PricewaterhouseCoopers India has released a white paper on M2M technologies. Machine-to-machine (M2M) refers to a four-step process, under which data is generated, transmitted, analysed and acted upon. M2M leverages innovations in micro computing and wireless technology that allow embedded devices to collect and distribute real-time data. In simple terms, M2M is defined as a technology that enables electronic and mechanical devices to communicate with each other seamlessly and function without human intervention.

The M2M system

The M2M system uses devices (such as sensors and meters) to capture an “event” (temperature, inventory level, etc.), relayed through a communication network (wireless, wired or hybrid) to an application (software program), which translates the captured event into meaningful information (for instance, items need to be restocked).

M2M works on four basic principles:

•   Acquiring data through sensors, radio frequency identification (RFID) and related devices

•   Transmitting data through the network channel

•   Making decisions through intelligent application solutions

•   Triggering an action, based on pre-determined rule sets.

 The M2M ecosystem

Telecom companies have been building M2M networks that deliver granular device data to centralised applications that convert it into meaningful information. However, the M2M business is at a nascent stage and business models are evolving, driven by various value propositions for the players in the ecosystem. The four key company categories in the M2M ecosystem are:

•   A hardware and semiconductor company – It provides the end-point devices, from where data is acquired (sensors, global positioning systems units, smart meters, RFID tags, video cameras and smart cards).

•   The communication service provider – It enables the transmission of data between machines.

•   The M2M service provider – It provides specific M2M application solutions for data analysis for decision-making.

•   The system integrator – It has the technical domain expertise to bind all systems together.

The roles of these players may overlap in various business models that will evolve depending on the position of each player and market opportunities.

 M2M in India

Mainstream adoption of M2M technologies in India has gained momentum over the past few years. However, it is still at a nascent stage and as per research studies, will witness widespread adoption within the next few years.

As per industry estimates, the Indian M2M modules (device) market generated $27 million in revenues in 2011 and is expected to generate $82.6 million by 2015, witnessing a compound annual growth rate of 32.3 per cent.

Challenges to adoption of M2M technologies in India

Various technology standards

M2M services are based on various access technology standards as each service has different requirements for mobility, power consumption, ease of roll-out, etc. M2M services that do not require mobility and are concentrated to a geographical area, are based on wireless personal area networks including Bluetooth, ZigBee and 6LowPlan, and proprietary standards like Z-Wave and ANT.

On the other hand, M2M services with a requirement for mobility and wider range are based on wireless technology standards like 2G/3G, IMAX and satellite.

The lack of guidelines for technology standards and protocols limit the benefits driven by uniformity and interoperability, leading to a complicated product life cycle. For example, the use of proprietary standards for smart grids may lead to significant investments in inefficient legacy networks.

The critical link between the M2M network and core enterprise systems is API, a standards-based interface that allows real-time data exchange. Its standardisation will pave the way for real-time interfaces that are lightweight, high scale and continuously available. All these characteristics are fundamental for M2M communications.

 Resale of telecom services by non-telecom players (M2M service providers)

There are various M2M services for which a third-party M2M service provider may need to procure a SIM card or bandwidth from a telecom operator (for example, providing smart grid managed services to a discom which includes bundled services). As per current licensing norms, this would contravene the clause of resale of telecom services and needs to be reviewed in the context of the emerging M2M opportunity.

Identity management

Telecom operators are required to follow stringent norms for subscriber identification. The existing know your customer (KYC) guidelines are based on the principle of traceability of the end-user. However, mostly for such services, the M2M device may not be directly related to a particular user. For example, in fleet management services, although the device is provided by the logistics service provider (procured from the telecom operator), the vehicle may also be owned by the driver. Furthermore, the following cases can increase the complexity of the KYC process:

•   M2M equipment may change ownership. For example, the ownership of M2M technology for security, tracking and performance monitoring in a car would change with a change in the ownership of the car.

•   Several M2M devices could be deployed by a single user (at home and the work-place).

Also, as per current licence conditions, operators are not allowed to send SIM cards out of India without activation. However, in cases where the SIM card is required to be embedded in the product (consumer goods, vehicles, etc.) during manufacturing, such KYC guidelines may not be followed. In this context, the KYC framework needs to be reviewed.

 Data privacy and security

Considering the proliferation of M2M services in every sector, a large volume of information will be generated, transmitted and collated. Ensuring data privacy and security for both individuals and enterprises would be a major impediment to uptake in the absence of safeguards.

With the introduction of cloud computing and innovative service models such as infrastructure-as-a-service (IAAS) and platform-as-a-service (PaaS), multiple M2M applications and databases will be hosted on the cloud. For instance, one of the key issues to be noted for hosting of applications on the cloud is the fact that as per the existing telecom licensing guidelines, subscriber data cannot be taken outside India. However, in cloud computing, several applications will be hosted on servers located outside India, posing issues related to regulatory compliance and data security.

Therefore, data privacy and security issues will need to be addressed.

 Spectrum availability

Currently, M2M services make extensive use of licensed and unlicensed spectrum bands. However, the biggest issue in using unlicensed spectrum is its inadequate availability. This may happen if a high number of M2M devices utilise unlicensed spectrum, especially 2.4 GHz (globally harmonised), through wireless personal area networks (ZigBee, Wi-Fi, etc.). Also, the performance in unlicensed bands would deteriorate significantly due to overcrowding of M2M devices. For licensed spectrum, 2G and 3G spectrum bands are the preferred access medium for M2M devices.

 Roaming

Considering the significance of some of the M2M services (real-time health monitoring, security, etc.), devices may be required to select an alternative backup network during downtime and while roaming.

Hence, there may be a need for a separate roaming agreement framework for M2M services, which can be based on the special numbering scheme identified by the service provider.

 Legal liabilities

M2M services will gain traction in the future, which will make certain M2M services very critical. However, service failure may lead to financial losses. Further, any breach of data privacy could result in a legal liability for service providers. In such cases, it is important to develop a clear framework to tackle the liabilities.

 Conclusion

M2M services have started witnessing increased uptake in India and are driven mainly by enterprises that are looking for the associated benefits in addition to the various government initiatives. Growth will pick up following the introduction of enabling regulations, a reduction in service and device costs and provision of innovative services for the masses.

The business models are currently driven by device-centric solutions. However, with the evolving new value proposition for other players like telecom operators and system integrators, new business models are expected to evolve.