smart meters for smart grids

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Research Report

Smart Meters for Smart Grids Smart Meters, Advanced Metering Infrastructure, Home Area Networks (HAN), and Distribution Automation (DA) Technologies

Sam Lucero Practice Director, M2M Connectivity

Stuart Carlaw

Vice President and Chief Research Officer

NEW YORK LONDON SINGAPORE

Smart Meters for Smart Grids

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© 2010 ABI Research • abiresearch.com 2 The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.

Section 1.

EXECUTIVE SUMMARY

1.1 Making the Electrical Grid “Smart” Massive regulatory efforts and business investments are currently underway around the world to upgrade various countries’ electrical grids with significant new capabilities, specifically in the areas of increased network communications, remote and automated management of network elements in the field, and new power management functionality (distributed generation and power storage, including support for Plug-In Hybrid Electric Vehicles (PHEVs)).

Certainly, a key aspect to this upgrade to a smart grid is the deployment of millions of new smart meters by utilities around the globe, but particularly in North America, Europe, and certain countries in the Asia-Pacific region, namely Australia. The upgrade to smart meters involves not only the replacement of existing electromechanical meters with two-way communicating digital meters, but also the installation of significant new communications infrastructure in the field.

The communication technologies and network topologies being used in Advanced Metering Infrastructure (AMI) deployments to network smart meters range from fixed wireless and power line carrier technologies used to connected local clusters of smart meters in Neighborhood Area Networks (NANs) that are then back-hauled by various Wide Area Network (WAN) technologies, to connect each individual smart meter directly to public cellular networks.

In addition to smart meters and AMI, however, it is important to keep in mind that other vital elements of the smart grid include the deployment of technologies for Distribution Automation (DA) functionality, as well as for enabling electricity customers to have more granular insight and control over their energy consumption, a capability typically referred to as Home Area Networking/Demand Response (HAN/DR). The nascent market for HAN/DR technology, in particular, is drawing tremendous interest and attention, with Microsoft and Google only two of the more recent market entrants.

In summary, the key benefits that are typically sought through the development of the smart grid are:

• Automated Meter Reads (AMR): Communication infrastructure connecting smart meters to the utility head-end enables the utility to remotely and automatically read the energy-consumption date recorded by the smart meter, typically in fifteen-minute intervals.

• Demand Response (DR), Time of Use (TOU), and Critical Peak Pricing (CPP): DR is the customer’s ability to alter energy usage, either through signals (such as real-time pricing signals) to encourage voluntary customer actions and reduce power use at specific times or through direct utility control of electrical equipment, with the customer’s permission. TOU and CPP are pricing components of DR; TOU represents the regular variance of retail pricing based on the time in which the power in consumed while CPP denotes the variance of retail pricing based on exceptional periods of energy demand on the network.

• Remote connect/disconnect: Remote connect/disconnect eliminates the required truck roll to the customer premises to initiate or deactivate power when a customer is moving into or out of the premises or for non-payment of utility bills.


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• Remote fault detection: Remote fault detection helps to speed restoration of service in the event of power outages. Traditionally, utilities rely on customer service center calls and exploratory truck rolls to find and repair outage incidents. That method increases customer dissatisfaction and support costs at the customer service center and in field operations.

• Net metering: Net metering accounts for energy flowing back to the utility grid from a customer location as a result of distributed generation, such as from a customer’s rooftop solar panel array. When customers generate and return more power to the grid than they consume, they are often paid the difference by the utility. Smart meters help to facilitate net metering.

Key market adoption drivers and challenges for the smart grid include:

Market Adoption Drivers Market Adoption Challenges

• Regulatory mandates

• Energy efficiency and reliability

• Operational efficiency

• Environmental concerns

• Improved customer service

• Reduced energy theft

• Energy market competition

• Evolving standards landscape

• Project complexity

• Business case complexity

• Project cost

• Consumer acceptance

1.2 The Evolving Smart Grid Value Chain/Competitive Landscape The utility/smart grid value chain is complex and we show only a simplified overview in Figure 1.1. Overlapping sets of industry players target different smart grid application domains: DA, AMI (smart metering), and HAN/DR. Smart meter vendors (Itron, Landis+Gyr, Elster, and others) are active in the DA market to a certain extent, as well as their core AMI market. Technology vendors, who specialize in the communications portion of AMI but do not necessarily provide meters themselves, are sometimes involved in the HAN/DR market, as is the case with Smart Spring Networks and its acquisition of HAN/DR specialist Greenbox. However, focused DA and HAN/DR system vendors also serve their respective market segments as well.

In addition, Meter Data Management (MDM) vendors, such as eMeter, are increasingly important to the smart grid value chain as the flood of new meter reading data becomes available to utilities with smart meter deployments, thereby increasing their data management burden. Likewise, to coordinate the activities of numerous vendors in deploying complex systems and technologies, system integrators, such as IBM and Accenture, play a vital role in the smart grid value chain. Finally, although public network communication services providers, such as MNOs, MVNOs, and, in the case of HAN/DR, telco/broadband providers, are not absolutely necessary for the implementation of the smart grid, they are taking an increasingly prominent part in the market.


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Figure 1.1 Utility/Smart Grid Value Chain

(Source: ABI Research)

1.3 Forecasting the Smart Grid Chart 1.1 shows ABI Research’s forecast of smart meters by region. Further detail is provided in Tables 1-1, 1-2, 1-3, 1-4, 1-5, and 1-6 in the accompanying Excel database file. Europe is currently the largest market for smart metering technology, and will remain so for the forecast period. However, other regions are expected to grow more strongly over the forecast period. Consequently, Europe’s overall share will decline by 2015. In particular, North America will start to see strong growth in the 2010 period and onward as key projects in several US states and Canadian provinces start hitting volume deployments. The Asia-Pacific region will see the highest growth rate over the forecast period, but this region is starting from a small base. Latin America and the Middle East and Africa are expected to remain marginal markets for smart metering throughout the forecast period.

