In the past two years, M2M (machine-to-machine) applications have become one of the most talked-about topics in the wireless industry. While M2M apps can be used for many purposes (such as smart homes, smart metering/electricity meter reading, fleet management, mobile workforce, automobile insurance and vending machines) and in many sectors (such as healthcare, agriculture, commercial, industrial, retail and utility), smart metering applications--also known as smart grids--present the biggest growth potential in the M2M market today. With many leading wireless service providers and utility companies jumping on the bandwagon and the growing support from states like Texas and California, M2M applications are set to become very successful in the coming years.
AT&T in March announced a new alternative for electric utility companies looking to provide the benefits of smart grid technology to the residential sector. AT&T and SmartSynch are for the first time providing utilities with a cost-effective solution by combining a new suite of service plans from AT&T designed specifically for machine to machine (M2M) communications with SmartSynch's smart grid solutions already deployed at more than 100 utilities throughout North America.
With this new solution from AT&T and SmartSynch, electric utility companies will now be able to concentrate on efficient electricity delivery rather than being distracted by building, maintaining, expanding and upgrading a communications network. This new solution offers a cost-effective point-to-point configuration model in which each meter communicates directly with the utility over the AT&T wireless network.
Smart grids combine "smart meters", wireless technology, sensors and software so customers and utilities can closely monitor energy use and cut back when the availability of electricity is stretched to its limit. The IP-based smart grid model ultimately helps consumers understand the economics of their consumption patterns so they can make intelligent decisions about their power consumption. The smart grid technology will also help to enhance reliability and energy efficiency, lower power-line losses and provide utilities with the ability to remotely automate service, providing cost-savings for consumers.
Key benefits of the point to point smart meter solution to utility companies include:
- improved speed of deployment over traditional meshed networks
- the simplicity of an open standard, IP-based network
- the ability to communicate directly with each meter.
How can T-Mobile, the fourth-largest cell phone carrier in the U.S., generate business in the face of dropping net additional subscribers and competition from low-cost cell phone companies? Get into the smart grid. Like AT&T and Verizon, T-Mobile is hoping to leverage its already built-out wireless networks to tap into the coming smart grid boom spurred by the stimulus package. On Thursday, T-Mobile plans to announce that it’s developing a durable SIM card that can be embedded in smart meters (as well as used for other industrial processes), and a new partnership with smart meter technology maker Echelon.
Mobile’s national director of Machine-to-Machine services, John Horn, told us that T-Mobile has been playing in the connected electric meter space for several years, including working with smart meter maker SmartSynch (AT&T has a deal with them, too), and he says the carrier has several utility pilot projects under way in the Pacific, Southwest and Midatlantic regions with an aggregate of “tens of millions” of smart meters. In some of those trials T-Mobile has been testing out its new smart meter SIM card, which is like the SIM card in your regular cell phone, but smaller — 5 by 6 millimeters — more durable and made of silicon, not plastic. Horn says the SIM, which can be connected to any of T-Mobile’s wireless networks, including 3G, can withstand the heat and environmental conditions of being outdoors in a smart meter much better than a standard SIM card.
One of the first smart meter makers to embed the new SIM is Echelon, which is also working with T-Mobile on a smart meter service that will run over T-Mobile’s wireless networks and, according to the companies, is significantly cheaper for utility customers. T-Mobile is just the latest phone company to drop its prices to attract utilities. AT&T and SmartSynch announced a similar deal last week. Horn said of T-Mobile’s smart grid price move: “We’ve broken historical pricing models.”
Network technologies including LTE, mobile WiMAX, WiFi and ZigBee potentially could be used for future smart grid applications. While it is still too soon to tell which technology is likely to become the big winner in this market, mobile WiMAX appears to have an edge over LTE due to mobile WiMAX's time-to-market advantage. Mobile WiMAX also has the advantage of being more reliable and secure than "pure" unlicensed technologies like WiFi. WiMAX can also count on support from leading companies like GE, Intel, Sprint Nextel, Clearwire, Motorola, Samsung and Google, among others.
Most importantly, WiMAX will enable carriers, utility companies and other key players to build open-standards based smart meters. Ultimately, through WiMAX, third parties will be able to develop many applications and devices, helping to reduce cost. With WiMAX chipsets currently running about $36, some observers believe that the cost could become as low as $8 or $6 in the next 18 months.
In the meantime, WiMAX-based smart meters are already available in the U.S. For instance, GE, in association with Intel and Grid Net software, has built one of the first WiMAX-based smart meters. Intel Capital and GE both invested in Grid Net in 2006. Companies competing with GE include companies like Trilliant, Itron, Silver Spring Networks (also one of GE's partners) and Landis & Gyr.
However, over time, LTE could become a valuable option for many companies involved in this space as LTE becomes widely adopted and prices associated with it start to come down. LTE's larger coverage capacity and ability to support a higher number of points should play a key role here. In our opinion, it will also become critical for LTE carriers to offer a decent revenue share with utility companies and other key players.
Although being a short-range technology, ZigBee could also have a role to play in the M2M apps space as several companies have expressed some interest in the technology. In fact, U.S.-based startup Tendril Networks is well positioned to become a pioneer in this space; the company, which teamed up with Itron and Landis & Gyr, has already developed a product called Tendril Residential Energy Ecosystem (TREE), compatible with various ZigBee-based devices to be used for smart grid apps inside homes.
Lastly, if fully secured, WiFi could also become a disruptor. WiFi-based smart grid apps appear to be gaining traction in the U.S. and Europe. For instance, the city of San Jose, in association with Echelon, is currently testing a whole smart streetlight network using WiFi-based smart grids set to be launched this summer. The system may receive federal stimulus money, and if it does the city plans to revamp the entire 65,000-light network, which would help reduce energy costs by 40 percent. That figure is consistent with the performance of two European cities: Milton Keynes in the United Kingdom and Olso in Norway, which have been implemented by Echelon.