Every Move You Make
By Peggy Anne Salz, Mon Nov 17 07:45:00 GMT 2003
There's no one on the road and you're free to put the pedal to the metal. After all, no one is looking, right? Wrong.
BANG! You're hit from behind. Embedded processors in the car sense the impact. Inside a "black box" - the size of two decks of cards - a wireless module, which is essentially a stripped-down mobile phone that allows objects to communicate with each other regardless of distance, picks up on this. It uses GSM or GPRS to "tell" your insurance company. Your car is a witness and you can bet your premium will jump. In the same vein, if you're a model Sunday driver who makes Mr.Rogers look reckless, then your car is a character witness - and you can expect a better deal on your insurance.
This isn't the future. This is now. Pay As You Drive (PAYD) is a new M2M (short for machine-to-machine, man-to-machine, and mobile-to-machine communications) concept gaining steam in the mobile space.
The most ambitious PAYD pilot is in the UK. IBM has joined up with Celestica (maker of black boxes) and Norwich Union, a major insurance company and UK operator Orange to monitor 5,000 cars and their drivers wirelessly. Norwich will calculate insurance premiums based on a risk assessment of data transmitted by the cars' black boxes. According to market research commissioned by Norwich, nine in ten people would prefer their car insurance to reflect how they drive (in every detail). So, there appear to be no major privacy concerns here - yet.
Governments are also sold on the concept. In fact, a senior exec at a mobile company recently told me a Nordic government is planning to use the technology to monitor how economically drivers drive their cars. If you waste gas, then you'll pay a higher price at the gas station. If you drive smoothly and conserve, you can expect to pay a lower price. It's a good deal all around. The government figures it's a great incentive to conserve gas-and save the environment.
But the appeal of M2M goes beyond the insurance industry and telematics. At a recent Siemens press event I learned that wireless modules are showing up in applications ranging from logistics, where wireless modules GSM and GPS allow companies to track goods around the globe, to mammal research, where wireless modules provide the all-important link between marine biologists and the endangered grey seal pups they study.
Companies are also beginning to target the consumer market with some great M2M gadgets, including a portable ECG unit from an Israeli manufacturer that uses the wireless modules to transmit patient data to the relevant locations at the first signs of a potential heart attack. And then there were a whole slew of senior care services that use wireless modules and mobile networks to help recover missing nursing home occupants from emergency situations.
My gut feeling that consumer-focused M2M will be big business has been confirmed by a recent report released by Wireless Data Research. It forecasts the global M2M market will be more than $28 billion in 2007. It found the M2M market was $3.4 billion in 2002 - and healthcare accounted for a whopping $1 billion of the total.
Another lucrative concept using M2M technology is car crash information. IBM recently announced a world-first telematics network to provide the Irish government with information can help speed emergency response and prevent fraudulent claims thanks to detailed data about the location and scope of an accident. The black boxes in this scheme cost $300. So far, IBM has declined to reveal the identity of its mobile operator partner in this pilot.
M2M is a mixed bag - and the jury is out on whether RFID is a complementary or competitor technology to wireless modules. The fact is
M2M schemes around wireless modules are happening NOW and with existing networks. Meanwhile, RFID, widely considered to be the mother of M2M technologies, is blocked by obstacles including cost, standards and frequency.
Take for instance, RFID tags started out at $1 and are now in the 20 cents range -but the price has to come down to 5 cents or under to get volume; the RFID readers also carry a high price tag.
Moreover, we lack harmonized international regulations for RFID (which means we can't use it for global track and trace yet - we can use wireless modules, however). The RFID Journal reports that Japan has finally allocated a portion of the UHF spectrum for use by RFID systems.
We were hoping for a boost from Wal-Mart, the poster child of the RFID industry. But a couple of weeks ago Wal-Mart backed down from its plan to push its top 100 suppliers to adopt RFID by end-2004. Instead, Wal-Mart is most likely limit the rollout to three distribution centers and 150 stores in Texas. This is generally interpreted as a sign that the RFID revolution will take longer than we think.
Not so for M2M via wireless modules. The EU has identified this M2M technology as the one it wants to ring online to cut accidents by 50% by 2010. Against this backdrop, IBM and its partners forecast millions of cars in North America and Europe could be fitted with the devices within the next five years.
Those are encouraging numbers that point to a lucrative opportunity in M2M - long before RFID becomes mainstream. In fact, some M2M schemes can trigger one SMS message every 10 minutes, that's more than 100 times the average SMS traffic of the average human caller. Simple arithmetic tells us M2M between billions of objects is the shot in the arm the mobile industry needs.
Now all the industry has to do is reshuffle existing wireless technologies and networks to create new M2M services. The pay off is increased ARPU for cash-strapped carriers - and loads of credibility for their fledgling enterprise offerings.