Chart 1.1 Total Smart Meter Installed Base by Region, World Market, Forecast: 2008 to 2015



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Section 2.

MARKET ISSUES

2.1 Introduction to the Smart Grid 2.1.1 The Market Landscape

This study examines the market dynamics impacting the deployment of advanced communications technologies used in conjunction with utility metering infrastructure and operations on a worldwide basis. Specifically, the study looks at the adoption of smart meters as well as communications to key Transmission and Distribution (T&D) infrastructure elements as part of an overall deployment of smart grid technologies. ABI Research defines the smart meter for the purposes of this report as a meter capable of two-way communications to and from the meter and a utility’s head-end infrastructure. This definition is distinctly different from one-way Advanced Meter Reading (AMR) technologies, where the AMR-enabled meter communicates energy use measurement data only in a unidirectional manner to the utility’s head-end.

Figure 2.1 illustrates the conceptual landscape of the various infrastructure elements and technology segments comprising the smart grid. At a simplified level, electricity flows from the utility’s generation infrastructure, through various T&D infrastructure, to the customers’ premises. DA denotes the use of communication technologies operating over WAN infrastructure to enable remote monitoring and control of T&D equipment, such as Phasor Measurement Units (PMUs), switches, and capacitor bank monitors. AMI involves the use of smart meters communicating with utility head-ends through local NANs and/or WAN communication technologies. AMI benefits and network topologies are discussed at length in this report. HAN/DR technologies permit utility interaction with in-home devices, primarily to reduce peak load demand.

Figure 2.1 Infrastructure Elements and Technology Segments Comprising the Smart Grid



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This study focuses on the use of smart grid communication technologies with electricity meters and infrastructure. ABI Research provides an overall forecast of gas and water meters (excluding heat meters, which are only a small portion of the overall worldwide installed base of meters). Advanced metering technology is being integrated into gas and water meters, but these are secondary markets with their own dynamics, vendors, and use cases. Such markets are oriented mainly toward simple AMR functionality. Typically, when gas and/or water meters are also present and the collocated electricity meter is being turned into a smart meter, the gas and/or water meters are connected via radio frequency links to the smart electricity meter, and through the smart electricity meter to the utility.

2.1.2 The Benefits of a Smart Grid 2.1.2.1 Automated Meter Reads

Smart metering is an outgrowth of unidirectional AMR. AMR systems have been available in the United States on both a fixed and mobile basis at least since the 1980s. Traditionally, utilities have employed meter reading personnel, either directly or through third-party contractors. Originally, readers visited each meter to manually scan the display and determine consumption since the last reading. This is an expensive operation to maintain, and can be potentially dangerous to the meter readers; for example, they could be attacked by a customer’s dog during an attempt to read a meter. Often, meter readings are estimated for several months before being actually checked. The use of wireless AMR, first to automatically download meter data to a handheld device and later to download meter data to a mobile utility van in a drive-by reading, has been the bridge to fixed RF AMR and now smart metering using either fixed RF or power line technologies.

2.1.2.2 Demand Response, Time of Use, and Critical Peak Pricing DR is the customer’s ability to alter energy usage, either through signals (such as real-time pricing signals) to induce voluntary customer actions and reduce power use at specific times or through direct utility control of electrical equipment, with the customer’s permission. TOU and CPP are pricing components of DR; TOU represents the regular variance of retail pricing based on the time in which the power is consumed while CPP denotes the variance of retail pricing based on exceptional periods of energy demand on the network.

DR is beneficial because it more closely links the retail consumption of energy to the wholesale cost and availability of that energy. Wholesale prices vary throughout the day and year, as well as in response to extraordinary supply constraint issues (called “peaking generation”) and outages. Yet, retail customers often pay a flat fee with no regard to when they use power. This imbalance is inefficient from an environmental resource allocation standpoint, but can also drastically increase a utility’s cost to provide power, and even put it in a temporary emergency position of not being able to supply adequate power, leading to blackouts and brownouts. While smart meters are not necessary for all DR programs, they certainly facilitate its implementation.

2.1.2.3 Remote Connect/Disconnect Remote connect/disconnect eliminates required truck rolls to customer premises to initiate or deactivate power when the customer is moving in or out or for non-payment of utility bills.

2.1.2.4 Remote Fault Detection Remote fault detection helps to speed restoration of service in the event of power outages. Traditionally, utilities rely on customer service center calls and exploratory truck rolls to find and repair outages. This method increases customer dissatisfaction and support costs at the customer service center and in field operations.


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2.1.2.5 Net Metering Net metering accounts for energy flowing back to the utility grid from a customer location as a result of distributed generation, such as from a customer’s rooftop solar panel array. When customers generate and return more power to the grid than they consume, they are often paid the difference by the utility. Smart meters help to facilitate net metering.

2.1.3 Smart Grid Market Drivers 2.1.3.1 Regulatory Mandates

Regulatory mandates, in the form of rules or legislation, are directly and indirectly driving the smart grid market, and tend to have particular impact, given the central role of regulations in utility operations. In a direct sense, mandates such as Ontario’s Smart Meter Initiative require regulated utilities to plan and deploy smart metering systems. Indirectly, national and transnational initiatives (such as the US Federal Energy Policy Act of 2005 and Article 13 of the European Union’s Energy Services Directive) outline broad energy efficiency and reliability guidelines and targets, which encourage many local governments and utilities to opt for smart metering to meet these goals.

