Going Global with M2M: What You Must Know to Control Costs

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1 WHITE PAPER Going Global with M2M: What You Must Know to Control Costs To launch a successful global M2M deployment, service providers and enterprise customers should first develop a plan that takes into account diverse cultures, languages, regulations, technologies and pricing. This Aeris White Paper outlines how differing regions and individual countries can create challenges in certification, support, and cost control and recommends actions to avoid these pitfalls.

2 Table of Contents Introduction...1 Planning for Spectrum Availability...1 Cultural Issues...1 Certification Issues...1 Design Process... 3 Global Deployment Issues... 4 Installation and Support Issues... 4 Service Provider Selection... 5 Cost... 5 Flexible Device Management... 5 Network Performance... 5 Pricing by Country... 5 The Aeris Solution... 6 AerCloud Transforms the Value of Data... 6 TOC

3 INTRODUCTION Machine-to-Machine (M2M) communications deployments are growing at a rapid pace around the world as IT leaders discover the many benefits connected devices can bring to their businesses. Global M2M connections will increase from two billion at the end of 2011 to 18 billion at the end of 2022, with global M2M revenue rising to $1.2 trillion in 2022, from $200 billion in 2012, Machina Research reports. But while international markets offer rich opportunities for success, companies should be aware that there are pitfalls that can slow the time to market and add costs that can undercut the success of a new deployment. Differing regions and individual countries can present challenges with diverse cultures, languages, regulations, technologies and pricing, all of which need to be addressed in advance. There are providers that can reduce this complexity by offering a single, global solution. While international markets offer rich opportunities for success, companies should be aware that there are pitfalls that can slow the time to market and add costs that can undercut the success of a new deployment. Before going global, M2M service providers and enterprise customers should first devote time to a set of considerations which can make the difference between success and failure. We ve divided these steps into planning, deployment, support, and costs, and we ll address each below. PLANNING FOR SPECTRUM AVAILABILITY U.S. businesses need to be aware that 2G GSM GPRS from AT&T, the largest provider of service in the U.S. is being shut down on Jan.1, 2017, but the impact of this is already being felt in the industry, particularly for the larger industries like security. The second largest GSM carrier, T-Mobile USA, has not yet made any official announcement, but is likely to also shutdown their 2G GSM network within five years. Unlike the 2G GSM sunsets occurring soon, 1xRTT 2G CDMA networks in the U.S. will remain active through 2020, 2022, perhaps longer. Businesses should be aware of these changes as they look toward the future. For a detailed analysis of the coming spectrum changes and alternatives, read The Definitive Guide to the AT&T 2G GSM Sunset (which can also be found at CULTURAL ISSUES The most important cultural issue is language. You will need documentation in multiple languages if you re going into a country that s not made up of an English-speaking population. Language will be key to performing the multiple deployment tasks. Patrick Bertagna, chairman, president, CEO, and founder of GTX Corp., a manufacturer of embedded M2M GPS real-time personal location services, with extensive business experience abroad, says a local partner speaking the local language can help handle the multiple requirements of setting up operations. If you re going to deploy in a foreign country, it s prudent to have a partner in that country that can handle just simple things, such as language, Bertagna said. If you re deploying in a country that s non-english speaking, or not native to your own language, you should probably consider having a local partner that can speak the language. If you have a technical issue, you don t want to aggravate that issue by having the difficulties and the challenges of not being able to communicate in the same language, Bertagna added. You may not even be able to deploy a human being there to see and touch the problem, so the partner can be very important. CERTIFICATION ISSUES An M2M business expanding abroad must understand certification requirements for each country. PAGE 1 Something as simple as voltage may become an issue if not properly addressed. If you have a pluggable

4 GOING GLOBAL WITH M2M: WHAT YOU MUST KNOW TO CONTROL COSTS unit, you ll need to make sure that you ve accounted for the fact that you might have a 110-volt device in the U.S. but you might need to have a different piece of hardware to connect up to the local electrical system abroad. Device certification is a cost that cannot be ignored. If you have a device that s been operating normally in the U.S. and you bring it to another country, there may be some additional certification requirements that take time and have an associated cost. For example, if you do a new design incorporating a chipset, or you are using a certified radio module, you may have to set aside some time and money to ensure such features are certified locally. There are several types of certifications needed to get to market: Government agencies that grant regulatory approval and decide policy for the wireless networks include the Federal Communications Commission (FCC) in the U.S., the European Commission in Europe, Anatel in Brazil, and COFETEL in Mexico. There are also associations that determine additional requirements that devices on the network must meet, including the PCS Type Certification Review Board (PTCRB) in the U.S. and the Global Certification Forum (GCF) in Europe. PAG E 2

