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My New Customer – The Machine
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My New Customer – The Machine

How mobile network operators can exploit new growth potential in M2M by using long-tail business models



Many of the more mature mobile markets are showing signs of saturation: price pressures as a consequence of the intense competition and a substantial slowdown in the number of customers are significantly dragging down turnover growth for operators. But machine-to-machine communications (M2M) offer a new field of growth which is no longer restricted by the behavior of individual consumers. The exploitation of the M2M potential requires modified business models which are able to serve effectively a very large number of applications,frequently with minimal traffic volumes and low ARPS.

More than three billion customers have been acquired worldwide since the market launch of the second generation of mobile networks (2G) a little more than 15 years ago. Market penetration in many of the more mature markets has risen to over 100% because many people have more than one mobile contract. Despite rising usage volumes of existing mobile contracts – voice telephony minutes (minutes of use) are increasing and there is a growing acceptance and use of data services – the price pressures in these markets, a consequence of the ever keener competition, are preventing any major growth in the average revenue per subscriber (ARPS). As far as their classical business with communication services for people is concerned, the only potential for growth still possible for mobile network operators is found either in regions which have not yet been fully developed (for more details, see the article by Dr Karl-Michael Henneking and Dr Bert Kiel) or in the expansion of the service portfolio in the direction of convergent products (see also the interview with Steven Andrews and the article by W. Knospe, P. Krah, and R. Marrakchi). 

M2M Makes Dreams Come True 

Since neither of these two paths is an easy one to take, the eyes of many mobile network operators have recently turned to an area of application which was neglected during the boom years: communication with machines, sensors, and other “intelligent” objects in our technical environment. It would be almost impossible today to find a technical device which did not contain electronic intelligence in the form of one or more microcontrollers. Once such controllers have been connected to the outside world via a communications interface in the form of a modem, they are capable of exchanging data with central infrastructures or other machines. From the viewpoint of the telecommuni­cations industry, a new customer has been “born.” 

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