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Vodafone M2M chief Erik Brenneis: building a business that sells modules and services, not just connectivity

28 September 2012

Erik Brenneis is in charge of Vodafone’s global machine-to-machine business, running a team drawn from utilities, the car industry and other users to develop and sell advanced services. Interview by Alan Burkitt-Gray

Read more: Vodafone M2M machine to machine smart meters Amazon Kindle


               
Erik Brenneis: The aim to provide integrated solutions, not just
access to the network. Our vision is that we want to be the
market leaders. As the biggest global operator we have a lot
of strengths 
                   
                
Machine-to-machine services are creating huge enthusiasm in the telecoms industry - but Vodafone's Erik Brenneis seems at times to be an executive for whom they are a personal campaign.
He's been working in the area for 12 years, since before most people in telecoms had any idea of the meaning of the terms M2M or machine-to-machine, working for two pioneering companies in the area - first meter company Landis and Gyr and then Siemens and its spin-off, Cinterion.
"I've picked up a little bit of knowledge over those 12 years," says Brenneis, a German who clearly has also picked up the British art of understatement. "That's why Vodafone hired me, to build a market. I had the market knowledge."
He joined Vodafone in October 2009 as head of its worldwide machine-to-machine business. He commutes from his home in Munich to Vodafone's main corporate offices in the UK, both Newbury and London.
"Three years ago Vodafone and the other mobile operators didn't have an M2M strategy," he says.
But there was already an identified demand - particularly from electricity companies that were developing smart metering systems. "Power companies would buy SIM cards to read out data but there wasn't a dedicated machine-to-machine solution."
Vodafone, like many other operators, was providing services to these early M2M users from within the corporate teams of its many national branches worldwide.
"When I came to the company we decided to create a central line of business, with all of the machine-to-machine specialists from around the world gathered into one team."
More than that, Vodafone went outside the group to hire specialists from all the many sectors that it expected to be wanting machine-to-machine services as the industry developed. "We went out and hired people from utilities, the automotive industry, consumer electronics and so on to build the market, to develop our own machine-to-machine service." 
                   
                   
Billing platform 
                   
The unit that Brenneis heads was kept deliberately separate from all of Vodafone's national units. "We built our own software platform and our own billing platform," he recalls.
That's because the future users of machine-to-machine services will want treating very differently from the regular consumers. "If a utility has one million electricity meters it will want one bill for all million meters, not a million bills," smiles Brenneis.
And the system can be programmed with what to expect from each in terms of the service to be billed for. A consumer may use many hundreds of megabytes of data. "If a meter consumes more than megabyte we want an alarm. We can set thresholds."
There's another reason for putting this machine-to-machine unit into a central division of the group.
A Vodafone consumer in Italy, New Zealand or India will go into their local store to sign up - and after that they're reasonably likely to spend most of their time in that country. But a company that makes cars, cameras, washing machines or meters will make them in a limited number of factories. It won't know definitely where they will end up, yet it will want to load up a SIM card into each machine-to-machine unit so that it can be shipped off for sale and use.
"We build our solutions around a global SIM, not national SIMs," says Brenneis. "A car manufacturer doesn't know where each of the cars will ultimately go. You need a global SIM. Otherwise you have to specify where it goes - France, Germany and so on.
"And these are industrialised SIMs that will work over a wide temperature range. The SIM in your phone is built on a strip of plastic. Industrialised SIMs are soldered into the car at the point of production. It needs to work for seven, eight, nine years."
It may be soldered into the device, but it does have a real phone number, he adds. "Sometimes you have to call. For example it may be in an elevator, and when you're stuck you press a button and a connection is opened."
The SIM will automatically register with the local Vodafone company in which the unit is first turned on. "If it's in Germany, it will register with Vodafone Germany - and that has the ability to be able to monitor it."
If there isn't a Vodafone company, it will pick a company that Vodafone has an agreement with: SFR in France, for example, or Swisscom in Switzerland. "We have special roaming agreements and we have agreed special prices."
Those special deals are important, because machine-to-machine services will not in general generate vast amounts of revenue-earning data. But sometimes no data at all. 
              
