LIVE FROM GSMA MOBILE ASIA EXPO 2013: The booming M2M market will pose challenges to operators as they seek to turn a profit on products generating just US$3 ARPU.

That’s the view of Shawn Sanderson, Head of Global Operator Solutions at vendor Jasper Wireless, speaking to Mobile World Live ahead of his conference appearance Thursday.

“Serving emerging classes of connected devices is radically different to the traditional handset market operators have excelled in… A challenge for mobile operators is finding and establishing the right business models to reach disparate demographics and vertical markets,” he said. “ARPU is a lot lower than smartphones’ typical US$50 per month, so operators have to invest in alternative systems and business processes to make a US$3 ARPU product profitable.”

Sanderson believes that operators need to be conscious of the different dynamics and requirements of each vertical industry to which M2M is applied. “To take the automotive vertical as an example – like most M2M markets it is a complex ecosystem made up of numerous players,” he explains. “This includes mobile operators, tier 1 suppliers, module manufacturers, auto OEMs and telematics service providers, all of which must factor into the business model. When it comes to in-car infotainment services, operators need to recognise that the typical handset-esque monthly contract may not be practical – asking consumers to plan a year in advance what content they will want to stream each month and how much they are willing to pay is unlikely to fly, particularly when it’s still such a new concept.”

Citing an example of how Apple defined a new micro-transaction model with its iTunes and App Stores, thus proving the demand for on-the-spot purchasing and the willingness of customers to pay premium prices to get immediate access to content, Sanderson said operators will need to recognise that real-time billing – via the micro-transaction model – is a strong contender as a business model for the connected car. “Allowing consumers to make ‘impulse buys’ of digital content holds the key for growing revenue streams in some connected consumer electronics markets,” he claims.

Sanderson’s work appears to be paying off; Jasper’s operator platform has been deployed by 12 operator groups representing 91 operating companies. Earlier this year at Mobile World Congress the vendor announced that Etisalat was the latest high-profile name to join its global M2M alliance.