A new study by the firm describes a landscape of cellular M2M service providers that shows increasing variety in its business models. Senior analyst Sam Lucero says the research identifies three classes of providers, each offering a different mix of capabilities.
“Traditional mobile network operators (MNOs), mobile virtual network operators (MVNOs), and a small number of specialized M2M mobile operators (MMOs) all face specific challenges and opportunities in delivering this emerging technology.”
Some MNOs, traditionally offering handset-based voice and data services, are now directly entering the M2M market. Examples include Sprint, Rogers Communications, Orange Business Services and others in Europe and Asia. “For the traditional MNO,” says Lucero, “there are problems in entering the M2M market directly. A cellular voice customer ARPU might be in the $50 to $70 per month range, whereas the M2M services ARPU might be just $5 to $15 per month. MNOs don’t want markets without large volume opportunities: a problem in the M2M space because market applications are so fragmented.”
Enter the MVNOs. Reliant wholly on infrastructure provided by MNOs, they focus on aggregating both supply and demand, matching multiple networks to multiple customers. They have organized their processes and operations around serving lower-ARPU markets.
MMOs utilize and aggregate MNOs’ base transceiver stations, but unlike MVNOs, they own key network infrastructure elements, giving them more control over the provisioning, service level agreements, and management functionality they can offer. ABI Research is aware of only two companies fitting that description: Aeris Communications and Jasper Wireless.
The few MNOs that have entered the market directly see it as a “solution” sale, involving system integration work and application development – an opportunity to bundle the M2M services with traditional telecom services. They want to standardize and package these offerings in a way that’s replicable across multiple customers.
It takes a tremendous amount of both application-specific business acumen as well as technological acumen to bring an application to market, and MVNOs, while significant business entities, do not have the same resources as the traditional MNO.
“We think that instead, many MVNOs will opt for a more MMO-like model,” Lucero concludes.