The rapid growth projected for wireless machine-to-machine (M2M) connections and devices bodes well for the network operators that will carry all the traffic. But wireless M2M applications usually consume little bandwidth, which translates into low average revenue per user (ARPU). Service providers are responding with concierge-style M2M services to generate more revenue and widen partnerships within the larger M2M ecosystem.
"The ARPU on a machine-to-machine connection is way, way lower than it is on a handsets, so there has to be a way to create revenue-generating services," said Kathryn Weldon, principal analyst at Current Analysis.
AT&T and Sprint Nextel Corp. separately announced at the CTIA Enterprise & Applications conference in San Francisco last week plans to open labs where application developers, equipment manufacturers, telecom engineers and even enterprise customers can jointly develop wireless M2M services.
Sprint will open its own M2M Collaboration Center later this month in Burlingame, Calif. The working lab will unite partners, suppliers and customers who want to develop and test wireless M2M applications for Sprint's network, according to Tom Nelson, senior marketing manager at Sprint.
Sprint will have staff engineers on site to help teams develop M2M applications. The carrier will also make its 3G and 4G airspace available for tests at the lab. The carrier does not plan to charge to use the lab for short-term projects and expects to work out any possible payments for longer-term projects on an individual basis, he said.
Providing a space for members of the M2M ecosystem to collaborate should ultimately boost Sprint's bottom line, since Sprint will earn revenue on applications that are deployed on its networks, Nelson said.