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January 16, 2013

Smart Meter Business Might Not be So Big



“The U.S. market will have over 50 million utility-based smart meters deployed by 2013, reaching 62 million by 2015,” said Stuart Sikes, president of Parks Associates (News - Alert). “The outlook for smart meters to interact with connected CE and appliances in the home has changed drastically as electricity providers are now exploring partnerships with communications and security service providers.”

Solutions with energy-efficiency components were prominent throughout CES (News - Alert) 2013, and Parks Associates research  finds 60 to 80 percent of U.S. consumers will pay for energy-saving products like smart thermostats, smart water-tank controllers, and attic insulation.

Assume there’s an installed base of about 235 million utility smart meters in 2016. Assume $12 billion in 2016 revenue for those meters. For the sake of argument, assume half those meters use powerline data communications, while a quarter use mobile data connections, and another quarter use some other form of communications (unlicensed frequencies, cable network or other).

So mobile service providers worldwide would be in a position to serve about 58.75 million meters. Assume an annual revenue stream for a connection is about $50 a year, or $4 a month.

That suggests a global smart meter revenue stream of perhaps $2.94 billion a year in 2016. To be sure, it shouldn’t represent the full size of the revenue opportunity for mobile service providers.

It is possible, perhaps likely, that more connections will move to wireless modes over time. And in many cases, the ability to sell a business-to-business smart meter service will have implications for consumer home security and other services.

Still, in the absence of other changes, such as dramatic movement in the market share held by mobile service providers, an increase in monthly annual revenue potential or some other important revenue driver, the global market for smart meter service supplied by mobile service providers is fairly small.

And that’s the problem with virtually all mobile service provider revenue initiatives: each specific new line of business is relatively small, while the shrinking voice and messaging businesses are very large.

Also, mobile smart meter opportunities in some cases could compete with communications services provided by fixed network business units. After all, broadband is virtually universally deployed, and could supply the monitoring link for smart meters.

And as use of voice lines declines, more narrowband resources become available, should that prove to be a viable path in terms of bandwidth.

The point is that, although helpful, most proposed new lines of business for mobile service providers presently appears to lack the revenue mass of older services that are declining.

It is a good thing mobile service providers are looking for new revenue sources. One hopes a few will turn out to be “big.” Right now, that is hard to foresee.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.




Edited by Braden Becker

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