2.1.3.2 Energy Efficiency and Reliability Energy efficiency and the reliability of retail supply are key aims for smart grid deployments, both on the part of utilities, as they seek to reduce the level of required peaking generation capacity in order to lower their wholesale costs, and on the part of the governmental bodies that regulate the utilities. The stability of the retail energy supply is a closely linked objective. For example, the 2001 energy crisis in California caused the state government to closely examine means of ensuring stable energy supply. Consequently, demand-side management through DR programs utilizing smart metering deployments has emerged as a key component of the state and utility energy plans.

2.1.3.3 Operational Efficiency Automating utility processes, such as meter reading, connect/disconnect, and fault detection, offer significant operational efficiency gains and expense reduction. For example, SRP, the Arizona utility estimates that in 2006 it saved 85,000 miles in vehicle expenses with 85,000 remote field orders and over 9,000 remote connects and disconnects completed. An additional component of operational efficiency gains derives from the aging utility workforce in North America and Europe, which is leading many utilities to search for ways to increasingly automate utility processes.

2.1.3.4 Environmental Concerns Many state, provincial, national, and transnational (such as the European Union (EU) governments are becoming more and more concerned about the negative impact of energy consumption on the environment, particularly the effect of global warming. These governments are seeking ways to ameliorate this negative impact, and increasing energy efficiency is emerging as a key solution. This trend influences the regulations and legislation enacted by governments that affect the utility industry and helps to drive smart metering as one path toward energy efficiency. For example, the EU’s Energy Services Directive explicitly cites improved end-use energy efficiency as a path toward reducing greenhouse gas emissions. Other governmental position papers on smart metering, such as those from the Irish national government and the Ontario provincial government, also link energy efficiency and environmental benefits.


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2.1.3.5 Improved Customer Service Automating utility metering processes improves customer service in several ways. For example:

• Estimated meter reads are eliminated at the same time that customers are no longer inconvenienced by meter readers needing entry to their homes.

• Customers have access to near-real-time consumption and pricing information, and have more control over their energy usage and, consequently, their energy expenditures.

• Remote fault detection enables utilities to reduce the amount of time that customers are left without power after an outage.

• Remote connect/disconnect capabilities enable utilities to turn on service immediately for customers moving into a new residence and to turn services off just as quickly when customers move out, without the need for a manual connection/disconnection.

2.1.3.6 Reduction of Energy Theft Smart metering is being investigated in many developing economies as a way to reduce energy theft by customers. In certain parts of the Asia-Pacific region and Latin America, for instance, energy theft by customers tampering with their conventional meters is rampant. For example, Mexico City utility LFC (Compañía de Luz y Fuerza del Centro) estimates its losses from energy theft in 2006 at $2.3 million per day. Smart metering both facilitates theft detection and enables remote disconnection when customers have not paid their energy bills.

2.1.3.7 Energy Market Competition Energy market competition entails the unbundling of generation, T&D, and retail energy services to enable customers to have a choice in Retail Energy Providers (REP). This is dramatically different from the traditional vertically integrated model, in which a utility owns and operates all aspects of the energy infrastructure. Competition is both a driver and, potentially, a challenge for smart metering adoption, depending on how such deployments are mandated by governments.

When the regulatory authority requires that the T&D provider deploy smart meters and provide open, standards-based access to REPs, then smart meters become a platform that facilitates competition and REPs will support smart metering through their own service development strategies. This is the case in Texas, for example, with the state legislature enacting HB 2129 requiring T&D providers to supply advanced metering service. REPs in Texas view smart meters as a platform on which to build differentiated services and compete more effectively in what is potentially a commoditized market. The drive for retail competition in the energy sector is strongest in the EU and Australia, though it does occur in some US states, as well.

2.1.4 Smart Grid Market Challenges 2.1.4.1 Evolving Standards Landscape

Standards are important to the smart grid market for several reasons:

• REPs in an unbundled market need assurance of a standardized means of communication with their customers’ meters. This is important because, in a competitive environment, customers can change REPs, and multiple REPs will likely offer service in the same geographic area.

• In the HAN segment of the smart grid topology, standards are even more critical, due to the need to interface with various heterogeneously sourced devices inside the home.


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• Standards are increasingly seen by the utility industry as an important means of fostering supplier competition and thereby lowering costs. In addition, standards help to facilitate more and more complex smart grid network deployments.

• While a plethora of standards currently exist, today’s standards landscape is seen by industry participants as insufficiently developed for the needs of smart grid deployment. As discussed in Section 3.2 of this report, significant efforts are underway to provide a coherent framework for the use of existing standards, such as ZigBee and Internet Protocol (IP) by the utility industry, as well as to develop new standards to fill in any perceived gaps in needed standardization.

2.1.4.2 Project Complexity • The deployment of smart metering projects are complex for several reasons: • Projects entail a significant logistical coordination in the deployment of millions of meters and

other infrastructure and systems in a manner that maintains customer service levels in a highly regulated industry.

• There is an overabundance of technology options available and insufficient smart metering standardization, which means that each project tends to be highly customized and must be planned accordingly.

• Data management needs to increase significantly, as the overall volume of information the utility receives could increase with the shift from monthly meter reads to fifteen-minute interval reads.

• Significant process changes are required for a utility to transition to smart metering and they affect many entities within the utility. For example, traditional meter reading operations will alter fundamentally with AMR capabilities, and achieving internal organization support for the project can be daunting.

• Utilities must work closely with regulatory authorities throughout the planning process, which adds additional burden to the project.

2.1.4.3 Business Case Complexity • Developing a smart grid business case is complex for utilities due to the regulated

environment in which they operate. For example, while reducing peak demand is a straightforward benefit to utilities and their customers, encouraging ongoing energy efficiency on the part of the rate base — customers — has the effect of lowering consumption of the utilities’ product and therefore revenues. Consequently, utilities will often need regulatory relief in the form of a decoupling of energy sales from utility revenue, in order to justify the investment in smart grid deployment. Decoupling essentially entails utilities being incentivized by regulatory authorities to invest in customer energy efficiency.

