Cellular Costs Decline, M2M ARPU Remains Steady

Although per-megabyte costs for data transmission over cellular networks continue to fall, the average revenue per user earned by operators offering cellular machine-to-machine (M2M) services shows no sign of declining, according to new findings from ABI Research.

ABI Research senior analyst Sam Lucero says the outlook is for more of the same. “Per megabyte, data charges are declining, but what the M2M service providers tell us is that there’s a corresponding rise in the amount of data end-users are sending each month, so the ARPU is essentially unchanged. This is interesting because M2M, basic telemetry and telematics applications are traditionally thought of as being very low data rate applications, using bandwidth only intermittently.”

This trend, and others, was revealed by the addition of new measurements to the firm’s “M2M Market Data” product.

Although cellular M2M ARPUs are still very low compared to traditional cellular data application returns, many service providers turn to mobile virtual network operator (MVNO) or M2M mobile operator (MMO) business models that allow them to wring economies out of automated processes and profit by fine-tuning their systems for M2M operations.

“Even those traditional mobile network operators (MNOs), which access this market directly see it as a strategic play combining application development with replicable bundled packages that they can offer to a number of high-volume customers,” adds Lucero. “For example, a Sprint Nextel or a Rogers may have an M2M vending machine monitoring application, to which they will add the fleet management telematics for the trucks that service those machines, and the cell phone connectivity for the workers in those trucks. The M2M services enhance the desirability of the higher-ARPU services, and serve as a differentiator.”

ABI Research’s M2M Market Data product was established in 2006 and is updated regularly, but it is based on analysis that ABI Research has been carrying out in M2M markets since 2003, and contains historical data going back to that time. The major change to the M2M Market Data product this quarter has been the addition to the mix of M2M service provider connectivity, revenue, and active subscriber forecasts.

M2M Market Data tracks six major categories of devices: IEEE 802.15.4, ZigBee nodes, Z-Wave nodes, INSTEON RF nodes, cellular M2M modules, and cellular M2M equipment. It forms part of the firm’s M2M Research Service, which also includes Research Reports, Research Briefs, ABI Insights, the ABI Vendor Matrix, and analyst inquiry support.

Founded in 1990 and headquartered in New York, ABI Research maintains global operations supporting annual research programs, intelligence services and market reports in broadband and multimedia, RFID & contactless, M2M, wireless connectivity, mobile wireless, transportation, and emerging technologies. For information call +1.516.624.2500.