              
Service fee 
              
"Let me give you an example," says Brenneis. There are Vodafone SIMs in intrusion and fire detectors installed by security companies. "In a perfect world nothing happens and you will never generate traffic. There will be no fire, no break-in. So we agree a service fee that is not based on usage but on availability."
And that brings us to an extra point. A global SIM will roam just like a SIM in a mobile phone that is taken across a border, but with an extra advantage: it will roam in its country of registration too, if there is no suitable Vodafone signal. So that intrusion detector should still work even if the local Vodafone base station has a glitch.
"We compete with Telefónica but our global SIMs will roam onto a Telefónica service if there isn't a Vodafone signal."
Brenneis's group is scattered around the world, in places such the UK, Italy, Spain, Germany, New Zealand and South Africa. "There are more than 200 dedicated M2M specialists reporting in to my team around the world."
The team has members in the US and Japan. "We don't have our own network there, but we do have potential customers," he says. Vodafone Japan was sold to SoftBank in 2005, and though the group has a minority, though substantial, interest in Verizon Wireless in the US it is a CDMA shop so, until LTE becomes a vehicle for M2M, Vodafone's SIMs won't work on that network.
"If you have huge customers like Amazon or Toyota which need a global M2M solution they need our engineers working with them in those countries," he adds. So more than "potential customers", then. 
              
              
Amazon Kindles 
              
Amazon has a contract with Vodafone to connect Kindles sold in most of the world. AT&T has the deal for the US, and Vodafone looks after the rest. (Brenneis didn't say it, but for the first Kindle models Amazon used Sprint - another CDMA house, rendering early acquirers unable to upload new books once they were outside US borders.)
"Today we are market leaders. That was our vision to get there. As the biggest global operator we have a lot of strengths."
The aim, he repeats, is "to provide integrated solutions, not just access to the network. Our vision is that we want to be the market leaders."
The focus is still on growing Vodafone's revenues as an M2M service provider, not just a retailer of data capacity. In addition to Amazon, the company has a strong position with the energy company Centrica - which trades in the UK as British Gas, though it provides electricity as well as natural gas - and with German carmaker BMW. "We use our position to sell more to those customers than just connectivity," he adds.
British Gas is planning to use Vodafone modules in more than a million electricity meters across the UK, he notes. "The European Union has set a target of 2020 for 80% of all electricity meters to be able to be read automatically, though it is up to each member country how to implement that. There is a UK national smart metering project."
One of the next big projects for M2M is for modules for ice cream cabinets and drinks coolers in local stores, he notes. They will be used to monitor the stock levels, the temperature and other parameters - including location, he adds.
One of the famous drinks companies - Brenneis won't say which - found that a shopkeeper somewhere in eastern Europe took his company-supplied cooler home every night for his own personal use, leaving the cans to warm up in the store.
"So in future the company will know if the shopkeeper switches off the energy to move it. And it will be able to check the cooler's location." As well as more mundane matters such as stock levels, no doubt. 
              
              
End-to-end solutions 
              
Brenneis's team is working closely on this project with Zelitron, a machine-to-machine software specialist based in Athens that is part of the Vodafone group.
"Zelitron develops the software to read all the connections and provide meaningful results," he says. It means that Vodafone can sell end-to-end solutions that are more than just network connectivity. "And that means we increase our revenues."
Where else will M2M modules appear? After electricity meters, gas and water will follow, he adds.
Navigation systems already use M2M: "TomTom is one of our biggest customers." Vodafone can judge the speed of the traffic from anonymised signals coming from the TomTom GPS devices, and that means TomTom can deliver congestion information back to those in-car navigation systems.
"I can see connected cameras," says Brenneis. And makers of washing machines and dishwashers are looking at M2M too. Not just to upload fault diagnoses to a central monitoring station so that a service engineer can bring along a spare part on the first visit, but because they're thinking about a pay-per-wash model.
"There are already big industrial systems - professional laundries - where that happens," he says. "This business model will go to the consumer market."
And then, when the washing machine reaches a certain age, the maker can send the owner a message, offering a discount on a new model.
We're clearly at such an early stage in the development of machine-to-machine services that all ideas are being considered. Some of them may end up unworkable - but in a few years many may be so logical that we wonder why things didn't always work like that. What do you mean, the washing machine service engineer had to take it apart to find what was wrong? And why didn't that cola company know where every drinks cooler was?
Brenneis will continue to generate new ideas, and will continue to enthuse about this fast-developing business. "It's a very exciting job, and I love it," he says. 
              
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