MTS M2M Telematics

Development of telematic services in MTS

MTS became the Russia's first telecommunication company systemically advancing a product portfolio on the basis of M2M at the federal level.

Start of service of the protected data transmission, the telematic solution for monitoring of NICKNAME motor transport and start in December, 2009 of the Telematics rate created especially for corporate clients and focused on data transmission between electronic devices was the first step in the strategy of development M2M of services. The next step — start of the innovation product for market M2M — reliable and durable heat-resistant SIM cards in March, 2010. Such SIM cards gained distribution in the world only in 2008-2009, and in the Russian market before one operator had no such offers. And in January, 2011 MTS started new generation of SIM cards – in a microchip form factor for data transmission devices. MTS is going and to expand further functionality of M2M-services, in particular, at the expense of new opportunities of M2M of SIM cards, new options of telematic rates and also to actively use the fixed communication lines of Comstar for the purpose of additional protection of transmitted data. In September, 2011 MTS started M2M-manager service which allows to configure and control in real time from the screen of any computer in MTS network operation of the different M2M-equipment.

In plans of the company – upgrade of services and implementation of additional functions, including, expansion of functionality of a management system for M2M SIM cards, optimization of telematic rates of MTS.

World experience

M2M in the world began to develop slightly earlier, than similar services came to Russia. But already now the Russian dynamics is practically at the level of universal. The research agency Yankee Group considers that the world market of M2M will show in the next decade some of the highest growth rates in a segment of services of wireless communication. Yankee Group predicts growth of quantity of M2M of connections between devices in the world to 217.5 million in 2015 from 81.8 million during 2011. Revenues of operators from providing M2M of services for the same period will grow more than twice: to 6.7 billion dollars in 2015 with 3.1 billion dollars in 2011.

The Infonetics Research agency, in turn, estimated quantity of m2m of connections between devices in the world in 2010 at 87 million and expects growth of such connections to 428 million by 2014. The agency expects that CAGR (cumulative annual average growth rate) of wireless m2m of services in the world for this period will make 38%.

The research and forecasts of the world market of M2M speak about steady growth of 25-45% a year. The average of ARPU service (on selection of 15 large European companies) fluctuates from 2 to 15 dollars (depending on a type of service).

Growth of the market of M2M in Russia

2014

By estimates of MTS the volume of the Russian market of M2M-services [1] according to the results of nine months 2014 in comparison with the same period of 2013 grew by 14% and reached 5.5 million SIM cards. In nine months 2014, from January to September, the quantity of M2M of SIM cards grew in MTS network two markets quicker percent point and increased by 16% (approximately on 400 thousand) and was 2.9 million SIM cards. It makes 53% of a total quantity of telematic SIM cards in Russia.

In a year from September, 2013 to September, 2014 the number of telematic SIM cards in MTS network increased by 26%.

The quantity of M2M of the SIM cards used in MTS network in the territory of Moscow and St. Petersburg increased by 132 thousand pieces and reached 1.02 million. At the same time the share of Moscow and St. Petersburg makes 35% of a total quantity of M2M of SIM cards in MTS network. The most active among regions of Russia on use of M2M-services according to the results of nine months 2014 is Krasnodar Krai where more than 75 thousand telematic SIM cards of MTS are used.

Scopes of M2M-solutions among corporate clients of MTS in 2014

• Monitoring of transport remains the leading industry of application of M2M in 2014. The share of the SIM cards involved in the transport sphere in a total amount of M2M of SIM cards in MTS network grew by two percent points in comparison with results of 2013 and made 43%. The total quantity of transport M2M-sim grew by 225 thousand and is a main growth driver of telematic services MTS in the current year.

• The number of the SIM cards of MTS used in security systems increased by 80 thousand in comparison with the end of 2013 and reached 580 thousand. The share of this segment remained at the level of 20%.
• Despite difficulties in the banking market and closing of a number of credit institutions, large participants of financial market continue to increase the number of ATMs and payment terminals. The number of the SIM cards involved in MTS network in this segment increased by 50 thousand to 348 thousand. The share of this segment did not change and makes 12%.
• The share of an industrial segment was reduced by one percent. In quantitative calculation the share involved at M2M-sim manufacturing enterprises increased by 19 thousand to 320 thousand.
• Use of telematic services in housing and public utilities (accounting of water, heat, light in premises and also use in elevators and on-door speakerphones) increased by 69 thousand to 319 thousand. The share in structure of fields of use of M2M increased by one percent to 11%.

