The good news is that the increased fuel costs bolster the business case for route planning solutions including applications and wireless devices. Route planning tends to deliver the largest fuel cost efficiencies because these solutions not only optimize routes by providing turn-by-turn instructions but also identify the least expensive fueling stations along routes.

In addition to reducing fuel consumption, another factor bolstering the telematics business case is the desire for a greener image.  According to a recent Frost & Sullivan report, the $80 million telematics market that existed in 2008 will grow to $700 million by 2015 due, in part, to growing pressure on fleet companies to reduce their carbon footprint and develop a greener image.  Having car-to-car and car-to-network communications could reduce fuel use and CO2 emissions by 10 percent, whether built into new cars or added to existing vehicles.

Also, according to a May, 2011 GE survey, Corporate fleet managers rated volatile fuel prices as their top concern for 2011.  The survey of 105 fleet managers found that driver safety and overall cost savings do matter. However, both are considered to be less of a concern than unstable fuel prices.  The survey showed that 29 percent of fleet managers use some sort of analytics to improve operational efficiency and reduce overall fuel consumption. Twenty seven percent of those surveyed claim that their analytical systems have slashed costs.  The volatile fuel prices are changing investment decisions beyond analytics and telematics.  28 percent of the surveyed fleet managers claim to have committed to purchasing electric vehicles to incorporate into their fleets within the next 12 months.

Simple fuel-saving practices that were ignored when fuel was around $2 per gallon are being implemented now that fuel is in the $4 range.  For example, many smaller fleets will no longer  let their trucks idle more than five minutes in any single spot.  Retailers such as furniture showrooms are increasing their home delivery charges.

Penny by penny, as fuel prices rise, we can expect to see increased investment in fuel-saving applications, devices, vehicles and the wireless services that connect them.

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The Aging Utility Grid

There’s also a lot of talk about America’s aging utility grid, including comments from Electric Power Research Institute (EPRI), the official research arm of America’s power utilities. Most of today’s power grids are based on 1950’s technology with few, if any, sensors or communication capabilities and dated control systems.  Utility operators can’t see the grid.  Even if operators could see the grid, they could not act due to the lack of adequate control systems. The grid’s lack of resilience—how quickly and intelligently it can recover from a disruption—was exemplified by the 2003 blackout that affected about 50 million Americans and Canadians and cost power users around $7 billion. Improving reliability and making it possible to deliver innovative new power sources will require a transformation of today’s centralized, unintelligent grid into a smart, distributed network. This is sometimes referred to as the “energy Internet.”

Utilities Developing a Solution

Fortunately, the industry is developing a multi-tiered plan that includes smart sensors, real-time control systems, storage and generation. There are plans to install sensors throughout the network that will send data about grid conditions to the cloud.  With this information, updated controls can be installed that can switch power in milliseconds, avoiding problems and potential disaster. Additionally, the installation of power storage devices that smooth out fluctuations in power flow will enhance optimization in the long term. I anticipate a number of advanced energy storage devices, such as advanced capacitors and batteries, flywheels—even consumers’ electric cars—that will plug into this upgraded grid.

The Rise of Micropower

Longer term, I expect one of the more interesting developments to be the implementation and proliferation of “micropower” sources—smaller power sources, such as scattered wind farms, solar farms, and fuel cells, located near end-users, as opposed to the current grid design of a limited number of large sources located much farther away.

Ultimately, the grid may be transformed into a wirelessly-controlled, digital network capable of handling complex, multi-directional flows of power. Communications and computing must be both cost effective and easy to install.  These criteria greatly favor wireless communications and cloud computing. Companies capable of delivering the necessary wireless communications and cloud computing functionality must also be armed with outstanding service level agreements and disaster recovery capabilities.

Do you think we’re ready? Share your thoughts.

M2M Delivers A Snapshot of Driving Habits

In March, Progressive Insurance, as part of its “Pay As You Drive” program, offered drivers the chance to lower their premiums based on real-time analysis of their driving habits. Drivers plug a device, the “Snapshot,” into the car’s onboard diagnostic port, or OBD-II, typically found near the steering wheel. [The OBD-II is a standardized digital communications port which was made mandatory in 1996 for all cars sold in the United States.] Using telematics and mobile technology, as they drive, information is shared wirelessly, via AT&T’s network, with Progressive. The Snapshot isn’t outfitted with GPS, so it can’t record where the car is or how fast it’s driven. What Progressive does record are the number of miles driven, time of day driven, as well as how often drivers make sudden stops. Not having GPS goes a long way towards alleviating privacy concerns.

