Beyond 100% Penetration

The mobile communications industry has been a huge success.   Its size now dwarfs that of many other consumer industries.    However this very success has led to a growing problem.   In many countries penetration rates are approaching, or have even reached, 100%.  

In other words just about everyone that wants a mobile phone already has one.  Telematics, or M2M, technologies are therefore very welcome to operators.   They hold out the promise of increased revenue streams and a genuine, high volume, role for data traffic.  They are a way of boosting the market beyond the “100%” barrier.

With the advent of GPRS, with its “always on” technology and billing by MByte rather than by call, a whole range of applications emerged that held out just this very promise.

What’s Hot…And What’s Not?

Contrary to popular belief (and to much of the hype in the media), tracking and vending applications have not proven to be very hot applications in terms of volume and value. 

The most successful applications seem to be those that provide a stream of information that can be input successfully into a business process to provide a marked improvement in customer experience and quality of service.

One good example of this is the GenTrak telematic system.   This uses a telematic device fitted to a generator to provide complete remote operation, management and tracking.   The system can certainly track the generator if it is stolen.  However in reality relatively few are stolen.   The real value behind the GenTrak system is that it can improve the business processes involved in managing a fleet of generators installed across a wide area.  

This includes processes such as the re-fuelling of generators.   By sensing fuel use the system can forecast when a re-fuelling visit is needed and reduce the over number of visits.   For generator rental companies the system can help to ensure that users keep to their service obligations.   It can also report “power on hours” to allow billing by usage.

The net result is a reduction in the cost of ownership and a re-assurance that the generator will be ready for use when it is needed.

However for such applications to be successful they do need to be complete “turn-key” solutions.    There are many telematic companies making wireless boxes.   However most end customers don’t care about the box or the technology behind it.    They just want a slick application that delivers them a benefit.   The flaw in many products today is that the customers are getting drawn into the technical details and, in many cases, getting confused and giving up!

Network Operator Efficiency

Network operators should not just look at telematic technology as a means of driving more usage.   It can also help them to manage their own network in a more effective and efficient way. 

Remote Control

The Tactus SiteWatch system is a good example of how this can be done.  This consists of an intelligent telematics box that is capable of running cameras, intruder alarm systems as well as accepting a myriad of active and passive inputs.

Locally it checks continuously for any of the signs that could lead to a system failure.    

These are signs such as:

·                 Microwave signal levels

·                 Internal temperature

·                 Humidity

·                 Moisture ingress

·                 Mains power supply

·                 Battery status

·                 Generator fuel levels and oil quality

·                 Air handling and cooling systems

·                 Weather: wind speed, temperature etc

If any of these fall outside of a pre-set normal range, the system raises an alarm.   In the event of a complete failure, for example of the microwave link, the system will take a series of pre-set actions such as:

·        Attempt to re-set the microwave system

·        Raise an SNMP alarm

·        Send email and SMS alerts to key staff (if necessary via a competing network)

If all else fails an operator can contact the system and interrogate the various pieces of site hardware and carry out diagnostics.

This combination of preventative maintenance and automated response to failures reduces the overall downtime of network sites and reduces operational costs.

Remote Monitoring

Another application is to use telematics to monitor the network, or more precisely the quality that the network delivers.

A good example is the Sensustech Insight system.   This uses mobile telematic boxes called “PAMs” fitted to taxis or other vehicles moving around the network.   These boxes make and receive phone calls and calculate the clarity of each call together with a number of other measurements.   This is used to generate a dynamic map of quality across the network that can be used to manage network improvements, operate marketing campaigns and increase overall revenue generation on the network.

Is The Car The Star?

A large part of the potential for telematics is seen as coming from road transport.  The number of vehicles on the roads is a large and growing one.

There are in fact a number of key areas:

Road Taxing & Management

The roads through Eastern and Western Europe are becoming ever more crowded.   Congestion is a real and growing problem.    So is traffic damage to the environment and the question of how to pay for the road network.

A widespread solution to this is the introduction of some form of road taxing by usage.   This is of course not new.  There are many schemes linked to the use of particular pieces of road infrastructure such as bridges or fast motorway routes.   There are also schemes specifically targeting congestion to try and encourage the use of public transport.   However the growing number of these has led to the need for a unified method of usage measurement and tax collection.

