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End Users Unanimous: Satellite M2M has a Big Future

The M2M market is seen as a lucrative one for the telecommunications industry as more and more devices become connected. However, outside of traditional verticals such as maritime, will satellite have a big impact when it comes to M2M?

No doubt if you talk to any executive from a major satellite company, they will tell you that M2M and connecting machines is a huge potential growth market for them. At the SATELLITE 2015 Conference and Exhibition, two of the CEOs of the “Big Four” operators said the Internet of Things (IoT) was the next big growth opportunity for satellite. Whether it is smart farming and crop monitoring or transport companies wanting improved asset tracking, the opportunity is there. The question is how important this new wave of connectivity can be to satellite companies.

Elisa Corporation is one of the biggest telcos in Scandinavia. The Finnish telco is already using satellite — not directly in IoT — in some critical places in Lapland and elsewhere. Satellite serves as filler where fixed or mobile services cannot reach. However, Elisa’s M2M needs using satellite are set to increase, particularly in the maritime market.

“The key point is that we will have satellite M2M connectivity coming more in the future. If we think of the old type of fleet management, such as vessels going around the world, you can’t have any other way to communicate other than satellite,” says Kari Terho, vice president of IoT at Elisa Corporation. “I know that one of [our] customers, Wärtsilä, one of the world’s largest vessel engine manufacturers, has a test environment equipped with satellite connectivity. This is 1,000 vessels; it will not take many years before you will see all the vessels in the world will be connected.”

Terho says the operator will use satellite going forward. Elisa works with a number of heavy industries that, having operations in South America or Africa, will require a satellite solution going forward. In areas such as mining, Terho believes satellite-M2M could become a compelling solution. In terms of the potential timeline for Elisa here, Terho says over the next 12 months, Elisa will definitely have satellite communications as part of its offering to its customers. “What we are interested in is satellite M2M and where we can put our own SIM card. Hopefully, we will be using lots of satellite bandwidth. I think maritime will be important. Today, when we are delivering worldwide fixed networks, when you have connections between Helsinki and a forest in Brazil with say a mining company, which needs real-time data, today it would cost a huge amount of money. With satellite, it would be much cheaper and much more reliable. Any global company that has tens of thousands of installations around the world will see more combined telecoms technology networks. You will have fixed line, mobile and you will definitely have more satellite going forward,” he says.

Terho expects M2M to become a major business component for Elisa. The telco generates 1.6 billion euros ($1.76 billion) in annual revenues and has a number of new enterprise customers that will need more complex and affordable data services. The company has a pure video communications services business, and really is just at the start of bringing more complex M2M services to customers. “We are not measure[ing M2M] in terms of revenues. I think maybe at the end of next year, we will have our first revenue target. In five year’s time, it will be major business for Elisa. The target is that it will be a major revenue generator for Elisa,” says Terho.

However, while IoT is one of the latest buzz terms, there is also a lot of confusion of what it actually means to businesses. Terho said in Finland, Elisa was conducting research for the CEOs of industrial companies. In this research from spring 2014, 20 percent of the Finnish CEOs, said they had heard of IoT and the industrial Internet. The same study was conducted again in the fall and this time 67 percent said they know about it. “Marketvisio in Finland then conducted a study in January this year and now most know what IoT and industrial Internet is, but do you know how you can use it? 80 percent of respondents answered that they didn’t know how to use it. Everyone knows they need to do something, but they don’t know to what to do. It is about the total strategy,” Terho adds.

In the United States, Lasso Technologies offers a wide range of satellite or cellular M2M communication and advanced sensor integration solutions. It serves market segments such as energy, and tank and container companies, for example. The company uses Globalstar satellite products to transmit sensor and GPS data back to its Web site or the end customers’ Web portal.

Lasso Technologies transmits as many as 30 channels of data via satellite. These channels might be voltage, temperature, pressure-level, flow, engine data or anything pertaining to what the end customer needs to know to better understand their business processes.

“Once at our website, this data is presented in graphical and tabular form for presentation to the customer. Email information and alert emails, texts, and even phone calls can be made depending upon how the user configures his application,” says Peter McCormick, CEO at Lasso Technologies.

McCormick says the company focuses on one-way communication to keep costs down. He says two-way satellite communication is typically not needed once the system is configured. “Two-way communication often implies remote control, which can be tricky due to liability. The M2M market costs are already falling rapidly as technology improves and single solutions for diverse application needs become more prevalent,” McCormick adds.

The key challenge for a service provider such as Lasso Technologies is offering value for customers in this area, particularly when trying to sell them a satellite-based solution. “Providing a real [Return on Investment] ROI to customers is the biggest challenge. Just because it is cool technology, people won’t buy it unless they need it and real cost savings can be shown. The technology will grow as new unanticipated opportunities arise.

Zencus, a Middle East service provider, uses M2M satellite services for monitoring remote oil field operations for one of the largest oil companies in the region. Zencus helps manages huge amounts of crude oil and natural gas reserves, for example. Zencus works with Thuraya in providing effective M2M solutions for oil and gas customers.

“Last year Zencus successfully completed a strategically important remote monitoring project with one of the largest oil and gas companies in the [Gulf Cooperation Council] GCC. The project involved real-time monitoring of well head and downhole gauges,” says Abed Sneineh, sales and support manager at Zencus. “The compact hardware design of the satellite equipment played a major role in reducing time and cost during both installation and commissioning. The client benefits were two-fold: saving significant costs in manual collection of data from remote well sites, and improving production as a result of better asset management.”