• Additionally, regulations can impact the types of technologies that utilities deploy for smart grid functionality. For example, utilities often earn a regulated guaranteed rate of return on capital investments in their infrastructure. This can be an inducement to deploy a private smart grid communications network rather than incur ongoing, non-reimbursed, operating expenses through reliance on an MNO’s infrastructure.

2.1.4.4 Project Costs • Smart metering deployments can be enormously expensive. For example, California-based

utility Pacific Gas & Electric (PG&E) is in the process of deploying 10 million smart meters by 2011 at a cost of $1.7 billion. Of this amount, approximately $1.4 billion is for capital expenses, $200 million is for non-capital expenses associated with the project, and $100 million has been set aside as a contingency fund. Similarly, the two other main Investor-


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Owned Utilities (IOU) in California — Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) — have each launched smart metering deployment plans that will cost an estimated $2.0 billion and $572 million, respectively.

• However, given that utilities operate in regulated environments, the primary challenge is not access to capital for the deployment of smart metering systems (although the market is cost-sensitive). Rather, the challenge is the additional complexity of having to secure regulatory approval for adequate rate recovery to pass the costs of the smart metering project onto customers. For example, SDG&E’s original proposal was rejected by the California Public Utility Commission (CPUC) on the basis of certain components in its financial model. SDG&E had to revise its plan, incorporating new technological, administrative, and financial elements, in order to obtain CPUC approval.

2.1.4.5 Consumer Acceptance • As smart grid deployments have been undertaken in increasing size and frequency, evidence

of consumer attitudes towards, and acceptance of, smart meters and DR functionality have become available, and the results are not always positive. First, there appears to be increasing consumer resistance in California to PG&E’s smart meter deployment, with the chief concern that the technology may be reporting customers’ electricity usage inaccurately, leading to higher bills. PG&E disputes this, but local lawmakers are attempting to sort out this issue. There have been reports in the media about consumer dissatisfaction in other locations and countries, as well. Second, it appears in early DR trials that consumer interest and participation tends to decrease after the first nine to twelve months. This points to a need to better design DR programs and consumer User Interfaces (UI) to DR functionality.

2.2 Value Chain and Competitive Landscape Trends The utility/smart grid value chain is complex and we are able to show only a simplified overview in Figure 2.2. Overlapping sets of industry players target different smart grid application domains: DA, AMI (smart metering), and HAN/DR. Smart meter vendors (Itron, Landis+Gyr, Elster, and others) are active in the DA market to a certain extent, as well as their core AMI market. AMI technology vendors, who specialize in the communications portion of AMI but do not necessarily provide meters themselves, are sometimes involved in the HAN/DR market, as is the case with Smart Spring Networks and its acquisition of HAN/DR specialist Greenbox. However, focused DA and HAN/DR system vendors also serve their respective market segments as well.

In addition, Meter Data Management (MDM) vendors, such as eMeter, are increasingly important to the smart grid value chain as the flood of new meter reading data becomes available to utilities with smart meter deployments, thereby increasing the data management burden on the utilities. Likewise, given the nature of these often large projects, there is a need to coordinate the activities of numerous vendors in deploying complex systems and technologies. Hence, system integrators, such as IBM and Accenture, are also an important link in the smart grid value chain. Finally, although public network communication services providers, such as MNOs, MVNOs, and, in the case of HAN/DR, telco/broadband providers, are not absolutely necessary for the implementation of the smart grid, they are taking an increasingly prominent role in the market.


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Figure 2.2 Utility/Smart Grid Value Chain


In the following sections, we will expand the value chain/competitive landscape discussion with a fuller analysis of the utility landscape, and the role of smart meter and AMI technology vendors, HAN/DR vendors, as well as communication and cellular connectivity and turnkey managed services providers.

2.2.1 Utility Landscape Utilities come in numerous forms, and categories vary around the world. There are approximately 3,000 utilities in the United States, with some of the largest — with millions of customers each — comprising IOUs such as Florida Power & Light and Pacific Gas & Electric. In the United States, utilities are segmented as IOUs, cooperatives, and political subdivisions, municipal and municipal marketing authorities, curtailment service providers, and power marketers, federal and state utilities, and Independent System Operators/Regional Transmission Organizations (ISO/RTO).

Utilities’ customers are often segmented into: residential, commercial, industrial, “other,” and wholesale sectors. This leads to a division of meters into residential meters (also called mass market meters) and Commercial and Industrial (C&I) meters. C&I meters are more expensive and offer greater functionality. Approximately 13% to 17% of electricity meters in the United States are C&I meters.

It is important to note that utilities are regulated entities, both in the United States and internationally. In the United States, the principal responsibility for utility regulation rests with the states’ public utility commissions — sometimes called Public Service Commissions (PSC)). However, other government entities at the state and federal level also have a role in utility regulation. As discussed elsewhere in this study, regulatory activity continues to be a prime driver for smart grid deployments.

An aspect of regulatory oversight of the utilities that has a tangential effect on the growth of the smart grid is the push for increasing competition in the utility sector, primarily by unbundling the retail provisioning of electricity from power generation and T&D. This push is particularly strong in Europe, though it has happened unevenly across the continent. Some countries in the region — especially in the north — have made more progress at developing competitive market environments. To the extent that standards are in place, smart meters help to facilitate competition and, in turn, REPs will increasingly offer differentiated retail electricity services built on the capabilities of the smart metering platform. Such offerings tend to encourage further deployment of smart grid technology in a “virtuous cycle.”