One approach has been that of an in vehicle telematic unit that tracks the roads that are traveled on and communicates the details to a central server.    Drivers are then charged on account for their use of the roads. 

Initially it is likely that this technology is used on heavy goods vehicles only but eventually it is likely to spread to all users of the road.   Some cynics have pointed out that this will have to happen because the growth in electric and other non petrol based transport will make it difficult for governments to raise revenue through fuel tax.

Road Safety & Security

Governments are focusing a lot of effort on improving road safety.    One way of doing this is by increasing the efficiency and speed of response of the emergency services.

In car telematic systems, often linked to the airbag, can automatically notify the emergency services in case of an accident and direct the ambulance to the exact location.   This faster response can reduce the number of fatalities. 

The threat of terrorism and street crime has also led to the use of telematics to provide in vehicle security for public vehicles such as buses, taxis and trains and for vehicles carrying potentially dangerous cargoes such as high octane fuel.   This use ranges from stolen vehicle tracking to “mugger alerts” where the activation of a panic alarm sends a picture of the assailant and the vehicle position to the police.    Devices with a CANBUS interface can also be used to control the vehicle.  This allows for hi-jacked vehicles to be deactivated.

Driver Information & Other Services

There are a wide range of other services that include stolen vehicle tracking, congestion information, remote engine diagnostics and parking space identification.

Many of these seem highly compelling.  However it appears that the technology is somewhat ahead of the consumer.   When General Motors launched its “OnStar” vehicle telematics service in Germany, few new car buyers made the effort to open their account, even though the service was free of charge for the first year.    A survey conducted by the Freight Transport Association at the end of 2004 concluded that at present many operators still regard mobile phones as adequate for most needs and see "the leap" into telematics as unjustified and too risky.

This user led side of the market may ultimately become very large.   However it will need a lot of education and the production of fully rounded, “plug and play” solutions.

The Main Market Drivers And Issues

A Clear Need

It is very difficult to talk about the telematics market as a whole.   It is highly segmented.  However one thing is very clear.  To be successful a telematic application needs to address a clear need.   Just to offer exciting, “cool” technology is not enough.   If you do that, the innovators in the market might try it out for a while and then move on to the next “cool” thing without the bulk of the market ever taking it up.

Having said that it does seem that, in some cases such as, for example, the photocopier market, the offering of telematic capability can give an OEM product a useful differentiator in an otherwise “vanilla” marketplace.   By offering one advanced feature an OEM manufacturer can potentially give his product an overall impression of being more advanced than the competition.

Another key factor, for consumers, is making the application easy to understand and to use.   If it is not easy the consumer simply gives up.   This also applies to how the service is billed.  Most consumers do not know “how much” a MByte is.    They are therefore worried about billing schemes that use this as a basis.

Skills

Telematics services are complex and require multifunctional skills. Specialised knowledge from several industries is required to make telematics services work - computer hardware and software, consumer electronics and mobile communications. None of these industries can deliver telematics services on their own.

Standards

There are no standards for telematics technology. As of today, there are no common technology standards and protocols for telematics. This may suit car makers striving for differentiation but possibly not their technology partners. Also, this creates a barrier for support organisations – such as for example car roadside assistance and garage services. These will be disinclined to invest in technology that is specific to each make of car.

Technology Availability

For most applications, GPRS has been a huge boon.   Its “always on” nature, and the billing by use rather than by “call”, has made many applications practical for the first time.

However a reliance on GPRS can be problematic.   For example with the GenTrak product we have found that large parts of the world, such as tropical Africa, do not have service.   Even parts of Europe cannot be relied upon to have coverage.   This limits the degree to with telematic applications can be rolled out as a universal answer.

In the case of GenTrak, this problem was solved by providing SMS messaging as a backup that could be used when GPRS failed or was either generally unavailable.  

The Bottom Line

Many providers quote “cost-saving” as a primary driver.  However market experience seems to show that this is not always an easy one to sell.   The user needs to make an investment in order to realize the saving without it being “guaranteed”.

The Secret of Success?

The key to success in telematics is that you must make somebody's life easier rather than more complicated!   It is as simple as that.

If you are prepared to take the time to understand a market and work to give the customers something that improves their life then you will be a success.