While Progressive assures those whose driving habits aren’t up to par that their rates won’t go up, my guess is that only drivers who perceive themselves as good drivers will try the Snapshot. If they exhibit safe driving habits, Progressive states that they can expect their insurance rates to drop as much as 30 percent. (The average user discount is 10 to 15 percent.) Those who drive less, and who do so at safer times and in safer ways, are likely to get a discount.

Telematics Does More Than Save Drivers Money

The program isn’t only instructive for Progressive. Drivers use the Snapshot for six months, but after 30 days, customers can log into their policy to see what kind of discount their driving habits have earned them. Drivers will also find suggestions on how to alter their driving habits and save even more. This, in turn, results in safer roadways (my earlier post gives some data regarding safety and the time of day cars are driven) and also creates a positive environmental impact. By encouraging drivers to maximize their savings, drivers will be motivated to drive less and with fewer rapid starts and rapid breaking. This saves fuel and translates in fewer carbon emissions.

The Technology is Here to Stay

As I noted in my initial blog, UBI isn’t realistic if the technology isn’t cost-effective. The ability for embedded devices like the Snapshot, which costs approximately $100 to manufacture, to communicate over a wireless network like AT&T’s signals that the technology has come of age. It’ll be interesting to see how long it takes other automobile insurance companies to follow Progressive’s lead. As they do, it will become common for drivers to be charged insurance rates that are based on their individual driving habits, not on actuarial charts and the collective driving habits of others. UBI is not a novel idea, but the technology now exists that makes easy, real-time transfer of meaningful information cost-effective and easy to accomplish.

“Snapshot is about much more than just really cool and fun-to-use technology—it’s a whole new way to think about car insurance,” Glenn Renwick, Progressive President and CEO said in the company’s press release about the Snapshot. “We believe Snapshot is a game changer—representing the future of auto insurance as our mobile and interconnected world gives us the opportunity to offer immediate and substantial savings to our customers.”

I agree with Renwick.

If your automobile insurance company offered you a UBI program, would you try it?

Why? Why not?

images courtesy of Progressive on Flickr

The M2M (machine to machine) category is broad.  What’s not clear is a standardized categorization of M2M segments.  At AT&T Mobility, we organize M2M into eight vertical segments:

1. Asset Tracking (referring primarily to mobile assets such as intermodal container and usually includes GPS capability),
2. Fleet Management,
3. Remote Monitoring (referring primarily to fixed devices such as an electric meter),
4. Security,
5. Telematics,
6. Wireless POS (Point of Sale), and
7. the emerging verticals of mHealth (mobile health) and
8. the Smart Grid.

AT&T Mobility has dedicated teams that are focused on developing Smart Grid and mHealth solutions.

What is clear is that the M2M market is rapidly growing and has a bright future. AT&T Mobility has been consistently adding about a million connected devices per quarter to its mobile network.  However, in the fourth quarter of 2010, AT&T Mobility recorded more than 1.5 million net additions, including both consumer devices and enterprise M2M connections.  This brings its total to nearly 11 million devices.

According to ABI Research, M2M connections will reach in excess of 297 million in 2015, up from 232.5 million the previous year. Europe will lead the way with 110 million connections, followed by North America with 79 million and Asia-Pacific with close to 66 million.  The GSMA, a trade body for the mobile industry, estimates that there will be 20 billion devices connected to the web by 2020.  From a revenue perspective, according to the research company IDC, the value of the market, including hardware and connections, will reach $7 billion by 2014.

Fully realizing the benefits of M2M will depend on how effectively whole product solutions (defined as the minimum set of products and services necessary to fix a customer’s problem) are delivered to the market.  To that end, AT&T recently announced its latest new M2M partners:

• The company is working with cloud-based M2M platform provider Axeda, which has traction in the industrial, medical, IT, banking, retail and government sectors;
• ILS Technology, which provides monitoring and predictive maintenance applications in the building automation, data centre, energy management, and industrial markets;
• SensorLogic, which specializes in fleet management; and
• Sierra Wireless, developer of the AirVantage cloud-based service and development platform.

The M2M ecosystem is gaining traction and is here to stay.

Are there ways in which your company is using M2M?

Ways in which you’d like your company to use M2M?

I recently spoke with John Moscatelli, AT&T Director Industry Solutions Transportation/AVL. We got on the subject of Compliance Safety Accountability 2010 (CSA 2010) and how it will affect both fleet tracking technology and trucking fleet operations.  CSA 2010 is the Federal Government’s new way to measure fleet safety. Based on safety records, every fleet with a DOT (Department of Transportation) number is now given a score posted publically on the CSA website. This added scrutiny has increased fleet owners’ interest in solutions that improve safety and driver compliance.  In addition to traditional data logging techniques, fleet owners want systems that give real-time feedback and predict problems before they happen.

