In the mobile satellite communications industry, the machine-to-machine (M2M) market is in the midst of a period of explosive growth, driven by the burgeoning demand for real-time connectivity and location-based services. Long perceived as a niche provider of narrowband voice and data services for relatively limited vertical markets, the industry is in the process of changing drastically. Mobile satellite service companies will become broad-based providers of mobile data services in tandem with terrestrial wireless networks. Mobile satellite service providers, who until now have counted their subscribers by the thousands, will be looking at an addressable market numbering in the millions, as the demand for always-connected devices increases.
M2M is already the fastest-growing business area for the mobile satellite industry. At, for instance, our commercial M2M subscriber base grew more than 60 percent year over year as of the second quarter of 2011. Other mobile satellite service companies are likely experiencing similar growth rates. We believe this is just the beginning of the wave.
Market demand for M2M services is booming in the public and private sectors. In the defense and security marketplace, we are seeing increased requirements for widespread Blue Force Tracking and battlespace connectivity. Many of these technologies, which started out in the government marketplace, are migrating into the enterprise and now the consumer marketplace. Large organizations are integrating M2M into their enterprise resource planning and logistics management infrastructure in a move to improve visibility and control over assets and value chains. We believe M2M will soon become incorporated into the great majority of customer care and commercial transactions. We expect the real surge will follow as the consumer electronics industry gears up for the coming boom in location-based services as 4G networks supersede earlier-generation wireless technologies.
The GSM Association recently published a report predicting that M2M revenue will grow to $1.2 trillion for mobile operators by 2020, with 24 billion M2M data devices deployed worldwide. Half of them will be mobile connected devices. Major growth markets will be the automotive sector, health care, utilities and — increasingly — consumer electronics. The authors of the study refer to their vision of the future as “The Connected Life.”
Despite the widespread expansion of terrestrial cellular networks, the fact remains that only about 10 percent of the Earth’s surface is currently reached by terrestrial wireless coverage. What about the remaining 90 percent?
Satellite links provide the only practical alternative for M2M across the rest of the world. To that end, mobile satellite service companies such as Iridium are bringing to market smaller, lighter, lower-powered and less-costly data modems that can be embedded by development partners into a wide range of tracking, monitoring and telemetry devices that can be used in places cellular networks cannot reach.
These satellite M2M devices will not compete against cellular networks. Instead, they will integrate satellite and cellular networks in a way that provides seamless, ubiquitous, global data links. Customers want connections, and they don’t really care whether their traffic is routed through satellites or cell towers, as long as they can count on reliable, low-latency throughput at a reasonable cost. KORE Telematics, one of the world’s largest wireless M2M network providers, just introduced a dual-mode satellite-cellular service to provide reliable data links for critical M2M applications regardless of their physical location. Importantly, KORE will offer its customers a single point of contact for billing, reporting, device management, troubleshooting and support. We expect other major wireless operators to soon follow suit with similar dual-mode satellite-cellular service offerings.
The mobile satellite service industry is about to cross over into the wider consumer marketplace. A new generation of two-way personal satellite location, messaging and SOS alerting devices are hitting the market this year, and we are seeing the appearance of new hardware and software applications to make it easier for consumers to interface smart
phones with satellite data devices. We’re now also seeing the appearance of a new generation of dual-mode satellite-cellular M2M data solutions that provide GPS tracking, email, text messaging and SOS alerting with seamless global coverage. They will use intelligent least-cost-routing software to select automatically the most advantageous routing for data traffic.
So what should the mobile satellite industry do to ride this wave? I believe it will require a new mindset. Instead of thinking of an either-or choice between satellite and cellular networks, we should embrace a concept of seamless connectivity that integrates the best of both worlds. This will require new technology solutions, moving from dedicated hardware to flexible chipsets and software that can be used to offer combined satellite-cellular service offerings providing the lowest cost of ownership and maximum availability.
In this way, we can become the leaders, and not the followers, in the evolution toward “The Connected Life.”
Patrick Shay is vice president and general manager of data services for Iridium Communications Inc.