The Internet of Things…to come

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Global telecoms vendors are enthusiastically talking up the benefits that will flow a future where almost everything - inanimate and animate objects alike - has embedded communications functionality, but curiously this scenario does not feature prominently in the Australian mobile industry’s latest bid to sell the benefits of mobile to the wider community.

You might have noticed that Cisco has recently jumped on the Internet-of-Things bandwagon. Marie Hatter, vice president, marketing in Cisco Enterprise Segment Marketing, told us in a blog posting last month that “The Internet of Everything Has Begun.” And in typical Cisco fashion the company has set up a snazzy web site to convey this message.

It’s a montage of photographs behind each of which lurks a message on what the Internet of Everything will bring. A tree links to: “When we connect billions of sensors around the globe on trees, at sea, in the air and in space, they will talk to one another and to us through our intelligent networks. And as we study and share this massive amount of data, we will start to understand and address climate change.”

(I think climate change is well enough understood and all that stops us addressing it is the will to do so, but I digress).

On this particular concept Cisco is in catch up mode. Since at least 2009 by my reckoning Ericsson has been promoting its vision of a world that, by 2020, will have 50 billion connected devices and it has been fleshing out this vision with a number of predictive publications.

For example in a white paper produced in mid 2012, “Goodbye to the industrial age” it envisaged a future, enabled by a myriad of communicating devices, where the sale of goods has largely been supplanted by the sale of functions underpinned by monitored hardware. Instead of buying a dishwasher you buy a crockery-cleaning function with guaranteed SLAs enabled by a dishwasher owned and constantly monitored by the function provider.

The present technology of machine-to-machine (M2M) communications represents the humble beginnings of this future age, so it is somewhat surprising that it has not featured more prominently in the Australian mobile industry’s latest attempt to sell politicians, investors and the wider community on the benefits and importance of mobile communications.

The Australian Mobile Telecommunications Industry (AMTA) has just released a report commissioned from Deloitte Access Economics “Mobile Nation: The economic and social impacts of mobile technology” that AMTA says “highlights the vital role played by mobile telecommunications in lifting Australia’s productivity [and] performance.” It estimates a boost of nearly $12 billion to the economy from current developments by 2025.

One of its key findings is given as: “Mobile technology is moving from a device for individuals to a platform underpinning all business ICT and the structure of the industry is being transformed from a simple supply chain to an emerging ecosystem of mobile technologies that are transforming the economy.”

However, the economic gains envisaged seem largely to flow from mobile communications devices used by people. Its approach to M2M is very low key.

The report notes that M2M “has the potential to benefit many industries, including health, transport and logistics, and education, driving productivity, labour savings and operational efficiency improvements in these sectors…to increase productivity, avoid unnecessary investments and maintenance costs, and dramatically transform capital-intensive sectors of the economy like mining and utilities,” but it does not explore this potential at all or make any attempt to quantify its contribution to that $12b benefit to the economy by 2025.

Certainly that contribution is presently very modest. Telstra revealed in its just released half-year results that M2M contributed just $44m to mobile revenues of $3.4b and that it had 888,000 M2M devices on its network out of total of 14.4 million. M2M devices numbers were up 20 percent on the same period last year and revenues up 10 percent.

Either Telstra has failed spectacularly to grab a decent share of a burgeoning M2M market or its predictions a couple of years ago were wildly optimistic. In September 2010 its director of wireless business applications, Mike Cihra, said: “We want to have the lead role in machine to machine over the next couple of years. We see this opportunity as being very significant financially. Right now in Australia is it worth about $300m and we expect that to go north of $1b over the next four years.”

A year ago, market research company Telsyte issued a fairly bullish forecast for M2M of three million new M2M SIMs connected to mobile networks in Australia by the end of June 2015. Telsyte research director, Foad Fadaghi, said: “More than one-third of Australian businesses not currently using M2M applications are considering them, creating a huge opportunity for carriers, developers and value-added partners who can educate buyers and provide innovate approaches to service delivery.”

Maybe it’s time for AMTA to give the M2M market a kick along by commissioning another study that focuses specifically on M2M: its potential applications and its predicted benefits to the economy as a whole. Certainly if some of the more far-sighted scenarios being developed by the likes of Ericsson are explored and translated into a local context there should be plenty of ideas to fire the imagination.