It’s Decision Time for Companies that Rely on M2M

Carl Weinschenk

Weinschenk: What about other apps?

Brisbourne: Many expected far longer [lifecycles] than that for example utilities, automatic meter reading, medical apparatus, home security. In those cases you have to look at what technology choices could or should be made. It is possible to change to 3G or 4G technology. The reason you would do that is that you want certainty of in-service operation. But much of M2M is in use in trucking, pipelines or homes. It is extremely expensive to go out and make technology changes in these scenarios.

Weinschenk: What about companies that are just starting out in the M2M world?

Brisbourne: If a customer or a new provider coming to market today asks for advice, I would say that they have got to be a little crazy not to use 3G minimally in their products today. The cost delta is miniscule. The cost difference a 2G GSM devices and a 3G GSM device certainly is under $10. It is in the mid-teen dollar range for 2G GSM and the mid-$20-range for 3G GSM. We have suppliers today who we are working with who, depending on volume, provide 3G radios in the $22- to $24-dollar range

The cost difference in the bill of materials is miniscule. They are undoubtedly in two camps: those that operate their businesses in a more specific P&L fashion and those [who listen to] enterprise IT who really understand the importance of designing for longer life cycle.

Weinschenk: So the reaction of companies facing 2G sunsetting depends to an extent on where the company is in terms of M2M deployment.

Brisbourne: The folks that are faced with this situation really fall into three groups: Group one is those that have 2G devices in the network already and partly through their life and probably will expire in the next three or four years. As a result they continue to service those devices. In some cases the lowest cost option is to keep them in service. They could be more from one network to a second — say, AT&T to T-Mobile — but we caution our customers to be extremely careful on the relative risk of doing that. They may find large holes in network anyway because of related refarming of other networks.

Weinschenk: The second?

Brisbourne: Number two involves the design of their next-generation 3G product. Most in this group are in the process of migrating and need to make sure they’ve got the right technology. The leading modem vendors — Cinterion, Telit and Sierra Wireless — have expanded a lot of efforts in attempting to make pin-compatible and software-compatible radio modems that can migrate to 3G with limited reengineering. It still means reengineering by customers, however. It is a bit like the phasing out of lead gasoline that was going to bring a whole new generation of problems to cars on the road. You must give five or six years notice for people to think about it.

Weinschenk: And, finally, the third?

Brisbourne: The third is to look to see how long it will be before the 4G technologies become inexpensive enough in terms of devices and specific coverage to meet the businesses’ needs. In the meantime, companies can try to eke out usage on 2G before moving to 4G products. This is fraught with reasonably significant risk. It depends on nature of business you are in.

Weinschenk: It seems that 3G is a rather short bridge between 2G and the ultimate goal of 4G. Is that so?

Brisbourne: Our view is 3G is doomed: It will have one of the shortest lifespans of technological innovations. It will be with us through the center part of the next decade. That is 10 years from today.

Weinschenk: So why use it at all, and not right to 4G? It’s available …

Brisbourne: [3G] is solid and assured and largely ubiquitous technology. It is inexpensive to deploy, uses a limited set of channels and has effective international roaming capabilities. It can be built to one standard. Going to 4G has a profound set of challenges, including the high cost of device and multiple frequencies. It is quite nichy and will remain quite nichy for some time.

Weinschenk: Is the attractiveness of 4G for M2M due to cost or that there just won’t be enough 3G spectrum available for advanced applications?

Brisbourne: Even though things like videocams for security still don’t chew up a whole lot of data … 4G in the future will be less expensive for those richer applications. Any business that starts today with a basic app is expecting that app will have to get richer over its life cycle. 2G networks have high recurring costs and therefore are not competitive with 3G and 4G [as the apps grow to be more demanding].

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