Media Release

IHS Senior Research Analyst Sam Lucero Blogs about WC

Sam Lucero

Sam Lucero

WorldCell Seeks to Provide Global Network Connectivity with its HUB Alliance
Date: 03 June 2013

While time will tell if WC and the HUB Alliance will be successful or not, IHS is intrigued by the existence of a differentiated competitor to Jasper Wireless and Ericsson on the platform front, and a potentially robust and cost-effective offering of connectivity for M2M deployments on a global basis.

In 2012, the WorldCell group of companies, including its European mobile network operations, launched a spin-off called “WorldCell” (WC) to provide a global connectivity footprint for cellular, satellite and Wi-Fi –based M2M devices. WC’s unique heritage from WorldCell is as a provider of global mobile telephony services to government agencies like the US State Department as well as large multinational companies.

WC has now re-focused this capability on the global M2M market with its primary offer: a global cellular footprint for M2M connections offered in partnership with other mobile operators in what the company is terming the “HUB Alliance”. The company provides its operator partners with a full-featured M2M connectivity platform (MCP) and, optionally, M2M application platform (MAP) via an innovative business model and end-customers (application service providers, OEMs and corporate adopters) receive global connectivity through one interface with local tariffs via a dynamic SIM with over-the-air (OTA) subscription provisioning.

In the past 18 months the ability to provide a global footprint has become a main area of focus and activity for the cellular M2M industry. The reason for this trend is simple: as the M2M market grows there are an increasing number of companies that want to offer products and services to a global customer base, either by providing products that are mobile internationally or a single product that can be shipped globally (or a combination of the two.) The global automotive industry has been a notable example of this trend: IHS believes that Telefonica won the GM OnStar account for European and Latin American connectivity (beating out Vodafone) at least in part to the ability of Telefonica to show a comprehensive global footprint via its own infrastructure coupled with other operator partners that also use the Jasper Wireless “Control Center” MCP.

To date, these attempts at providing a global footprint have manifested in one of two ways:  first, by operator alliances and partnerships and, second, via MVNOs and their respective operator relationships. Examples of operator alliances include those among operators using the same MCP, such as the aforementioned grouping of Telefonica, along with Rogers Communications, NTT DoCoMo, SingTel, Etisalat, KPN, Telstra and VimpelCom, as well as more traditional inter-operator groupings, such as the Deutsche Telekom, Orange Business Services, TeliaSonera, Everything Everywhere partnership. Likewise, certain operators, such as Vodafone and AT&T, have woven together fairly extensive bi-lateral partnerships and agreements with other operators. MVNOs have sought to differentiate themselves from operators in the M2M space by creating their own agreements with numerous operators in different regions. Examples of leading MVNOs, in terms of global footprint, include: KORE Telematics, Wyless, Numerex and RACO Wireless.

Our Take

WC’s HUB Alliance and global connectivity offer are an interesting and differentiated play in the cellular M2M market.  By bringing together operators directly into the Alliance, WC avoids both the roaming and re-seller arrangements some other efforts at building a global footprint have relied on.  Both roaming and re-selling lead to higher connectivity costs than what is available from an operator selling directly as in the case with the HUB Alliance members. The Alliance will also be able to provide customers with direct, in-country QOS support of connected devices. This is a crucial differentiator for large-scale in-country deployments.

WC also has an advantage in the direct role it is taking in organizing the Alliance, which potentially could lead to a more seamless experience for customers and quicker times-to-market for new Alliance service offerings. The other alliance and partnerships entities in the market are either groups of operators working among themselves or are lead operator/re-seller partnership (or MVNO) arrangements.  Crucially, WC has a heritage of working with a wide range of competitive operators globally to provide a global footprint and should be able to leverage this experience and these contacts to develop the Alliance offering into a robust global footprint.

Relatedly, WC’s efforts should be facilitated by comparative cost advantages, not only in the use of in-country tariffs for end-customers, but in the unique low cost business model the company is using to work with potential operator partners.  While the details of this model (known to IHS) are private to the company and its business development efforts, the goal is to make it feasible for a smaller, second-tier competitive operator to deploy a platform cost-effectively over a smaller base of connections that would be possible for a Telefonica or AT&T.

WC’s key challenges will be its lack of brand awareness in the market and the need for it to prove to partners and customers the robustness of its technical offering.  Currently, leading global operators and their associated alliances/partnerships are getting the most attention in the M2M market. MVNOs that offer a robust footprint increasingly have to add additional value-added service offerings to retain relevance and differentiation. Large multinationals are normally going to place their trust in a global brand like Telefonica or AT&T or Vodafone, although WC does have a good track record of signing up significant organizations (e.g. US State Department) as customers.

Likewise, WC’s offering is relatively unproven in the market.  Its chief platform competitors are Jasper Wireless and Ericsson (although the business model is different).  Both of these companies have greater brand awareness in the market and their offerings are arguably more “proven” from a technical standpoint. It will simply take signing up customers and having those customers be satisfied with the service they are receiving for the market to be able to assess to the technical robustness of the WC platform.

While time will tell if WC and the HUB Alliance will be successful or not, IHS is intrigued by the existence to a differentiated competitor to Jasper Wireless and Ericsson on the platform front, and a potentially robust and cost-effective offering of connectivity for M2M deployments on a global basis.