• About 0.5% are the share of a share of consumer electronics and smart insurance in M2M approximately. At the same time, if the share of consumer electronics in natural numbers does not increase in comparison with 2013, then services of smart insurance are one of the most perspective in the field of M2M in the next years. The MTS company develops this direction together with the largest insurance companies: Renaissance Insurance and Intouch insurance.

2013

The volume of the Russian market ^[1] at the end of 2013 grew by 40% and made about 4.8 million SIM cards. According to forecasts of MTS by 2017 the volume of the Russian market will reach 18.5 million SIM cards while the universal market of telematic services by 2017 will make 400 million devices.

For the last six months 2013, from July to December, the quantity of the used M2M of SIM cards of MTS increased by 450 thousand and exceeded 2.5 million SIM cards. By estimates of MTS, it makes 52% of a total quantity of telematic SIM cards in Russia.

The most active regions on use of M2M, in addition to Moscow and St. Petersburg of which more than 35% of all telematic projects of MTS are the share are Kazan, Ufa, Nizhny Novgorod, Yekaterinburg and Novosibirsk.

Scopes of M2M-solutions among corporate clients of MTS in 2013

The leading industries of application of M2M in 2013 became monitoring of transport (more than one million SIM cards) and a security system (500 thousand SIM cards).

The share of the SIM cards involved in the transport sphere in a total amount of M2M of SIM cards grew by one percent point in comparison with results of 2012 and made 41%. At the same time the total quantity of transport M2M-sim grew twice to one million cards from 520 thousand in 2012. The share of SIM cards which are used in security systems did not change during 2013. At the same time the total quantity of these SIM cards grew to 500 thousand from 290 thousand SIM cards in 2012.

The share of the SIM cards involved in ATMs and payment terminals was reduced by three percent points in a total amount of SIM cards to 12%. At the same time the number of the involved SIM cards in this area grew in quantitative calculation by 83 thousand up to 300 thousand.

Housing and utilities sector and medicine became leaders in dynamics of growth of M2M of SIM cards. In a year the number of the SIM cards which are used in housing and public utilities increased by two and a half times, and in the medical industry – three times. The number of the SIM cards used in these areas was 250 thousand (housing and public utilities) and 75 thousand (medicine).

One percent of SIM cards — 25 thousand falls to the share of consumer electronics in M2M. At this stage of market development this industry has the highest potential of growth due to increase in penetration of M2M-devices – trackers, the customer navigation equipment, services of "smart insurance", development of client applications for computers and smartphones.

2011

In 2011 subjects of growth of services m2m exceeded initial forecasts. According to the results of the first half of the year 2011 the number of the sim cards of MTS involved in telematics grew to 820 thousand pieces, growth was 60%. Growth at the end of year can be about 100%.

MTS assumes that in 2011 the number of the SIM cards involved in telematic services will grow twice in comparison with the last period. The market m2m in Russia for the end of 2011 will make about 2.5-2.7 million subscribers, MTS intends to save a market share in the field of telematics at the level of 40-45%.

The M2M projects in North-West Region

Use of services M2M MTS in North-West Region in 8 months 2011 grew by 3 times. The rate of MTS Telematics which is specially focused on data transmission on M2M technology in the field of monitoring of transport and moving objects, payment systems and security systems at the housing and public utilities enterprises is in the greatest demand.

Maximum, twice growth of use of services M2M happened in the field of monitoring of motor transport: information transfers about location and a route and also fuel consumption in the center of monitoring of transport. More than by one and a half times use of M2M services increased in the security organizations (anti-theft systems), at the housing and public utilities enterprises (remote measurements of a consumption of liquid, gas and other parameters) and in the field of work with payment terminals (data transmission about transactions in a processing center from ATMs, POS terminals, street payment terminals of services).