5 Different technologies can have different approval processes and this is something businesses should be aware of when deploying a GSM or a CDMA device. The FCC has a set of requirements that are common to all radio products, including wireless radio products. And there are some requirements specific to the cellular industry as well. The GSM carriers require certification from PTCRB, which performs a series of tests that the carriers establish as a good baseline for all GSM devices in the U.S.; it is similar to the GCF certification that is conducted in the EU and for other GSM countries. But there are some tests that are unique and regardless of whether you have successfully passed the GSF, you still need to go through the PTCRB. On the CDMA side, particularly if you are doing a design from a chipset, there are some CDMA Development Group (CDG) certifications that you need to go through. There are companies that provide that as a service, but you should be aware that it will require additional time and money. These approvals don t touch on product-related certifications that the application might have to obtain. For example, if it s a consumer product, there might be underwriters, labs, or UL testing required. If it s a medical device, there might be some medical testing or certification process that is unique. You have to worry about that only from the perspective of your specific application. And if you have an industrial application, like an irrigation monitor or a business security device, some of those other regulations might not be relevant or appropriate. DESIGN PROCESS Another consideration that can affect the cost of doing business abroad is the design process. Depending on the level of integration that you want for your application, the cost can change. If you have a design that must be implemented from a cellular chipset level, it will take you a long time (usually between 18 to 24 months) to get your product developed, designed, certified, and put into production. If you use a radio module, a pre-certified radio module can reduce that time. The average time is 15 to 17 months. If you use an embedded modem with a pre-certified card, it can cut the time to 6 to 8 months. And if you use a standalone communications product, typically it will take only 2 to 4 months to get your application to market. PAGE 3 Of course, cost comes into play here. A standalone product is more expensive upfront, but it gets you to market more quickly. On the other hand, at the other extreme, if you develop something from scratch from a chipset, your product cost is low, but will it will incur costs by taking longer to get it to market,

6 along with higher costs for testing and certification. Most companies find a balance somewhere in the middle. They either pick a radio module which is pre-certified for incorporating the design or they use a certified embedded modem. Using a module is typically done by folks who have a special need for their application; for example, if they have a sensor or a specific interface on their product that needs to be supported, they will pick a radio module because they have to design the rest of the product around it. This is a choice that customers can make and it affects the time to market, the certification, and all of the things that you would traditionally expect from putting together a complex application for a machineto-machine environment. GLOBAL DEPLOYMENT ISSUES You should expect cellular regulations to differ regionally or even by country. What applies to the U.S. will generally cross over into Canada, although there may be some specific requirements from the Canadian FCC equivalent. If you are within Europe, generally speaking, there is a set of requirements that will apply all over Western Europe, but might be different in Eastern Europe countries, the Middle East and Africa. Deploying a 4G application around the world offers a different set of challenges entirely. LTE spectrum fragmentation is a significant problem today. You must use multiband radios to provide coverage around the world and of course the cost higher. More, LTE coverage is still low in many places, so you need to use the right band and radio module for the countries in which you intend to deploy. INSTALLATION AND SUPPORT ISSUES Understanding the different needs of your product from a support and installation perspective is very important. If you expect to deploy your application in remote locations, or multiple metropolitan markets, you will have myriad support needs and procedures. If you require a technician to be dispatched, it can get quite expensive. So you should take these issues into account during the design and development process. You should consider incorporating the ability to do some kind of remote firmware update over the air. Otherwise, ensure that the process for debugging is simple enough for your customers to do it themselves. For example, having a radio installed in a pluggable carrier or sled of some sort can increase your cost PAGE 4