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2.2.2 Smart Meter and AMI Technology Vendors The metering industry is highly concentrated, with the majority of meter sales comprising a handful of players on a worldwide basis. Nevertheless, in the past decade, a host of newer meter vendors has appeared, primarily targeting less-developed markets with cost-optimized products. One major meter vendor estimates there are approximately 500 meter manufacturers worldwide.

In North America, the leading meter vendors are: Itron, Elster Electricity, Landis+Gyr, Sensus Metering Systems, and GE Energy. These vendors also have a significant presence internationally, especially Elster, Itron, and Landis+Gyr. Iskraemeco, as well as newer vendors, such as Echelon, NURI Telecom, and Holley Metering, are also important international players and are gaining traction with their emphasis on smart meters.

The major meter vendors have a long history with the operations of most going back 100 years or more in one corporate guise or another. For example, Elster Electricity traces its corporate heritage back to 1836 with the founding of American Meter Company (AMCO) in New York. Not surprisingly, these meter vendors have built longstanding ties to the utility industry. Some vendors say that the utility selects the meter first, with supporting technology a secondary consideration. The meter is the “cash register” of the utility, and utilities are conservative about the meters they deploy into their infrastructure.

However, with the advent of the smart grid, newer vendors focusing specifically on the communications aspect of smart metering have entered the market. The vendors provide systems comprising hardware and software that is integrated “under glass” in the digital meter itself, as well as in various in-field nodes in the NAN and WAN, and finally in the utility’s head-end systems. This market dynamic is illustrated in Figure 2.3.

Figure 2.3 Meter Vendor and AMI Technology Vendor Convergence on the Smart Meter Market


What Figure 2.3 is not able to demonstrate is the close interrelationship between the meter vendors and the AMI technology vendors. Each of the major meter vendors, with the exception of GE Energy, has introduced its own AMI technology offering. For example, Itron offers “OpenWay,” while Elster provides the “EnergyAxis” system. However, each of these vendors —


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with the exception of Echelon, which is tightly wedded to its own Networked Energy Services (NES) AMI technology — also enables other vendors’ technology to be integrated into its own meters. This is essentially a result of the view that the utility ultimately controls the technology decisions in a deployment and may opt for a heterogeneous meter/AMI technology environment. The meter vendors are quite happy to support this; at the end of the day, they simply want to sell meters, even if their AMI technology is not being used as part of the smart meter deployment.

The fact that vendors are somewhat agnostic to the actual smart metering technology they provide to their customers is good news for the remaining independent AMI technology vendors. Such dealers will have a growing market opportunity for two reasons, despite the move of meter vendors to develop or acquire smart metering technology. First, ABI Research believes many utilities will select the technology first and then the meter. Second, the meter vendors are likely to remain agnostic to the smart metering technology they provide, even as they see the importance of having an in-house option for customers.

2.2.3 HAN/DR Vendors The HAN/DR market is still in an early stage of development in terms of business models and technologies and this, along with the overarching growth trend of the smart grid in general, has led to a large influx of different kinds of vendors into the space. The competitive landscape for HAN/DR comprises “pure-play” vendors, such as Tendril and GridPoint; utility software vendors, such as eMeter; home automation vendors, such as Control4; enterprise software vendors, such as Microsoft; and networking equipment providers, such as Cisco. In September 2009, AMI vendor Silver Spring acquired HEMS vendor Greenbox.

In this section, we assess the market trend towards providing HAN/DR platforms as opposed to point solutions, and how this impacts likely consolidation in the industry. We also discuss the impact of the recent entry of Google and Microsoft into the HAN/DR market, which has received tremendous press coverage, but has relatively minimal practical impact, in our view. Figure 2.4 provides a graphical representation of the HAN/DR vendor landscape.

Figure 2.4 Vendor Segments Active in the HAN/DR and HEMS Markets



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2.2.3.1 Platform Plays As with other technology markets (smartphones), the HAN/DR market is seeing a strong push by vendors seeking to offer platforms, rather than closed point solutions. This is particularly evident for those vendors seeking to serve the utility and service provider segments of the market, though it is true for home automation vendors seeking to offer energy management capabilities, as well.

In the context of the HAN/DR market, a “platform” entails a combination of client software serving as the controller/gateway intelligence in the home, paired with back-end server software at the utility’s or service provider’s AMI head-end. This platform enables third-party hardware and software applications (PHEV recharging, for example) to be integrated into the service offering without significant reconfiguration of the back-end software implementation. Figure 2.5 is a diagram of Tendril’s TREE platform to illustrate the central platform concept.

Figure 2.5 Tendril’s TREE Platform as an Illustration of the Central Platform Concept


ABI Research believes that these platforms, from companies such as Tendril and GridPoint, will increasingly be the method that utilities and service providers use to offer HAN/DR services, due to the ability to integrate the platform once on the back-end, and then extend the capabilities of the system with various applications as the market develops. This is simply a more efficient and extensible model than trying to assemble disparate pieces of system software and hardware from various vendors and either have the utility integrate all of these pieces, or, more likely, have a systems integrator or consultant write custom software to integrate the pieces.

2.2.3.2 Consolidation Trends ABI Research’s belief about the value of platforms in the HAN/DR market does have implications for competitive landscape trends. They include:

• Current HAN/DR platform vendors are likely to be acquired over the next few years. These companies tend to be smaller, closely held entities in a market that is likely to place more value on large established vendors with proven resources and longevity. Likewise, large public enterprise software vendors, such as Microsoft, Oracle, and SAP are increasingly focused on the smart grid opportunity, and given the intersection of the back-end software portion of the HAN/DR platforms and the MDM and other utility software the large enterprise software vendors want to offer, acquisitions of the platform


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vendors would be a natural fit. We could also see the AMI vendors, including the smart metering dealers, making a play in this segment, as Silver Spring did with Greenbox.

