Near-field communications (NFC) and machine-to-machine (M2M) communication promise to bring innovation to multiple industries in the next few years. Lance Harris investigates.

Telecoms operators, device manufacturers and payment firms are preparing for a future where we are surrounded by smart, connected devices that simplify and automate many day-to-day business and personal tasks. They gather data in real-time, share it with other devices, and get on with their jobs with minimal human intervention.

Just one example is a smartphone equipped with a near-field communications (NFC) chip that uses a short-range wireless communication technology to allow you to pay for your shopping with a simple tap of the payment terminal at the retailer’s point of sale. Suddenly, there’s no more need to swipe a card or remember a pin code. There are also smart meters that relay data about the consumption of gas or electricity every few seconds, and telematics devices in fleet vehicles that report the cars’ location, provide engine management information, and track the drivers’ speed and braking behaviour.

M2M future                

Machine-to-machine (M2M) communication uses sensors and embedded computers to capture information events such as temperature, location, consumption, heart rate, stress levels, light, movement, altitude and speed. A M2M device can send and receive data using SIM card, allowing devices and processes to be monitored and even managed remotely. “Anytime, anywhere access to realtime intelligence from remote machines or devices is transforming businesses,” says Tony Smallwood, executive head for M2M and vertical industries at Vodacom Business. “Businesses are beginning to realise the potential that M2M represents for increased efficiency, revenue generation and improved customer satisfaction.” Although several industries are starting to sit up and pay attention to the benefits of M2M, two sectors in particular are reaping the rewards of this technology: automotive and healthcare, he adds. Other mature markets for M2M include point-of-sale devices and smart metering.

M2M applications have been around for a while, but their sophistication is growing and adoption is rising. What’s more, there is a move from the M2M applications of old towards the concept of an Internet of Things (IoT) that brings together a number of devices, assets, processes and systems into an interconnected network. This is creating a massive new market for operators, one that South African mobile networks are focusing on closely. GSMA Intelligence forecasts that M2M connections will account for at least 10% of the global mobile market by 2020, from 3% today. The researcher estimates that the number of M2M connections by this time will be at least around one billion.

Growing global traffic

Cisco meanwhile says that M2M is one reason global internet protocol traffic will increase nearly three-fold between 2013 and 2018. The company believes the majority of traffic will originate from devices other than personal computers for the first time by 2018.

M2M modules will be a major factor - smart cars will have nearly four M2M connections per car, for example, says Cisco.

Many telecom operators around the world are investing in NFC rollouts. They see it not only as an important part of the future of payments, but also as a potential part of the M2M puzzle. NFC might be used to pair devices easily together in the home or factory, providing an alternative to Wi-Fi or Bluetooth. It could be used, for example, to pair a smartphone with home appliances or smart meters. The hope is that it will make a range IoT services and applications easy, intuitive and cost effective. Nick Black, end-user computing business manager at VMware, says that the risk and challenge of services such as M2M and NFC is that it places the onus on service providers such as Telco’s to provide frameworks for safe and secure transactions. “The ease-of-use and convenience demanded by the consumers of these devices means that the standards, procedures, security, compliance and regulations need to catch up,” he adds.

Reaping the benefits

Retailers and utilities are among the companies with the largest customer bases who can benefit from new M2M and NFC technologies and they are thus the organisations being most aggressive in exploring the business cases, says Black. But he warns that consumers will need to get used to protecting themselves from information theft risks. This encompasses malware protection, physical security, encryption, and more. In addition to security, there are a number of regulatory, commercial and technical standards issues to resolve before the IoT explodes in the business market, says Bruce Taylor, chief solution & marketing officer at Dimension Data Middle East and Africa. He says that for mass commercial adoption of the Internet of Things, we need to see the rollout of low-power, low-bandwidth networks built for its needs. Sigfox, an ISP that specialises in the IoT, is rolling out just such a network in San Francisco, and optimising it for an explosion of smart sensors, appliances and wearables. This network can support millions of connections at low speeds, compared to the traditional cellular network that can support far fewer devices but at faster speeds.

With a range of technology, security, consumer adoption, and regulatory issues to consider, telecoms operators and other companies face a range of hurdles as they roll out M2M and NFC solutions for their customers. Yet the revenue opportunity is so significant that operators seem likely to invest heavily in this market in the years to come. South Africa may lag behind international trends by a year or two, but will benefit from learning from developments in other markets.