Mobile Network Operators Are Eyeing Building Automation as their next M2M Vertical

27 Jan


Building operators are being pitched a multitude of cloud apps accessed by mobile devices for energy management, lighting control, physical security, etc. MNO’s are going to play a role in delivering these applications. But, will it be a matter of providing dumb pipes? Or are MNO product and service contributions destined to be more central and significant to the value chain?

Say what you want about its pipes, the telecommunications industry is anything but dumb. It just scored a major win in its legal battle against the Federal Communications Commission’s (FCC’s) ability to enforce net neutrality. Until mid-January, U.S. law demanded that all data flowing across the open internet be treated equally by Internet Service Providers (ISPs) — no tiered pricing schemes. Now it’s possible to start building toll roads. Mathew Ingram of Gigaom has pulled together the relevant facts and some likely outcomes here. This battle concerned broadband and cable services, but the company that brought the suit, Verizon, and other large telecom companies are MNOs, as well as ISPs. They now have greater flexibility and power in bundling these services for U.S. customers – and the segment of those customers that are building owners and operators make an attractive target for new bundles.

To get into the head of an MNO executive, a few facts often cited in last month’s news about both the net neutrality case and the Nest acquisition by Google are worth recalling. First, the big telecom companies have ceded a lot of market share in traditional businesses –  like person-to-person calling – to new Internet-enabled methods like instant messaging and voice-over-internet protocol (VOIP) calling. And, they have pushed into new businesses. Two of these new areas are relevant to the buildings industry: cellular M2M (machine-to-machine) networking services, which MNOs market to enterprises, and home automation services, which they market to consumers.

Concerning the latter, you would need to be living an unplugged existence to have completely missed the advertising blitz by AT&T Digital Life, Verizon Home Monitoring and Control, or Comcast’s Xfinity Home. Google-Nest will be going up against these brands to capture its share of the connected home market.  Another notable fact: Google has also recently launched an Internet infrastructure business known as Google Fiber. In select U.S. markets like Kansas City, Missouri, and Provo, Utah, subscribers can get gigabit-broadband and TV service – and soon Nest home automation services – all from Google.

Concerning M2M cellular, according to Informa Telecoms & Media (ITM), 315 million public cellular M2M connections will be deployed by 2015, generating $12.81 billion in mobile network revenue.  While not growing as fast as earlier predicted, there have been some significant deals, like General Electric contracting with AT&T to build out its industrial internet.  Also Tesla is working with TeliaSonera in the Nordic and Baltic countries and with AT&T in North America for its M2M Connected Car services. The surveys used to calculate these estimates were run in 2012, collecting data separated by industrial verticals like utilities, transportation, automotive and consumer electronics, i.e. not commercial or industrial building operations. So they weren’t even asking questions about the demand-side of the smart-grid, the garages and parking lots that would be housing the electric cars, or the enterprise building networks that would need to accommodate all the BYOD (bring your own device) activity that has been unleashed over the last few years.

The way the competition is shaping up in the Connected Home and Connected Car markets has some clear implications for the Connected Workplace. You can bet that MNO executives are sizing up the opportunity of selling M2M cellular services for building automation to their building owner and operator customers.  Moreover, they are likely thinking about how M2M could help them compete for enterprise customers against other carriers in their regional markets as well as globally. They’ll be looking to partner with application developers – and the building energy management system vertical is very attractive.  (Automotive, Fleet Management and Smart Grid verticals are already crowded. )

In addition to stellar marketing support, any building-automation app development community that collects around a given MNO’s platform would also need an SDK (software developer kit) that specifies wireless device connectivity.  Due to the potentially large volume of M2M connections involved in any deployment (every ballast in a building for a lighting control application, for example) a device connectivity platform is needed to automate the provisioning and decommissioning of SIMs (a holdover acronym meaning Subscriber Identity Modules) and to automate fault monitoring and policy management. Some big MNO’s, like Vodafone, have their own device connectivity platforms. Others partner with companies likeJasper Wireless and Ericsson for this capability. (Ericsson also provided  technology in the winning 2013 TM Forum Smart Grid Catalyst project that involved remote equipment monitoring.)  Expect these companies to start courting building automation app developers, in concert with their MNO partners.




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