• We believe the long-term market opportunity becomes somewhat more problematic and challenging for those home automation vendors that are seeking to make a HAN/DR play by targeting utilities and service providers. They will need either to place more focus on the energy management aspects of their offers and, especially on the utility side, likely be acquired in a similar manner as the HAN/DR vendors above, or else see the market opportunity shift away from them as the trend described in the first paragraph plays out. A related challenge for them on the utility side will be the more general-purpose nature of their offerings. While this is effective for a broadband or telco service provider seeking to roll out a bundle, their platforms may not be as optimized for energy management as are those of the pure-play HAN/DR vendors. Of course, to the extent that third-party apps and hardware are integrated into the system, this may be a moot point.

• We do not see the same trend toward consolidation happening in the standalone HAN/DR market or the part of the home automation market that is focused on enabling standalone energy management capabilities. While it is possible that overall energy efficiency trends in the market may prompt a large home systems company to acquire a home automation or standalone HAN/DR vendor to offer a product, we do not see the same drive in this segment as in the utility/service provider space to scale up and offer a service platform tied to back-end systems.

2.2.3.3 The Impact of Google and Microsoft Since Google launched “PowerMeter” in February 2009 and Microsoft launched “Hohm” in June 2009, the two companies have received a vast amount of press coverage for their efforts. ABI Research believes, however, that the software the two companies have released is relatively basic and poses little direct impact or challenge to the platform offerings currently on the market.

Certainly, both companies have the size and resources to bring to bear on the home energy management market. As we noted earlier, the utility industry is somewhat conservative and gravitates towards large vendors. Likewise, each company has a well-known consumer brand that could be leveraged to place energy management squarely in front of consumers as a useful application, in a way that current vendors cannot do on their own. There are also company-specific factors that favor their presence in the HAN/DR market. In the case of Google, the company’s ad revenue model can potentially be extended to the user interface aspect of the PowerMeter HAN/DR. In the case of Microsoft, it is the company’s increasing focus on the utility enterprise software space and the ability to develop Hohm into the type of HAN/DR platform discussed above.

However, despite these factors, it is important to note that, to date, neither PowerMeter nor Hohm is much more than consumer software to provide basic energy consumption monitoring along with analysis and recommendations for becoming more energy efficient. It is certainly possible that the companies will evolve their offerings into full-fledged HAN/DR systems, or work more closely with platform players. Both PowerMeter and Hohm could serve as presentation user interface layers to a HAN/DR platform, if a utility so desires. But the impact of the current offerings is more about PR than a real change to market dynamics.

2.2.4 Smart Grid Communication Services Providers 2.2.4.1 Cellular Connectivity Providers

When a utility chooses not to deploy its own WAN infrastructure for smart metering, it typically opts for a wireless provider, such as an MNO, MVNO, or a specialist telecom


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provider like Arcadian Networks, which supplies licensed connectivity to the utility sector in the 700 MHz frequency band, particularly in rural areas. This has also become the standard means of WAN connectivity in European smart grid deployments, with GSM/GPRS the preferred air interface standard.

MNOs such as Sprint and Rogers Communications typically seek to provide bundles of services beyond simple meter data backhaul. For example, Sprint will sell smart meter connectivity services, mobile voice communications services, and mobile worker data services (such as fleet management and utility operations management) to the utility. While MVNOs are active in the smart metering market, ABI Research believes MNOs have an advantage in that they can offer such bundled services and have more brand recognition, which is important in the conservative utility industry. Likewise, a key selling point for MVNOs is their ability to provide extensive, often international, coverage; utility operations tend to be localized.

In 2009, AT&T became active in offering highly flexible rate plans designed for the utility industry, with the goal of enabling utilities to connect every smart meter directly to the cellular network. Utilities typically need per-meter monthly ARPU below $1.00 for this to become an attractive proposition. AT&T is working closely with its partner, SmartSynch, in this effort. The drive to connect every smart meter directly to the cellular network mirrors developments in some of the Nordic countries, where Telenor has been quite successful in working with utilities to link every meter to the cellular network, at an annualized ARPU of approximately $7.00 to $9.00 per meter.

Although ABI Research does see greater penetration of an all-cellular network topology for smart metering occurring over the next several years, it is doubtful that there will be a fundamental shift away from the current model of using various NAN technologies in conjunction with WAN backhaul, particularly in the United States:

• First, regulated utilities typically earn a guaranteed rate of return on capital investments — such as investments in utility-owned NAN infrastructure that they do not receive for operational expenses, such as monthly cellular connection fees. (We should note here that AT&T is encouraging regulatory authorities through its state lobbying efforts to have operational expenses treated on a more level playing field along with capital expenses.)

• Second, cellular embedded radio modules are a significant BOM cost-adder to the smart meter itself, compared with the lower expense of adding a short-range wireless radio or PLC modem.

• Third, some utilities regard the two-tier NAN/WAN topology as a way to insulate themselves from potential future-proofing challenges associated with advancements in public cellular network infrastructure, as MNOs evolve their networks from 2G to 3G to, and eventually, 4G. It is a less-costly proposition to change a few thousand cellular WAN gateway/backhaul nodes than it is to upgrade millions of smart meters in the field to a new cellular air standard.

2.2.4.2 Turnkey Managed Service Providers In Europe, there is a trend among utilities toward completely outsourced AMI management, using managed services from vendors such as Atos Origin, Landis+Gyr, Telenor Cinclus, and Telvent. For example, Telenor Cinclus will purchase the smart meters in partnership with customers, install, and finally operate the meters, including data collection, processing, and presentment to the customers. Once the systems are up and running, Telenor Cinclus will bill customers for the meters; the meters will be owned by the utility, and operated by Telenor Cinclus on an ongoing basis with service-level agreements.


