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In recent years, they have turned to value-added services as a way to move beyond basic voice and text messaging. While value-added services are still growing, a very different form of communication over a cellular network – that of machine-to-machine (M2M) communication in industrial telematics – is an interesting source of revenue that has not yet been fully explored.

Use of M2M location and tracking applications in industrial telematics is steadily rising. While growth is expected to slow somewhat due to the global financial crisis, industry expansion is still expected to be substantial over the long-term.

According to a new Berg Insight study, the use of tracking technology in industrial environments such as telematics and asset tracking in Europe will continue to grow, to 3.3 million units by the end of 2013, from 1.1 million units at the end of 2008.

Consumer telematics systems are becoming more popular due to the growing awareness of car manufacturers, telematics service providers, governments and end users about the benefits of positioning and communications technologies in cars for driver safety, public security, operational efficiency, cost savings and reduced environmental impact.

Currently, the telematics industry is the most mature segment of available M2M services. Frequent messaging over a cellular network (currently 2G) provides managers of large and small vehicle fleets immediate and exact location capabilities. Other industrial uses of M2M communication today include asset tracking (i.e. tracking large containers while in transit), vehicular diagnostics (in which various measurements relating to fuel can be observed in an effort to optimize efficiency and reduce costs), and locating stolen vehicles and cargo in an effort to retrieve them.

As it continues to grow, the M2M market is worth exploring as a potential revenue-generator.

SIM sales from wireless carriers to telematics service providers and product manufacturers bring in more capital when M2M communications are added. Information services will prove to be one of the biggest revenue makers in terms of value-added telematics services. Aside from tracking the location of a vehicle, applications such as fuel and temperature sensors and remote diagnostic systems have become more common and advanced in recent years, and will be developed ever further.

Carriers also can utilize any spare bandwidth they have on their network for industrial M2M communications.

While currently telematics communication is over a 2G network, the movement to 3G networks will enable the potential for communication of rich information between machines – beyond just current messaging, and into more and more complex information capabilities.

Additionally, as M2M platforms become more pervasive, they can also be utilized for entertainment purposes, which will of course bring in additional revenue. Possibilities include mobile Internet for WiFi devices, including the ability to connect multiple WiFi devices simultaneously, interactive services like music and video, and more.

Finally, a realistic financial advantage for mobile carriers of M2M communications is the ability to serve users outside their traditional geographic region.

With various companies now providing global SIM cards, traditional geographic boundaries continue to break down. Especially in an industry such as commercial telematics, where fleet and asset management often includes tracking vehicles and cargo over great distances, this presents a unique opportunity for the mobile carriers to generate revenue well beyond their own area.

Of course, there are still barriers to be overcome for the industry to fully bear fruit.

For example, the lack of standardisation of server-to-vehicle protocols around the world prevents interregional M2M communication from full development, and has to date limited the revenue potential for mobile operators.

Additionally, awareness of the numerous advantages of M2M applications is still relatively low among fleet managers within the SMB sector. As more become aware of the technology's cost reducing benefits, the industry will expand even further.

The future, however, looks bright. Particularly during tough economic times, many enterprises and small businesses will turn to tracking technology in an effort to minimise costs.

Mobile operators should increasingly explore the potential for revenue growth that these services provide. As the technology continues to develop even further, operators and telematics service providers together can bring the industry forward in interesting directions and toward increased revenue-generating possibilities.

Israel Ronn is General Manager of Cellocator, the Products Division of Pointer Telocation Ltd., a leading Automatic Vehicle Location solutions provider for fleet management, car and driver safety, public safety, roadside assistance, vehicle security and asset management. For more information, please visit http://www.pointer.com/.