they use to retail competing services,mainly voice and SMS, to their subscribers. Tey are calledMVNOs because they dont own base stations, but theirmanaged M2M services are not competitive. Te businessrelationship is that o a partner and the M2M data services

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they market generate additional revenue or the MNOs.Wyless is one such company, they operate in over

120 countries and thereore they reer to themselves as aglobal network enabler. Wireless Logic is another, theytalk about SIM aggregation. In both cases they partner

with ier 1 MNOs in order to oer robust, secure accesswherever and whenever its needed.

Note that this service involves establishing VPNs acrossthe networks o dierent operators, establishing roamingagreements and negotiating local taris. Tis is the servicethat they oer to the application developers and in mostcases the service is coupled to a middleware platorm.Tereore the combination allows developers to ocus ontheir core competence and the MNOs only have to dealwith companies that understand data communications.

MVNEs: what are they?

An MVNE is a Mobile Virtual Network Enabler; itsa company that provides inrastructure and services thatenable M2M MVNOs to oer services to their end-usercustomers.

Te key benets are: lower CAPEX (shared platorm);lower OPEX (shared resource poll); and quicker time tomarket (the requisite platorm is in place).

Aspide r So lu ti ons is an MVNE th at o e rs M2 Menabling services to MVNOs. Key eatures include: real-time SIM card management, real-time cost control, raudmanagement and IP number management. However,

MVNOs have ull control and ownership o their SIMcards.

he p la t orm can be enhanced with spec i icunctionality, or example: raud management; settingcredit limits; ticketing system; tools or analyzing trafc;network monitoring; automated SIM ordering; andreporting. In addition there are comprehensive datacollection and data handling services.

MVNOs use the platorm to create their M2Msolutions, but Aspider also oers value-add services. Teseinclude: veriication/validation o GPS data; networkinitiated remote wake-up services or disconnected (un-

ping-able) devices; enhanced roaming services with bearertesting and improved border crossing roaming algorithmsor tracking and tracing applications.

Early bird MNOs

elenor, the incumbent operator in Norway, runsits M2M activities via a separate company, elenorConnextion, and more recently they created elenorObjects, which is running an ambitious, orward-lookinginitiative.

Right now M2M solutions are running on proprietary

platorms, but elenor Objects is predicting a shit romvertically integrated and closed solutions to a layered, openapproach. he basic idea is to enable communicationsbetween devices, systems and sotware applicationsthrough a new inrastructure that employs Object Service

Enablement Functions.his new, open inrastructure would provide services

and eatures common to many applications, therebyreducing complexity, development eort and maintenancecosts. here would also be signiicant operating costsavings since the resulting managed service inrastructurecould be shared across many independent applications.

However, the really big beneits would come romthe ability to allow sensor inormation to be shared in asecure manner across any application and to allow anydevice to connect to any application. his means thatnew applications could be created on the basis o installed

devices, i.e. there would be no need to keep on reinventingM2M wheels.

he value o object networks would increaseexponentially with the number o nodes. his is avariation o Metcales Law, which states that the value o atelecommunications network is proportional to the squareo the number o connected users o the system. elenorObjects expects this development to result in hyper growthwhen a critical mass is reached, which is what happenedwith the Internet.

Looking aheadAlthough M2M represents a rel atively small niche

market within the telecommunications market, it hitthe media headlines in 2009 ollowing the smart gridannouncements o the Obama administration and theresulting impact on the environment.

M2M also has the potential to address other keyconcerns, e.g. the act that populations are aging andhealth care costs are rising. In addition to healthcare in thehome, the industry has developed and implemented usage-based auto insurance solutions and the emergency eCallsystem or cars.

he niche is thereore set to grow signiicantly andas a result it will generate a huge amount o additionaldata trafc and thereby generate signicant new revenuestreams or the MNOs, even i they continue to play anindirect role. However, it is clear that the ier 1 operatorswill move up the value chain in order to optimize the hugerevenue opportunity. his development has started, oneexample being the partnership between A& and JasperWireless.

Editor: Yao Haifei [email protected]

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