Interview with Telenor Connexion: Inside the world of M2M

| July 11, 2011

Telenor Connexion, the unit of the Telenor Group focused on the machine-to-machine market, has been developing and deploying M2M applications for customers for the past decade. Green Telecom Live speaks with Gwenn Larsson, head of marketing at Telenor Connexion, about what makes M2M different from the rest of the mobile industry and the kinds of infrastructure needed to support increasingly global deployments of M2M applications. Perhaps more importantly, we find out the different business models and charging schemes in place to support thousands, and even millions, of devices sending more and more critical data over wireless networks, across borders, and even continents.

Green Telecom Live: What’s M2M all about and what is Telenor Connexion’s position in the market?
Gwenn Larsson: Putting a SIM card inside a smartphone or tablet is very different from designing a house monitoring system. Some of our competitors have focused on getting as many M2M units deployed as possible, but they are applications like Kindle and focus on the consumer segment to mass release devices.

We deliver something call a premium service and this is for companies that run business and life-critical applications – they recognise that there’s product integration complexities when you are putting in a monitoring service to a healthcare unit, or an automobile – the whole thing has to be tested together. Mostly what we look at is multiple market developments – as in geography – so they are looking to launch services in the Europe, the US, and Japan, something like that.

And then there’s the understanding that machines behave differently than human beings. For incidence, when you walk into a conference and can’t get a signal, you are not going to try a hundred million times to make the call – you are going to give up and try again in a few minutes. But machines don’t think like that, so you have to avoid these kinds of synchronised behaviour – that’s one example that we work with our customers on. We make provisions so the machines don’t all come on at the same time. You can design the application not to behave that way, you can design non-synchronise communications, it could just a few seconds apart. This is something we work with our customers to solve problems with the mobile network – you don’t want 50,000 alarm panels to come online at the same time.

Also, there is the quality of service aspect. There is a big focus in Scandinavia on high quality in all the products. Essentially what makes us different from most of the players in the industry is this quality and reliability focus. In order to achieve that, we offer something call pro-active service awareness, and this is being more proactive with our customers and ensuring the longevity of the service and the quality of the service.

The third thing is we are one of the few companies that have a proven track record across verticals, so we can point to Volvo and Nissan for automotive, Daimler for fleet management, Omron for healthcare, Hitachi for asset management and so on.

Lastly, we are a company that is very focus on ensuring that our customers are aware of the latest trends in embedded connectivity. There are certain governing bodies, GSMA as an example, who have written some guidelines for embedded connectivity, and we ensure that our customers are aware of them.

How does M2M work?
Essentially, we have developed an M2M platform – this is where the data is processed. But in order to deliver this service, we have to leverage mobile networks all over the world. For incidence, we might have a roaming partner in Italy because we don’t own a network there, so we would make an agreement with an operator there to allow our SIM cards to roam there. In Malaysia, we have our own network provided by Digi [Telenor Group company]. It doesn’t really matter because anywhere in the world, we can use the radio network where we have roaming agreements on to connect back to our M2M platform, which then sends the data onward to our customers.

What are some of features offered by Telenor Connexion?
Because we have roaming agreements with operators all over the world, we can put a probe into their network. What a probe does is it allows us to check on a regular basis, the performance of that network. Let’s say this roaming partner in Italy is having a problem with their network, we would send a message to our end customer saying ‘we don’t know if you will experience an issue here, but right now, we are seeing X, Y, Z, problem in Italy.’ This is something that our customers really appreciate, instead of just wondering what the issue is when it happens.

Other things that we can also offer are value-added services that lie outside of the platform itself. There are three different areas – one is connectivity: What we can do is enabled different types of connectivity as part of our offering, to add Wi-Fi, to add CDMA, to add satellite. We can also add data processing functions, so that we can use location-based service information, device management information and bring that all together in one central focal point for the customer.

And then finally, we are working with some companies with special payment set ups, prepaid solutions, smart bill solutions and so on. There’re a lot of value-added services that we can add to our platform that allow us to continue to differentiate from our customers.

What is the typical M2M business model?
There are different business models for different applications. Some of our competitors, they advertise one global standard, one global price, but then it is really expensive. Instead, maybe what you need is a SIM that work in Malaysia, Thailand and India – we can be really flexible in creating a business model based on where a customer actually needs to use the application.

For example, with Hitachi, their machines now have our SIM card in them. The business model that we set up with them is they can potentially pay a package and use it anywhere in the world, or we can charge them on a country-by-country basis, depending on what the roaming rates are. They like to keep track when it is being used and so on. They have created the monitoring tool that they are now selling into other industries.

We can work with some of our customers to ensure the efficiency of the applications, to ensure the amount of data you are sending is optimise – to send costs money, you always want to reduce the size of the packets, and we work with our customers for that.

And we work with them to design the quality of the terminals and how the terminals perform in the network, because that is important too, especially when there’s a problem in the network.

How do you charge for your services?
I can’t even begin to answer that question. If you compare a security monitoring applications, you are only sending data if someone breaks in, or the house is on fire, so you might send one-packet of data a year, maybe less. For Nissan, the application is providing monitoring information to the driver on a constant basis, but maybe some people drive their car everyday, some people drive their car once-a-month, so the business model varies.

Is it all usage-based then?
It’s not always usage-based pricing. For Tomtom for example, it is not usage-based pricing, they predict how much data their customers will use per year and they just sell the Tomtom and the customer doesn’t even know that there’s a SIM card in there.

The objective is not to be cheaper. So if you are implementing, say a home monitoring system, you’re buying it because it is going to save your life. In some cases, you will walk into a car dealership and they will say, ‘we have this feature and it will cost your US$250 extra over the life of your car, but if you crash it is going to send vital data to the authorities.’

M2M packages are charged in a completely different way. We are not billing consumers, we are billing companies and some companies we bill just based on the value of the offering – like Volvo, they could come to us and say ‘I want you to provide this applications to 100,000 vehicles for 10 years, how much will you charge me?’ They don’t really care how many transactions, or how much data, will take place over the network.

Today, the amount of M2M networks relative to people is very, very small. It is such a small part of the industry today, so minute compared to people.

So what are your plans in Asia?
Telenor is in Asia primarily for four reasons. We are trying to find companies who have headquarters in Asia, who want to take an existing, or new, M2M solution and take in internationally. It could be a company who is deployed in Malaysia today and they want to now deploy in multiple markets. If they started out in Malaysia, they are probably just using one of the national providers, but that national provider doesn’t have a M2M focus, and they say ‘we don’t want to take that risk, we want to work with a company that understands.’ The same thing with many of our existing customers, maybe they haven’t launched in Asian markets yet, and it feels more comfortable for them that we have a presence here to support them in that endeavour.

To support that, we have appointed Thomas Strandin as Head of Sales for the Asia Pacific region, and are expanding our Japanese office.

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Category: Applications, Featured articles, Green ICT, Interviews, Mobile, Networks

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