Sneineh sees a very large potential market for satellite-based M2M remote monitoring of oil wells and other production facilities. “The M2M market has been rewarding for Zencus in the last couple of years, and we believe it will grow significantly in the next 12 months as the industry trend toward M2M services continues to expand,” he adds.

Ovinto was created in 2005 with a focus on the tracking and tracing of land vehicles, such as trucks and cars. Its customer base includes companies such as MAN Truck & Bus and Societe Generale Equipment and Financing. The focus within Ovinto has shifted gradually toward equipment, machinery, and unpowered assets like yachts, trailers, containers, and rail wagons with customers such as Securitas, Technocon, Geotraceur, Rietveld, and Rail Service Net. With such a diverse customer base, satellite is now an important part of the equation for Ovinto. Frederick Ronse, CEO of Ovinto, believes the company will also use more satellite going forward as it looks to service its customer base.

“I think, in general, [satellite] will be used more and more as there are so many things out there that we want to follow, monitor, and measure. We started our business by putting cellphones in cars. That was easy because cars have a power source and usually [Global System for Mobile communications] GSM coverage,” he says. “But there are so many more things out there now that are not being adequately monitored yet, or still being controlled manually, that I think, from the perspective of the M2M world and the IoT world, there is gigantic growth ahead of us thanks to satellite communications.”

Companies that work in high-pressure environments stand to benefit hugely from satellite-based M2M. Ronse cites an example where companies want to monitor unpowered assets, vehicles and their contents. Ovinto focuses on tank containers and rail tank cars that are carrying extremely hazardous materials.

“A rail tank car, for instance, is a piece of metal standing somewhere, often in a remote area without its own electricity source and often carrying something that is very dangerous — potentially explosive,” Ronse explains. “The owner or transport company wants to know what is happening to the vehicle and to accurately know the state of its contents.”

Like Terho, avoiding huge roaming costs when using cellular is key when looking to move to satellite. “First, we need the coverage. If I would try to use GSM, I would have constant problems due to roaming. If I were to go outside the [European Union] EU, I would have huge roaming costs. And I would have battery problems. If a container of hydrogen peroxide leaves the Port of Antwerp to go to Nigeria, we simply could not rely on GSM to monitor it throughout its journey,” says Ronse. “Using satellite technology gives us a financial benefit several times above what is possible with other types of communications that are available. It must certainly be x4, x5, x6, but really, satellite, and having low power consumption, is indispensable for this.”

Satellite-based M2M will be increasingly important when improving things like maintenance. When looking at rail wagons, Ronse says many companies currently maintain them manually, which means an engineer going to the wagon, looking at the wheels, and estimating the number of kilometers it has done. He says M2M monitoring can give that engineer essential metrics, such as the miles travelled by that wagon, so they can better plan maintenance. This offers a compelling business case.

“You go from reactive human control toward proactive condition-based efficient maintenance. The evolution of technology will mean we will be able to measure more items more efficiently, with more detail, while using less energy.,” he says.

Beecham Analyst Also Predicts a Bright Future for Satellite

Beecham Research predicts rapid growth in the sales of M2M cellular modules and wireless terminals to the end of 2019, with volumes shipped reaching 154 percent and 166 percent of 2014 levels, respectively. Cellular M2M modules are expected to reach $2.2 billion in sales in 2019. A cellular module is a small integrated assembly that provides cellular connectivity to a user product. It is added directly to the circuit board of the product like a single component, and is embedded in the product.

Robin Duke-Woolley, CEO of Beecham Research, told Via Satellite that he has high hopes for satellite in the M2M arena. In some places, Duke-Woolley believes satellite is beginning to be as competitive as cellular, but only when talking about low data rates.

“The satellite M2M market is growing strongly and consistently,” he says. “It is not growing as fast as the cellular M2M market, but that it is because there are a number of high volume applications specific to cellular that are growing particularly quickly over the next few years, such as smart metering and connected car. As a result of these and other applications, cellular M2M growth is much faster and the percentage of satellite as a proportion of cellular M2M connections will therefore go down. On the other hand, if you look at ARPUs, they are considerably higher for satellite than they are for cellular and revenues are correspondingly higher. We are getting to a realization among enterprises that they need to connect their assets to the Internet wherever they are. We think this will become more common over the next few years and this will considerably aid satellite M2M market growth.”

According to its latest research, Beecham predicts that more than 90 percent of new cellular M2M connections are made using a module built directly into products such as smart meters, security alarms, medical devices, parking meters, and connected cars systems. Compared with that, wireless terminals are defined in the report as general purpose, stand-alone devices with one or more cellular network connections, such as modems, routers, and gateways. Duke-Woolley believes the opportunity for satellite-based M2M will be across all regions, as companies wake up to the potential of satellite.

“North America is the leading market for satellite M2M. Elsewhere, even though the penetration of cellular is much higher across Europe, there are still many remote locations,” he says. “In the Middle East, there is a renewed interest in satellite, particularly around the oil and gas sector.” Duke-Woolley also mentions Africa and Asia as regions where there are a growing number of opportunities. “One issue for satellite is the need for gaining landing rights to operate in a particular country. This has been challenging in countries like India, China, and Russia, but those are now easing. I think we will see much more opportunity in those regions in the future,” he adds. VS