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There is some regional disparity in the prevalence of fully outsourced solutions: they appear to be much more popular in the Scandinavian countries and Northern Europe in general, compared to Southern Europe. In Southern Europe, the fully outsourced model is challenged by the existence of the many thousands of unionized utility workers for whom employment must be found even as the utilities become more operationally efficient. Therefore, keeping the management of the smart grid infrastructure and processes in-house becomes more attractive as a means to protect jobs.

2.3 Regional Trends 2.3.1 North America

The North American market has seen deployments of smart grid technology since the early 1990s and this region has the longest experience with smart metering. There also have been fairly substantial prior deployments of AMR, both fixed and mobile, with some estimates as high as 30% for one-way AMR market penetration.

While California and Texas tend to garner much of the attention for their efforts to roll out smart metering infrastructure, other states have been making significant progress. In terms of the highest penetration of smart meters into the total meter base, the five leading states in 2008, according to the Federal Energy Regulatory Commission (FERC), were: Pennsylvania (23.9%), Idaho (13.8%), Arkansas (11.3%), North Dakota (8.9%), and South Dakota (8.7%). The top five states by total number of smart meters were: Pennsylvania (1.44 million), Texas (868,204), Florida (765,406), Georgia (342,272), and Missouri (204,498).

In Canada, the provincial government of Ontario launched the Ontario Smart Meter Initiative with the goal to have smart meters replacing the approximately 2 million traditional devices in the province by the end of 2010. A significant deployment is also planned for the province of Alberta. Both of Mexico’s main utilities are in the early stages of investigating the use of AMI, with prevention of energy theft a key goal.

The result of the relatively long time span of AMI deployments in North America is a heterogeneous smart meter communications technology profile. In contrast to Europe and the Asia-Pacific region, RF connectivity comprises a majority of the installed smart meter base, with power line the second most-used technology at the NAN level.

Also a result of the long time span of North American AMI deployments is the greater reliance on private utility networks and third-party, utility-centric primary-use network providers — such as Tantalus — for smart metering WAN connectivity. In effect, utilities have had to develop their own WAN connectivity options due to the early start of North American AMI, as cellular network providers have only recently begun to support metering operations directly.

The market drivers for smart metering specific to North America include:

• US federal legislation seeking to promote the deployment of smart metering. • Some state and provincial governments are actively encouraging the conversion to smart

meters for environmental, energy conservation, improved customer service, and energy reliability reasons.

• A competitive energy market in Texas is encouraging the deployment of smart metering in part to facilitate service provider change-out and service differentiation.

http://encyclopedia.thefreedictionary.com/Federal+Energy+Regulatory+Commission


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In contrast, the heterogeneous nature of the connectivity market may be slowing overall smart metering growth in North America and perhaps other parts of the world, due to increased complexity in vendor and technology selection. ABI Research anticipates the diverse nature of the communications market for smart metering in North America will continue over the next five years, given the long lead times and sales cycles in the industry. It is possible that national mandates will emerge in the United States, Canada, and/or Mexico for smart metering, depending on factors such as growing political motivation for increased energy efficiency.

2.3.2 Europe The European smart metering market was essentially initiated in 2001 when Italian utility ENEL announced its intention to replace all 27 million of its electricity meters by 2006 with smart meters using power line and GPRS connectivity. This is the single largest smart metering deployment in the world to date.

Smart metering is occurring all over Europe. Major trials and deployments have been announced in Austria, France, Germany, Ireland, Italy, the Netherlands, Spain, and Sweden. In France, a deployment by Électricité de France (EDF) of a reported 44 million meters would be the largest such installation in the world, when it occurs. Germany introduced a law that all new and retrofitted buildings must be connected with smart meters. Ireland is getting ready to deploy smart meters to approximately 2 million homes and businesses. The Netherlands defined a specification for minimum functionality in preparation for a planned nationwide rollout of smart metering. Spain will require all meters to be replaced with smart meters by 2018. The British government plans a nationwide rollout of smart meters to be completed by 2020.

Unlike North America, the AMI deployments in Europe have been fairly homogenous to date, with most projects utilizing power line technology in the NAN and GPRS in the WAN for connectivity. There are several factors behind this homogeneity:

• The massive ENEL deployment and more recent introduction of AMI into the market mean that European utilities are starting with the same ideas on how to deploy smart metering.

• The ubiquity of GSM/GPRS as a WAN connectivity option. • The absence of a third-party utility-centric primary-use ecosystem due to an established AMR

footprint. • The prevalence of indoor utility meters, making RF-based communications more problematic

in some cases.

The market drivers for smart metering specific to Europe are:

• A strong European-wide push toward increased market competition, which should favor the deployment of smart meters similar to the situation in Texas.

• The interpretation by some EU countries of Article 13 of the Energy Services Directive (ESD) as a mandate to enact smart metering initiatives for nationwide rollouts and, in some cases, smart meter standards.

• Relatively higher wages and a more regulated employment landscape throughout Europe, which tend to encourage utilities to be aggressive in finding ways to increase operational efficiencies.

• The development of turnkey meter technology/hosted service plans by vendors such as Telenor Cinclus and Landis+Gyr, which reduce the complexity and costs of smart metering deployments for utilities.

ABI Research believes there are no significant challenges to smart metering rollouts exclusive to Europe.


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2.3.3 Asia-Pacific The Asia-Pacific region has only recently started to see deployments of smart metering technology. Australia appears to be in the forefront in AMI deployments, as well as in activities at the national and state level to develop a plan and legislation. New Zealand seems to be moving toward development of a national smart metering initiative.