While CSA 2010 does not impose any new safety-related regulations on fleets or drivers, the program will make it easier for the Federal Motor Carrier Safety Administration (FMCSA), established in January 2000 to regulate the trucking industry in the United States, to identify the worst risks in the trucking industry. The FMCSA, under authority of the U.S. Department of Transportation, will use CSA 2010 to improve commercial truck and bus safety, thereby reducing crashes, injuries, and fatalities related to commercial motor vehicles.

Within the CSA operation, the Safety Measurement System (SMS) quantifies the on-road safety performance of carriers and drivers. The SMS works to determine the specific safety problems exhibited by a carrier or driver, monitors whether safety problems are improving or worsening, and identifies candidates for interventions. SMS is an after-the-fact, post processing model that uses a motor carrier’s data, collected from a variety of sources, such as roadside inspections, safety-based violations, state-reported crashes, and the Federal motor carrier census, to quantify performance.  CSA 2010 replaced SafeStat, an older system that measured safety performance using the SMS.  Starting in summer 2010, carriers and drivers could review SMS database records and, if they felt compelled to, contest them.

Rather than making improvements and incurring costs after the fact, fleet owners are interested in improving their operations by utilizing predictive models.  Fleet tracking companies , such as AT&T partners Trimble and WebTech Wireless, offer solutions that create models based on a fleet’s own hours-of-service (HOS) and driver performance data to predict which drivers will earn a negative performance on their scorecard if no intervention is taken.

These solutions also gather data by tying into onboard systems, data busses and engines.  They also provide real-time, in-cab feedback regarding such potentially hazardous behaviors as speeding and hard braking. For operations management, this means the ability to generate real-time alerts at the dispatch center and, ultimately, enable driver interventions. Programs such as those offered by Trimble and WebTech Wireless allow fleet operators to address driver behaviors that could negatively impact their scorecards—and do so before the egregious behaviors are recorded in the government’s database.

As 2011 progresses, we’ll see increased enforcement, state-by-state, of CSA 2010, including new interventions.

If you work with or for a fleet operator, are you making any changes?

If so, what are they?

The mobility industry appears ubiquitous now, but it’s a fairly young industry. Initially defined by devices (such as the Motorola RAZR, first sold in late 2004), it was device manufacturers that controlled the mobility space. Since 2008, apps have been all the rage. While apps still get plenty of attention, I think mobility is now entering a new phase.

The Service and Social Era

A few analysts have referred to this time in mobility history as the “service and social era.” This present phase builds on the mobile app boom, but adds streaming media and cloud services and greatly expands the industry’s offerings. I see applications as continuing to play a key role, but I think they’ll shift from being device-centric to residing in the cloud.

Going forward, device manufacturers will test different concepts. As a result, we’ll see new device types fill the form factor continuum–the smartphone at one end and the tablet PC on the other. A recent example, with its 7-inch screen, is the Samsung Galaxy Tab. With the price of modules dropping, we can expect to see more traditional devices, such as laptops, offered with embedded WWAN technology as a standard feature.

Connected Devices and the Future

When considering the future of mobility, we can’t overlook machine-to-machine (M2M) technology and connected devices. M2M is shaping up to be one of mobility’s fastest growing sectors. According to Analysys Mason, in 2010, there were an estimated 62 million devices connected, and year-on-year growth between now and 2020 is projected to be between 36% and 52%.

Businesses will increase the use of location information services (LIS) and barcoding in their mobile plays and will take these services into consideration when deciding which companies and vendors to choose. Mobile business systems will leverage cloud services hosted by competent third parties. We’re already seeing vendors such as Google, Microsoft, IBM and AT&T stake out cloud service positions.

Develop a Strategy

To take advantage of this service and social era, companies should develop a high-level strategy based on technology-independent management goals and styles, rather than focusing on individual device, platform or application policies. In other words, mobile-device-management (MDM) should not be about managing a small sample of devices or operating systems. It should be based on an over-arching strategy. For sure, companies must pay attention to certain device requirements, but there’s a lot more to it.

Which is why it’s semi-shocking that when Forrester conducted a global mobile maturity online survey among executives in the fall of 2010, 57 percent of those executives interviewed admitted they either have no mobile strategy or are just now defining one. When it comes to best practices, few have been implemented. In the early 1990s, to support the PCs that began to appear on corporate America’s desktops, a specialized IT industry evolved. The emergence of mobility and its forthcoming support requirements is akin to this. Granted, I’m biased (I work at AT&T and in mobility), but outsourcing your company’s MDM to a qualified third-party like AT&T can help your company deal with everything from device management to security solutions. Regardless of whether or not your company seeks out a partner to help it with its MDM needs, if it doesn’t have a mobile strategy, it’s time to develop one. Even a small piece of a trillion dollars is a lot of revenue.

