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Thursday, 6 December 2012 - Beyond mobile: Telcos hook up hospitals, cars and coffeemakers |
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      Edition: U.S. Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Home Business Business Home Economy Technology Media Small Business Legal Deals Earnings Social Pulse Business Video The Freeland File Aerospace & Defense Investing Simplified Markets Markets Home U.S. Markets European Markets Asian Markets Global Market Data Indices M&A Stocks Bonds Currencies Commodities Futures Funds peHUB Dividends World World Home U.S. Brazil China Euro Zone Japan Africa Mexico Russia India Insight World Video Reuters Investigates Decoder Politics Politics Home Supreme Court Politics Video Tech Technology Home MediaFile Science Tech Video Tech Tonic Social Pulse Opinion Opinion Home Chrystia Freeland John Lloyd Felix Salmon Jack Shafer David Rohde Nader Mousavizadeh Lucy P. 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See the best of Reuters photography.  See more | Photo caption  Royal babies Babies born into the monarchy.  Slideshow  Living in a sewer A husband and wife have made themselves a home in an abandoned sewer fitted with a kitchen, fan, TV, a chair and a bed.  Slideshow  Sponsored Links Beyond mobile: Telcos hook up hospitals, cars and coffeemakers Tweet Share this Email Print Analysis & Opinion Creating an upscale service economy Related Topics Health » Tech » Investing Simplified » By Clare Kane and Leila Abboud BARCELONA | Thu Dec 6, 2012 7:38am EST BARCELONA (Reuters) - In Barcelona's Hospital Del Mar, Telefonica is doing more than connecting phone lines - it is also developing a lucrative new business keeping patients' hearts in good shape. A heart-monitoring program put in place by Telefonica is just one kind of machine-to-machine (M2M) technology that telecom operators are racing to develop for sectors including healthcare, automotive, transportation and energy. Carriers such as Vodafone, Deutsche Telekom, AT&T, Verizon, China Mobile, and France Telecom are betting that M2M will be a significant source of growth as the number of connected devices climbs to 12 billion or more by 2020. In cars, for example, mobile technology can be used to automatically call emergency services after a road accident. In offices, France Telecom uses it to tell companies when their coffee machines need re-stocking, while energy companies are equipping homes with 'smart meters' to track consumption and permit differential pricing. The potential prize is billions of dollars in new business for telecom groups, many of which are otherwise faced with declining sales, and the promise of big cost savings for their customers. Yet turning the 'Internet of Things' into a real business will not be easy for big telcos, since the market is far more complicated than their traditional sales of mobile and Internet contracts to consumers and companies. To succeed, they have to develop an understanding of a range of industries, their specific needs and regulatory constraints. They also have to outfox a phalanx of new competitors such as start-ups in Silicon Valley, app developers, and corporate giants like IBM, General Electric and Philips. Analysts' forecasts vary widely on the size of the M2M market and how much of it telcos can win, since the biggest opportunity comes not from putting a mobile SIM card in devices but from providing the software and services to make them work. Machina Research predicts revenue of 714 billion euros ($933 billion) by 2020 for M2M overall. Informa Telecoms & Media's Jamie Moss says the market is growing slowly and will reach 217 million connections and $9.3 billion for telcos by end 2014. They earned $5.7 billion from M2M this year, dwarfed by the roughly $1.14 trillion from mobile services in the same period. "I am very convinced that M2M will be a profit driver," said Matthew Key, who heads Telefonica's digital unit, which aims to earn 500-800 million euros in annual M2M revenue by 2015. "But we need to sell more than just basic connectivity by adding know-how and a complete service, and build the business locally step by step." NEW TERRITORY The opportunity and the challenges for telcos in M2M are on display at the Hospital Del March Every morning, patients recovering from heart attacks use equipment installed in their homes by Telefonica to weigh themselves, take their blood pressure and answer a few questions on their symptoms via a touch screen. The information is transmitted to nurses at the seaside hospital's cardiac unit who follow up by phone if they have any concerns. The program has had a positive effect on mortality rates, reduced hospital visits and saved 9,000 euros per cardiac patient since it began two years ago, according to doctors. Nurse Ana Linas said the system was so simple to use that an illiterate elderly woman was among the patients able to use it. Yet the hospital, which experienced some video connectivity problems that were quickly resolved by Telefonica, has no plans to expand the project because of the costs involved. "You have to hire trained people so that it all works. Although costs fall a lot later on, the initial investment is high in staff and equipment," said doctor Cristina Enjuanes. With budgets under pressure and doctors often reluctant, getting the investment needed to roll out telehealth schemes can be an uphill struggle. Telefonica wants to roll out the heart-monitoring program elsewhere in Spain and is also investing heavily in projects in Britain with the National Health Service. "I cannot tell you when it will ramp up. What I can feel is that we are getting closer to it ... We will know soon the speed at which demand will move, and whether there is finally an opportunity to create a totally new (business) category," said Jose Perdomo, head of Telefonica's e-Health division. Telefonica has had more success rolling out e-health in Latin American markets such as Brazil and Chile, where more medical care is provided via the private sector than in Europe. CARS AND HOMES The M2M gold rush has sent some telcos on the acquisition trail to get technology and expertise. AT&T bought U.S. start-up Xanboo and has used its technology to develop security services for the home, as well as tools for homeowners to control their heating, lighting and appliances from a mobile phone. Verizon paid $612 million in June for Hughes Telematics and plans to build on the company's expertise in M2M software for tracking truck fleets, as well as crash detection, emergency calling, and maintenance needs for cars. Hughes has a worldwide contract with Volkswagen and a U.S. contract with Mercedes. John Stratton, Verizon's vice-president for enterprise, said the Hughes deal would allow it to gain know-how in the software needed to boost the profitability of M2M contracts beyond the few dollars earned from the connection itself. "If we only transport the bits of data in M2M projects, that has relatively modest value, less than 10 percent of the market opportunity overall," he said in an interview. "The next big piece is the solutions on top, which is what motivated us to buy Hughes." Korea Telecom's experience launching a taxi fleet management service powered by M2M technology demonstrates the point. Initially it earned about $5 a month per taxi for tracking taxi locations with mobile technology. It boosted that to $50 per month and signed five-year instead of two-year contracts by selling a software platform and call center as a package with the taxi tracking. Telefonica invested 2 million euros in a Spanish start-up called addFleet that makes a free taxi-calling app for consumers, and a paid version for taxi owners to track cars. "There is no global market for taxi cabs, so you need to go local first," said Telefonica Digital chief Key. Martin Garner, an analyst at consultancy CCS Insight, said telecom operators would have to adapt if they are to succeed in making M2M a mass technology, adding that for now the market was growing slower than they would have hoped. "We do think there is a big world in M2M for the telcos," said Garner. "But they have to go and take it: it will not come to them." ($1 = 0.7652 euros) (Additional reporting by Harro Ten Wolde, Robert-Jan Bartunek and Roberta Cowan; Editing by Will Waterman) Health Tech Investing Simplified Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints   We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.   Edition: U.S. Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Connect with Reuters Twitter   Facebook   LinkedIn   RSS   Podcast   Newsletters   Mobile About Privacy Policy Terms of Use AdChoices Copyright Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us   Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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