The number of users of SIM cards "thermo MTS" in 8 months 2011 grew up twice in comparison with 2010. "Thermo MTS" SIM cards are capable to work uninterruptedly in the most severe climatic and working conditions, from Far North to the hot South that is especially important for northern regions of the Northwest.

"The sector of M2M of services in the field of mobile communication actively develops - today business and the municipal enterprises look for all new opportunities for expense optimization, economy of resources. In terms of application of M2M of solutions, the most perspective industries today – municipal services, transport, health care and security. Thanks to M2M-services clients of MTS have an opportunity to considerably cut down the expenses due to cost reduction for personnel and energy resources, to reduce accident rate thanks to monitoring online, to increase quality of the provided services", - the director of MTS in regions of the Northwest Ivan Zolochevsky noted.

• • MTS provides M2M rrupneyshim services to the companies of the region. MTS provides with services on data transmissions Rosokhrana Telecom LLC company - the leading service provider of the organization of communication channels for private security in St. Petersburg. MTS provided Rosokhrana Telecom LLC companies 1500 of the SIM cards connected on a special rate for data exchange Telematics which are used in the systems of private security for transfer of the service information about a status of the protected object.
  • MTS provides monitoring of security systems of Caesar Satellit LLC company - the largest company on providing satellite anti-theft systems which perform security monitoring of the car by means of GPS navigation. In case of danger, information on movement of the objects connected to a system by means of a data transmission technology between devices quickly comes to the special Dispatching center. Today the Caesar Satellit LLC company uses about 27000 SIM cards of MTS for automatic data exchange.
  • The security company An Security LLC uses more than 300 SIM cards of MTS in the terminals installed in objects of retail: network supermarkets and hypermarkets, motor shows, network gas stations.
  • Arkan LLC - the federal operator of services of security, uses about 10000 SIM cards of MTS for ensuring remote status monitoring of objects. Also in MTS salons it is possible to pay services of security of Arkan LLC.

Key factors of growth of a segment m2m:

• high penetration of cellular communication with steady quality (MTS networks cover more than 90% of the inhabited territory of Russia, MTS implements projects on construction of networks in the remote regions, in partnership with clients - the largest production and mining companies, it allows to set sim cards on remote objects, in difficult climatic conditions);
• development of solutions for integrated management of telematic sim cards ("M2M manager")

improvement of technologies in the field of M2M (the thermo SIM card, development of solutions for the built-in SIM cards and the ave.).

• already implementable state programs on upgrade of the industries of an ekonomikma, what as transport, power, medicine.

Perspectives of application of M2M of services by the Russian companies

In Russia the number of the industries where application of M2M of technologies is reasonable significantly grew. It, in particular, is caused by the fact that crisis forced many companies to look for ways of cost reduction and increase in business performance due to implementation of the innovative technologies.

The most perspective segments in terms of development of M2M of services, according to us, are:

• monitoring and control of transport. About 40% of all clients of MTS M2M-services are the share of this segment. Projects in this sphere are implemented by MTS in Ryazan, Samara, Krasnoyarsk, Yekaterinburg, Ufa, Bryansk, Zelenograd, Moscow, Kazan, Saratov;
• remote measurements of indicators of sensors. Here M2M-services are used for control of work of the systems of energy industry and the systems of production/processing/transportation of raw materials, for example, for remote monitoring of pressure in pipelines. In the field of housing and public utilities telematic services are applied to monitoring of the systems of power supply, for example, for pressure monitoring and temperatures in heating systems, can be used in counters of a consumption of water and electricity, for monitoring of operation of elevators, services of garbage removal. About 20% of clients of MTS M2M-services are the share of this segment;
• security and anti-theft systems (about 10% of clients of MTS M2M-services);
• ATMs and the automated payment systems (about 20% of clients of MTS M2M-services);
• vending machines and the automated sales points (about 5% of clients of MTS M2M-services). About another 5% are the share of other telematic services.

For development of M2M MTS technologies carries to number of the perspective industries also the field of health care (mobile cardiographs, monitoring of ambulance cars).

Notes