Smart metering set to be alternative revenue stream for operators

Smart metering set to be alternative revenue stream for operators

As operators search for new ways to boost their dwindling revenues, the Government’s £7bn smart meter programme must look like a pot of gold.

Under the mandatory programme, every household in Britain must be fitted with a smart meter by 2020.
With over 27 million households in Britain, this is a market with huge potential for UK operators.

As Vodafone demonstrated last month, when it announced its smart meter deal with British Gas, UK operators are in pole position to be at the heart of this multibillion-pound programme.

Under the exclusive deal, Vodafone will provide the network connection, monitor the energy usage, and encrypt and send the data from almost one million households as part of a British Gas trial of smart meters.

However, it doesn’t stop there. British Gas tells Mobile its deal with Vodafone extends ‘beyond the initial contract’. With over 12 million households making up British Gas’ customer base, the Vodafone partnership promises to be huge.

Not surprisingly, other UK operators are hot on the trail of smart meter opportunities. All five UK networks have declared their interest as part of their move into the wider m2m market.

Eddie Murphy, head of telecoms consultancy Priory Consulting, says: ‘Every operator is fascinated by the opportunities smart metering offers. If an operator can get its Sim cards into the smart meters of a good part of those 27 million homes, it opens up huge opportunities in data, which is their next growth area.’

Operators see smart meters offering much wider opportunities than the simple provision of energy usage data via smart meters. Murphy explains: ‘The smart meter could provide a single point of data connection for each house. We are talking about a home hub gathering all data input and output services – a much more attractive proposition to householders than dealing with a host of different providers.’

Data usage spanning services could range from entertainment to at-home remote monitoring of elderly care and health services.

However, smart metering could go even bigger. The Government wants its smart meter programme to pave the way to a Smart Grid, which, via smart meters, will allow utilities to remotely manage household energy in peak usage periods.

Murphy says: ‘When everyone has their Toyota Prius charging in the garage, and then the commercial break comes on during the World Cup and millions of kettles are switched on, the Smart Grid will use the data from smart meters to remotely switch off thousands of Prius chargers until peak demand subsides.’

The launch of the Smart Grid will see an explosion in data usage as the system becomes a two way street, with operators that monitor data usage standing to reap a large slice of those rewards.
Vodafone may have cut the first smart meter deal but other UK operators are hot on the trail with most in discussions with potential partners.

Orange tells Mobile it is in talks with potential smart meter suitors. An Orange spokeswoman says: ‘We are working with a number of utilities on what might work for them but it is early days.’

O2 is also tipped to forge a smart meter deal with a utility in the coming months.

Billy D’Arcy, head of corporate for O2, says: ‘O2 has been extremely active in the smart metering and m2m business for a number of years now, providing services to both direct and indirect customers.
‘However, with the Government’s plans for smart meters in the home currently under development, there can be no doubt there will be huge opportunities in this space.’

O2 is aiming to add value, looking further than simply providing the Sim in the smart meter and charging for data usage.

D’Arcy adds: ‘At O2, we believe the challenge is not just to deliver a smart meter that can provide energy readings remotely, but to create a service that delivers an end to end solution that satisfies Government, utilities and consumers, in addition to providing revenue streams.’

T-Mobile and 3 also have m2m teams looking at opportunities in smart metering and beyond.

3’s m2m business development director, Tom Gardner, believes 3’s 3G network will give it the edge in the race to corner the smart meter and m2m market. He confirms: ‘We are having regular talks with various vendors.’

Gardner believes smart metering as part of the m2m market will be a significant revenue stream for operators. He says: ‘The mobile market is quite saturated and so all operators are looking at different ways to get the most value out of their assets and m2m is going to be a big part of that.’

He welcomes the British Gas deal with Vodafone as a move that will raise the pace of the smart meter programme.

‘Smart meters have been around a long time but there have been few big deals like this one, so this should kick start the process and get other energy providers to focus on their plans for smart meters.’

Is the British Gas/Vodafone move a pre-emptive strike?

The fact that the British Gas announcement came before the Government has finalised its plans for the smart meter rollout has raised some eyebrows in the industry.

However, others believe this apparently risky move may indicate a bold game plan to corner a major chunk of the smart metering market, which could leave slim pickings for Vodafone’s rivals.

Analyst Keith McMahon of STL Partners believes the joint venture may be planning to deliver a smart meter service to more than just British Gas’ 12 million customers.

The Government has said it wants a central data handling function for the smart meter programme. Consortia are already forming to bid for this contract, which is expected to be worth several billion pounds over the life of the contract.

McMahon believes British Gas and Vodafone may have deliberately launched its data handling joint venture before the Government concludes its findings later this year to give it a head start on rivals.

McMahon explains: ‘Some utilities are only interested in selling energy and already outsource their meter services. British Gas has a meter arm and their Home Serve Unit so it could be setting itself up to provide that centralised data handling service as part of their energy saving services.

‘If Vodafone is part of that, it could be in for a very big share of the smart meter market.’

Written by Mobile Today
Mobile Today


Would be nice to know how the data would be encrypted
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