7 ahead of time, but often it will save far more in later support requirements. Finally, and this is the important one for international markets: check the device support model. Ensure in advance that you can get service internationally anywhere that your device is deployed? Bertagna believes support is one of the most important cost considerations. I can t emphasize enough about having the ability to remotely troubleshoot your products, to be able to do a firmware upgrade remotely, he said. You want to have the least amount of human intervention as possible. That s where costs really come into play, is when you need to dispatch a human being to the problem. Even remotely, just having someone on the phone across the country for 20 minutes is costly. A lot of these M2M contracts aren t generating very high revenues, or what we call RPU, revenue per unit, Bertagna added. So when you re collecting two or three or five dollars a month per device, and you need to spend 40 or 50 dollars to troubleshoot it, you can see that the economic models don t work. So make sure that you have a good service and support strategy in place, and that your hardware can be upgraded and supported remotely as well as possible. I can t emphasize enough about having the ability to remotely troubleshoot your products, to be able to do a firmware upgrade remotely. - Patrick Bertagna, chairman, president, CEO, and founder of GTX Corp. the cellular device. SERVICE PROVIDER SELECTION Your choice of a service provider partner can be all-important. So what are the factors to consider when selecting a service provider? Cost Cost can be determined by many factors, which should be taken into account when evaluating a service provider. Choose a provider that will allow you to pool devices across a rate plan. Pooling will lower your costs and help you better align your rate plan to your business model. If you can get pooling from the service provider who can match the rate plan to your business model, you will achieve more efficiencies and lower cost. Make sure you understand all of your provider s fees for special network services, and ensure you know what services are included. These can include API setup and implementation, voice set up, number leases, static IP fees, VPN client, VPN hardware, SMPP short code setup, ICMS setup, custom APN. Look for flexibility from providers that allow them to make changes to your rate plan in the middle of a billing cycle to avoid charges for overages, or charges applied for service usage not covered by the pre-paid rate plan. If you have such a provider, you will need to plan spikes (for updates or other special events) well in advance. Be aware of other practices that can result in higher costs, such as slow troubleshooting, fees for certification charges, and fees for changes needed to complete deployment. Flexible Device Management Perhaps you have a seasonal application that needs to be suspended or a device that may not need to be turned on for months after manufacture. You need a provider that will allow you to suspend devices. It is expensive to turn devices on and off and most operators force this cost on their M2M customers. Ask your provider if you will be charged when the device if off, how to avoid human intervention with the device, and if they offer automatic billing activation. Network Performance Superior performance is essential. For example, if you re using SMS, for a mission-critical application, can the provider give you better performance, success, and latency for that need? If the provider cannot and you have to do retransmissions, you re going to add cost. PAGE 5 Ask your provider what percentage of its network traffic is M2M? Naturally, many operators dedicate

8 more resources to their greatest source of revenue. If the vast majority of their revenue is from consumer traffic, you can be assured that consumer traffic will get priority you re your M2M transmissions. Will you get attention for units that are generating only a few dollars of revenue per month compared to the hundreds that they might get from a handset or a smart phone? As there will be lower revenue for the provider of service, will they still give you the attention you need? PRICING BY COUNTRY One of the most complex elements of deploying global M2M programs is pricing a country-by-country basis. Rates and other costs that are affordable in one country might not be in another. THE AERIS SOLUTION Clearly deploying a global M2M program is highly complex. It is important that you are aware of all the issues involved, however, Aeris Communications can make the process of planning, deploying and maintaining a M2M program seamless for you. Working with Aeris, you will have a single SIM for deployment in more than 190 countries. We eliminate for our customers the time-consuming and expensive process of selecting multiple carriers for each country. We give you a single portal for managing your global deployment, which means one login for billing, support, APIs, VPN and more. Mohsen Mohseninia, Aeris Communications vice president of Market Development for Europe, believes Aeris offers significantly lower costs for businesses looking to do business abroad. Aeris provides fast time to market in terms of certification and deployment, with coverage through national and international roaming, he said. Aeris has a global reach in more than 190 countries with a platform allowing it to connect 550 cellular carriers using 2G and 3G CDMA, GSM, and LTE to companies serving healthcare, telematics, utilities, retail, and other sectors. The company provides faster time-to-market with more efficient processes for certification and deployment, shortened development cycles, simpler hardware integration, and with coverage through national and international roaming. Aeris uses cellular radio access networks to bring the data and services into its core network, which has been built for machines only. The core Aeris network sits the company s portal, called AerPort, which allows customers to manage their devices from anywhere at anytime. The company also offers an architecture platform called AerCloud, which enables businesses to quickly and easily build applications that access high-value business information which can transform their business, easily and cost effectively. AERCLOUD TRANSFORMS THE VALUE OF DATA Aeris also offers an architecture platform called AerCloud, which enables users to quickly and easily build applications that make the gathering and management of data more robust. Aeris provides 24/7/365 support for its customers, with cradle-to-grave connectivity, and global service that goes across CDMA and GSM networks. Using Aeris SIMs cards, customers can enjoy connectivity going from the U.S. to Europe, to Asia. PAGE 6 Contact Aeris at or GO-AERIS for more information. Copyright 2014 Aeris Communications, Inc. All Rights Reserved.

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