Billing systems themselves must be flexible to accommodate different billing models, even for the same service. One customer might want to pay once, and have three years of connectivity for the life of a device. Another customer might want to be billed monthly for the connectivity for the same device. Yet another might want to be billed for connectivity in a usage-based manner.

“What is interesting is that it doesn’t seem to be just a legacy system problem; some newer solutions also have the same shortcomings, mainly because of their focus on subscription billing (flat monthly charges with the ability to upgrade or downgrade from packages),” said Brent Maropis, CEO, H2O Overgroup, in an interview with Pipeline. “While subscription billing does offer convenient and easy to understand pricing, we see that usage based or tiered billing is coming back especially in IoT and M2M markets.”  

Finally, and perhaps most importantly, the market is always evolving. In the case of home monitoring, for example, the number of new entrants in the market is staggering. Service providers must have the agility to evolve their offerings in a rapid fashion to remain competitive. This means development cycles that only last hours or days, not weeks, months, or years.

“When a service provider limits customers to “approved” devices or a few service packages, it sets the provider up for market failure,” said Brent Maropis. “If the provider can’t quickly test markets and have the flexibility to adopt what works, the consumer will readily look for something else. This is one reason why Verizon pulled the plug on their home monitoring and control services.” 

M2M Scalability

Scalability is one of the top concerns for M2M solutions. Legacy telecom systems can support millions of subscribers, but run out of runway when the number balloons to a billion. This is not hyperbole. Cisco and Ericsson have predicted that 50 billion devices will be connected by 2020. Huawei is even more optimistic, forecasting 100 billion connected terminals by 2025.

To view it in another light, using the more conservative numbers from Cisco and Ericsson, in 2020, 250 new “things” per second will be coming online. Every day. Every second.

Similarly, the way in which data is managed in traditional telecom doesn’t make sense for M2M/IoT applications. From both a storage (what data is stored) and effervescence (how long data is stored) point of view, new systems must be in place that can efficiently scale to meet the influx of data created by billions of connected devices.

Don’t PaaS on partnerships

In order for CSPs to profitably and efficiently compete in M2M and IoT, they need the right support tools. Some service providers, such as AT&T and Telefonica, are building out their own support infrastructure. For others, buying support systems that are designed specifically for M2M and integrate well with their existing systems make better sense. But there is a third option available: partnership.

Numerous M2M providers offer their M2M Platform as a Service (PaaS). Companies such as Device Cloud Networks, Jasper Wireless, Axeda, AT&T, Aeris Communications, and RacoWireless enable service providers to rapidly enter the M2M market with the right tools in place from the start.

A billion reasons to innovate

The systems used by CSPs to support high-ARPU consumer and enterprise communication were not designed with the business dynamics of M2M in mind.

“Like any other business, the bigger and more diverse you get, the slower and less nimble you become (for the most part),” according to John Horn. “When you look at the telecoms, there are so many different silos, business units, departments, etc. This often equates to longer time to market, more layers of required approvals, and overall, just more work to get to market. In such an entrepreneurial landscape being nimble is critical.” 

CSPs need support systems that are lean, nimble, and highly scalable if they are to succeed in M2M; and beyond the buy-it/build-it paradigm, the case for partnering with an M2M platform provider is also compelling. As the digitally connected revolution spawns new lifestyle and enterprise services, there are literally a billion reasons for CSPs to innovate—100 billion if you ask Huawei.