If your company has not adopted a mobile strategy, I’d like to hear what’s holding it back.

Rise of Smart Grid Cyber Security

The vulnerability of the smart grid infrastructure to cyber-attacks is expected to drive a boom in security spending for utilities. According to a February 2010 report from Pike Research, the smart grid cyber security sector will increase from $1.2 billion in 2009 to $3.7 billion by 2015. During the period from 2010 to 2015, the research firm anticipates that a total of approximately $21 billion will be invested in global smart grid cyber security deployments.

For smart grids to become viable, utility companies must collaborate through interconnected components, such as smart meters, fault sensors, switches, storage devices and energy management systems through an IP network?similar to the technology used by telecoms. Collaborative smart grids can be enabled by cloud computing technology, but cloud computing, if not implemented correctly, has security risks as well.

Potential Solutions to Anticipated Problems

As I see it, utilities seeking to reduce smart grid cyber security risks should apply the same best practices and industry standards currently used by proprietary data centers in hosted environments managed by third party solution providers. Where appropriate to collaborate with other utilities and to take advantage of gained efficiencies by utilizing shared resources, they should transition their servers to the cloud.  In addition to utilizing a world class Global Network Operations Center (GNOC) monitored by a trained staff, practices include:

• malware filtering at the network perimeter,
• intrusion detection/intrusion prevention systems,
• data loss prevention and others.

Commercial hosted services are often more secure since they serve multiple customers and have to adhere to multiple evaluation standards.  As an additional incentive, the liabilities are much more significant.

According to Art Maria, the Chief Enterprise Architect here at AT&T, a solid security option for utilities is to collaborate with hosted service providers that have implemented datacenters in compliance with ISO standards and that meet SAS70 certification. Whether hosted by a utility or a solutions provider, smart grid security standards must be implemented and maintained by a team that can keep pace with the fast-evolving cyber security threats.

What other Smart Grid security concerns are particularly troubling to you?

The LEAF convincingly dispels the usual objections to EVs, such as style, performance and anxiety about the cars’ range. Built to travel 100 miles on a single charge, the EPA rated the Nissan LEAF with an MPG equivalent of 106 city, 92 highway for a combined 99 MPGe. (This calculation is based on the EPA’s formula of 33.7kW-hrs being equivalent to one gallon of gasoline energy.) Perhaps this is part of the reason Nissan met its goal of 20,000 LEAF reservations three months ahead of schedule.

One of the stations at the Drive Electric Tour focused on the LEAF’s power pack. It is purpose-built with 48 modules, each with four wafer-like cells (192 cells total). The entire pack weighs approximately 600 pounds and sits under the rear seat, front seat and floor of the LEAF that gives the car a low center of gravity and improved vehicle handling. The life of the power pack depends on the amount of fast charging at commercial stations versus slower, off-peak overnight charging on a 240V home system, but Nissan expects the LEAF to have around 70 to 80 percent of the power pack’s original capacity after ten years. When I drove the LEAF, I found that its power plant delivered peppy pickup and it felt like driving a gasoline-powered car.

From the driver’s seat, the most prominent feature is the CARWINGS telematics system. Its seven-inch screen displays possible range and the car’s current position on a moving map. The system tells you which charging stations are reachable and automatically populates the map with new charging stations as they come on line. It tracks your energy usage information and allows you to see daily, monthly and annual reports that show distances traveled and total and average energy consumption, among other things. As battery charge gets low, CARWINGS switches the car to “economy” mode in an effort to maximize range and then directs you to the nearest charging station.  One of the most interesting features of the system is that it leverages social networking and crowdsourcing. The CARWINGS system connects all Nissan LEAFs to a network, wirelessly feeding the cars’ energy economy statistics to a central server. The central system tracks each car’s driving efficiency and uses its “Regional Rankings” system to compare your LEAF’s energy economy to that of other LEAF drivers in the region. This means that as a LEAF owner, you compete with other owners. Winners receive a gold trophy icon on the CARWINGS dashboard control center. The second, third and fourth place winners can also win a place on the graphical podium, receiving icons depicting gold, silver and bronze medals.

Another “delight feature” of the Nissan LEAF is a smartphone application that enables remote interaction.  The app can send messages to the vehicle, such as an instruction to warm or cool the interior to a preset temperature before the driver is in the car. This allows the car to use the grid to power its climate control system rather than using the car’s battery power after the car has left the charging station. The app also allows you to start charging the car, see how “full” the battery is, check when the battery charge will be complete, and calculate the car’s estimated driving range given its current charge.

