Telefonica's O2 group is pursuing machine-to-machine and telematics projects, with aneye to enticing third-party enterprises to offer services such as mapping and monitoringto companies and end-users.

Various subsidiaries of Telefonica's O2 carrier group in Europe are involved in made-to-order machine-to-machine (M2M) and telematics projects - both commercially and on a trial basis - for functions as diverse as mapping road traffic, monitoring pollution and managing irrigation and field workers. Some of the projects predate the merger of O2 and Telefonica, though the latter has begun enabling such services to be deployed across its footprint. Sources in Telefonica O2 say that, even at this early stage of deployment, many of the carrier group's enterprise location-based services are already generating revenues."We're not in the business of loss-leaders," Ian Curran, head of M2M- and telematics-business strategy and product development at O2 UK, told Informa Telecoms & Media. Each Telefonica O2 subsidiary is in the process of fine-tuning its local M2M/telematicsstrategy, including which market sectors to address and how to make services profitable, while the parent group is overseeing all operations. Curran described Telefonica's attitude as: "Think global, act local."The Accelerated Partnership Program, a group-wide developer initiative, helps third parties develop services for enterprise customers. Speaking at Informa's recent Mobile Location Services conference in London, Telefonica O2 executives from the UK and Czech Republic gave insights into various pilot programs that have been launched within the group.

Road-traffic management

In December, the Czech Telefonica O2 subsidiary began an M2M pilot in Prague using its fleet-management system, O2 Car Control, to collate road-traffic information using both GPS and cell-ID positioning technology. The aim of the plan is to monitor the speed and movement of road vehicles in real time. The system works by fitting a fleet of cars with onboard units that feed back their location to a central server at least once every two minutes. This enables O2 to identify areas where major traffic disruptions have occurred and keep track of other developments as they happen. Filip Linhart, manager for telematics Telefonica O2 in the Czech Republic, says the carrier provides raw or processed data that third-party customers can combine with other information and offer to end-users. The cellco is looking to sell the data to service providers, which can then brand the final product as they please. Potential customers could be state authorities, media companies and navigation providers. Alternatively, O2 also has the option of selling the information directly to mobile or fixed-line customers as a premium service. The trial was undertaken in conjunction with the Technical Roads Authority, part of Prague's city government, which supplemented the data gathered by O2 Car Control with data collected through cameras, sensors and other fixed devices placed in strategic vantage points on the city's road network, Linhart says. O2 convinced the Czech authorities to participate in the service by emphasizing the potential cost savings of using the mobile network to help deliver accurate information in real time. Local-government politicians were reportedly eager to team up with O2 to set up a traffic-information portal, to curry favor among residents, with an eye on forthcoming elections. "The most profitable customers for Telefonica O2 shall be the state administration,because the value of the information for them is the biggest," Linhart says. Budgeting problems at City Hall have stalled any commercial deployment, but this does not mean that a deal between O2 and the Prague authorities is out of the question, he adds. O2 has sought to sell the traffic information via alternative sources, such as traditional media outlets. Surprisingly, local radio stations - the medium most commonly used by drivers to stay abreast of traffic conditions - are not proving to be as hot a prospect to buy such information as O2 had expected. Radio Beat, one of Prague's main radio stations, compiles its traffic information by encouraging users to call and relay eyewitness accounts of conditions on the roads. Although the station's management says they can see the benefit of broadcasting up-to-the-minute information fed to it by O2, they say they want to preserve the current level of interaction with listeners and are not in a hurry to spend additional money on traffic data, according to Linhart. The carrier has also experimented with alternative business models, such as its dealingswith the Czech Republic's most successful online portal iDines. The Internet company said it didn't have enough money to pay for O2's data in full, so the two firms have entertained the possibility of negotiating part payment in advertising inventory. Linhart says O2 also contemplated selling the data to third-party mapping providers butidentified a number of problems with that (see fig. 2). The Czech Republic's socialist past - in which people used to be spoon-fed free services - means that mobile users are unlikely to pay for such services, he says. Therefore  the best chance for O2 to make money from its traffic data is to sell it to enterprise customers - to local authorities  or businesses.Fig. 1: Possible services using O2's fleet-management offeringField-worker management in Scotland

In the UK, meanwhile, where O2 has a long track record of catering to enterprise customers, the carrier has been prepared to go out of its way to win big contracts. For example, it installed GSM boosters in remote areas where its cellular coverage was patchy to clinch a workforce-management contract from electricity-supply company Scottish Power. The service enables Scottish Power to track its engineers as they go out on calls andfurnish them with turn-by-turn directions and detailed job instructions via GPS-enabled wireless devices. Engineers often need to repair faults at remote sites in the wilds of the Scottish highlands, so it is important to Scottish Power that the wireless service provided be truly ubiquitous. The considerable investment made by O2 to deliver this service to Scottish Power raises the question of whether the carrier expects to get a return on investment from such tailor-made deployments or whether it views them as loss-leaders to build up the capabilities, expertise and reputation with which to secure similar contracts in the future. But Curran asserts thathis is a profitable business that is answerable to shareholders. O2 has used the same workforce-management technology to offer tracking and alarm services for vulnerable lone remote workers - such as community-health workers or vending-machine engineers, who are often the object of aggression when they are out conducting their work. In the UK, O2 has also piloted a mobile mapping service, MESSAGE (Mobile Environmental Sensing System Across a Grid Environment),which monitors air and noise pollution. The three-year project started in 4Q06, involving five universities and 19 industry partners (including O2) and is exploring the role that mobile devices and networks can play in environmental- and health-monitoring services.In one part of the project, led by Cambridge University, researchers fitted bicycle couriers with GPS-enabled mobile handsets connected via Bluetooth to portable environmental sensors. Results were fed back over the mobile network to a central server and were used to map out pollution levels in urban areas. Health researchers are using the data to look for correlations between pollution hot spots and respiratory diseases such as asthma.One commercial outcome of this project could be a service offering pollution-hot-spot-alert services to asthma sufferers, for example. The data could also be used on real-estate Web sites to show pollution levels around properties that users are interested in buying.

This is an extract from Mobile Communications Europe Reasearch Service, for more information please click here.