M2M Growth: Connecting almost everything in Telecom

Craig Wigginton, Vice Chairman & U.S. Telecommunications leader, Deloitte & Touche LLP
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Major Marketplace Drivers The big challenge—which also presents a major growth opportunity for the sector—is that consumers  are addicted to connectivity and speed. The ongoing expansion of the mobile ecosystem, coupled with demand for highbandwidth  applications and services such as video and gaming, is keeping  pressure on the industry to increase the availability and  quality of broadband connectivity.
 
"In order to maximize the value of innovation, instead of carriers doing it all themselves, they may want to supplement  traditional offerings with more non-traditional arrangements"
 
What does this mean for players in the sector? Carriers will continue to pursue technological advancements to handle demand,  including offloading some mobile bandwidth needs to Wi-Fi, which is proving an effective complement to mobile networks. At  the same time, long-term spectrum availability, spectrum efficiency, small cells and continued backhaul improvements are  likely to be a key focus to assure continued mobile broadband momentum.
 
Another major marketplace driver is the issue of security. This compasses a myriad of topics, including the threat of  increased risks of hacking and malware as the global adoption of mobile devices continues to rise and Machine-to-Machine  (M2M) communications gains momentum. 
 
Moreover, increasing popularity of Bring-Your-Own-Device (BYOD) in the workplace could exacerbate the potential exposure to  critical company data using malware or other hacking  techniques. Reducing the vulnerability of mobile devices to hacking,  including embedded anti-malware software into devices and enhanced authentication features, will be a key priority for device manufacturers and wireless carriers.
 
Connected World Connected Things
 
As the telecom ecosystem expands, beyond the unending need for broadband access to content and speed, new business models are emerging among both traditional and new players, which could open up markets and change the landscape. Three in particular  show near-term promise.
 
First, mobile payments technology is certainly at a tipping point, and we anticipate it will gain traction in 2014. The  landscape remains fluid as Near Field Communication (NFC) and other technologies jockey for position, but strong growth is  nonetheless likely. Second, the spread of communications services into vertical markets is gaining momentum.
 
Deployed effectively, communications solutions can enhance consumers’  personal and professional lives in realms including  education, health care, automotive, hospitality and beyond. Finally, a broad concept to watch in 2014 is “connected world,  connected things.” Almost everything has a connectivity element to it—which is what sets the stage for M2M growth. There is  vast opportunity to connect almost everything at both the consumer and enterprise levels.
 
Telecom to Expand Footprint
 
“All in all, what is fascinating about the telecommunications ecosystem of 2014 is that mobile is on the leading edge of  innovation that crosses virtually every industry and sector, and is a key engine of economic growth for the U.S.”
 
Innovation has been the cornerstone of success in the mobile ecosystem, and companies should keep pushing on the accelerator  as many more opportunities exist. For example, new devices will continue to arrive with varied price points and different  form factors— bigger screens, flexible screens, curved  screens. Mobile capabilities are being extended into completely new  devices, including wearable technology such as glasses, smart watches and fitness/ health devices—and these are just the tip  of the iceberg. We’ve been seeing indications that the benefit derived from relevant features and functionality, as well as  apps, have greatly improved the value proposition to consumers, resulting in increased receptivity in paying more for  devices.
 
Mobile is driving profits and value creation across the industry, but deploying it isn’t cheap. Telecom companies need to  invest—expanding their footprint, updating technology and infrastructure, acquiring spectrum and funding R&D. Companies that  don’t, or can’t, maintain focus on rapid innovation may lose out to those that do. In order to maximize the value of  innovation, instead of carriers doing it all themselves, they may want to supplement traditional offerings with more  non-traditional arrangements.
 
Rather than building a health care competency themselves, for example, they can team up with health care providers through  joint ventures, partnerships and other relationships. The same dynamic is possible between telecom and financial services  companies, as well as in many other industries.

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