This year’s crop of EVs marks the next step in the transformation of transportation. Planes, trucks and cars have all become more dependent upon electronics and software. Transportation vehicles are moving from being mainly mechanical devices to having a much larger proportion that is electronic. I believe 2011 will be a critical year for the adoption of electric vehicles. If the Nissan LEAF’s ahead-of-schedule reservation success is any indication, things are moving in the right direction.

One of the largest UBI (usage based insurance) pilots was performed about five years ago by Norwich Union (recently rebranded as Aviva), one of Great Britain’s largest insurance providers.  According to Aviva, for its pilot Norwich Union installed telematics “black boxes” in customers’ cars to track how far they were traveling, the time of day, and the type of road they were on. Knowing the type of road is important because, for example, motorways are ten times safer than urban roads.  With this information verified, insurers could give a better rate to those traveling on motorways versus those who travel mostly on urban roads.  Time of day is also important because driving at night, especially for young drivers, is significantly more dangerous than traveling during the daytime.

The Value Telematics Can Bring

With telematics, it is possible to know the time of day and the road on which a customer is driving. This information can be used to generate, in real time, individualized penny-per-mile tariffs.  Based on that information as well as the total number of miles driven, a very accurate premium can be calculated.

During the time Norwich Union performed this pilot, accident claims among younger drivers alone dropped by about 20 percent. That is a staggering statistic and it represents a huge benefit in terms of road safety. The use of telematics enables insurers to more effectively incentivize good driving practices. For example, increases in premiums could dissuade some young drivers from driving during the most dangerous times, such as on a weekend night, when they are 14 times more likely to be involved in an accident. They could seek safer alternatives—such as taxis or public transportation—and save money on their auto insurance as well.  Customers were also saving approximately 30 percent on their premiums.  Telematics leads to other benefits as well, such as improved emergency roadside assistance.

The Future of Telematics

Although Norwich dropped its program in 2008 due to disappointment with the acceptance rate of the service, I think there is a bright future for the concept.  Moore’s Law suggests that processing power of electronics increases over time, leading to lower costs for equivalent processing power.  Assuming the price of telematics technology falls over time, these lower costs can open up new market opportunities and make existing market opportunities more appealing.  That is why I look for automobile insurers to begin offering UBI as an option to their customers as the costs for telematics devices decline. Drivers who choose telematics-based products will be those who perceive themselves as having good driving practices and who expect to see those practices translate to a savings in their insurance premiums.

More information on this topic can be found from EMB, an insurance consulting company.

In what industries would you like to see telecommunication companies provide additional data?

In what other ways do you think Telematics could augment other vehicles?

Envision this…in the very near future, you might be using your mobile device to pay for your morning cup of coffee at Starbuck’s. Your mobile device might become your driver’s license and credit card. With M2M technology, we can foresee a smart home where you control your air conditioner, lights, and the charging of your electric car. For many of us, our mobile phones already function as a GPS and mini-computer connecting us to people and organizing our lives.

The Rapid Pace of Change

Changes are coming rapidly. The move from mainframes to client server took over ten years, but it seems that the move from client server to cloud computing won’t take nearly that long. PCs are being replaced by smart phones and tablets. According to some predictions, by 2013, a decade after their launch, there will be one billion smart phones in the world. That’s roughly the number of PCs that exist today, three decades after the machine was introduced.  It is projected that 2011 will be the year that more people will access the Internet by smart phones than by personal computers.

Reducing the “Digital Divide”

What’s going to happen when most of the people on earth carry a device that gives them access to much of the world’s information? For commerce, politics, and education, the implications are profound. The mobile revolution could mean transparency and accountability for governments, or the ability to spy more easily on citizens. The advent of low-cost mobile devices will allow people in developing nations to see the rest of the world and participate in it. The information age is finally reaching the deepest rural areas of the emerging markets and, at the same time, reducing the “digital divide.” The lack of a wired infrastructure in the developing world makes wireless devices particularly attractive. Their introduction has spurred microcredit and increased entrepreneurship. With the vast subscriber base of many service providers, the convergence of cutting edge technology and telecoms brings both opportunity and responsibility.

The convergence also changes the IT needs of many enterprises and small and medium-sized businesses (SMB): they’ll rely more heavily on their technology service providers for cloud, hosted, and outsourced services. With an infrastructure in place and a cloud computing vision, telecoms are well-positioned to lead us into the biggest technology market that’s ever existed.

Are we ready?