The rest of Asia has seen less traction for AMI, though there are indications that smart metering is occurring, particularly C&I, rather than residential deployments. One Asia-Pacific-based vendor states that smart metering deployments are occurring on the southeast coast of China, and AMI reportedly figures into Chinese government economic planning. (We should also note that there are press reports of a major planned rollout of smart meters by China’s State Power Grid Corporation that potentially involves tens of millions of meters. As of this writing, we have been unable to confirm these reports.) Smart metering deployments are occurring in South Korea, Malaysia, Singapore, and India.

There have been trials and deployments of power line carrier and fixed RF smart meter deployments in Australia, the leading market, including a recent announcement by Australian utility SP AusNet on the use of WiMAX technology in smart metering. Nevertheless, it is still too early to say if the Asia-Pacific region as a whole will follow more of a European PLC/cellular model or a North American fixed RF/heterogeneous WAN model. For the purposes of the forecast in this report, ABI Research is assuming that the Asia-Pacific region falls somewhere between North America and Europe in terms of a PLC/fixed RF mix.

The market drivers specific to smart metering in the Asia-Pacific region are:

• Certain countries, notably Australia, New Zealand, Singapore, and, apparently, China, are actively encouraging the adoption of smart grid deployments.

• There is a desire on the part of utilities in some countries to reduce energy theft, which encourages the adoption of AMR and smart metering.

On the other hand, AMI in the Asia-Pacific region faces certain challenges:

• There is much less coordination on AMI in this region compared to Europe. • Due to lower wages and less regulated working environments, as well as a younger

population in many countries, there is less need to automate metering operations. Therefore, it is more difficult to make a financial case to justify investment in smart metering technologies.

• Many countries are less economically developed than North America or Europe. Consequently, there are fewer meters per capita to automate, albeit a greater total base of meters.

• Also owing to the relative state of economic development, there is less likelihood of HAN adoption in the region as a whole in the near term. However, Australia and perhaps a few other countries, such as South Korea and Japan, may move more quickly on HAN deployment.

2.3.4 Latin America Latin America is at an early stage of AMI technology deployment. ABI Research has found instances of such deployment or development plans in Ecuador, Honduras, and Trinidad and Tobago. There appears to be increasing interest in the region for smart metering, driven mainly by the desire to reduce or prevent energy theft, in addition to increasing overall operational and energy efficiency.


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The key challenges for AMI deployments in Latin America are similar to those in the Asia-Pacific region:

• There is much less coordination on AMI in Latin America than in Europe. • Due to lower wages and less regulated working environments, as well as a younger population

in many countries, there is less need to automate metering operations. Therefore, it is more difficult to make a financial case to justify investment in smart metering technologies.

• Most countries are less economically developed than North America or Europe. Consequently, there are fewer meters per capita to automate, albeit a greater total base of meters.

• Also owing to the relative state of economic development, there is less likelihood of HAN adoption in the near term.

2.3.5 Middle East and Africa To date, there appears to be no measurable deployment of smart metering in the Middle East and Africa. ABI Research has received reports of a trial underway in Israel, and it is possible that there are small deployments or pilot projects in other countries, particularly in South Africa or the Gulf States. However, ABI Research’s sources are not aware of any, and we have not found secondary source reference to such deployments in the region, outside of Israel. The majority of the focus in this region appears to be on pre-paid meters, where the user pays in advance for a set amount of electricity.

ABI Research believes that smart metering will start to gain traction in the region in 2010, first in the countries just mentioned. We expect that prevention of energy theft will be a key driver, with operational efficiency perhaps a factor in some of the more developed Gulf States. The primary challenges that we see specific to the region include:

• Much less coordination on AMI than in Europe. • Due to lower wages and less regulated working environments, as well as a younger population

in many countries, there is less need to automate metering operations. Therefore, it is more difficult to make a financial case to justify investment in smart metering technologies.

• Most countries are less economically developed. Consequently, there are fewer meters per capita to automate, albeit a greater total base of meters.

• Also owing to the relative state of economic development, there is less likelihood of HAN adoption in the near term.

2.4 Legislative and Regulatory Impact Analysis Government legislative and regulatory policy plays a significant role in driving the growth of the smart grid market. Government policy regarding smart metering and other smart grid technology deployment occurs at both the national and state/provincial levels. This is in addition to the special situation in Europe where the activities of the European Union transnational government have an impact. The governments that ABI Research sees as most active in promulgating legislative or regulatory actions in regards to smart metering are primarily in North America (the United States, including numerous state governments and regulatory agencies, as well as the Canadian province of Ontario); Europe; and Australia. There may be other legislative/regulatory developments in other regions and countries, but the above are the areas with the highest profile government-level activities with respect to developing the smart grid. The following focuses specifically on government activities in the United States and Europe.


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The three main reasons that governments at all levels have been working to encourage smart metering and the broader concept of the smart grid are:

• To improve energy efficiency and environmental protection • To increase market competition/liberalization and improve customer service • To secure the supply, transport, and delivery of energy

Government policy actions take several forms:

• Creating mandates • Developing funding mechanisms • Providing incentives for utilities and other stakeholders • Establishing standards and frameworks • Providing information on best practices and market benchmarks

2.4.1 North America Governmental policy action on smart metering first occurred at the state/province level in North America in the early part of the previous decade. California, Texas, and the Canadian province of Ontario have been in the forefront of smart metering policy development. However, with the US Energy Policy Act of 2005 (EPAct) and the Energy Independence and Security Act of 2007 (EISA), the federal government is becoming a driving force in smart metering market development. Federal actions, in turn, further encourage and direct state legislative and regulatory activity on smart metering policymaking.

The following are some of the key US federal legislation impacting the deployment of smart metering, as well as a description of activities in California and Texas. Please note that these are highlights rather than an exhaustive or comprehensive description of all of the governmental activities taking place in North America. For example, the US Emergency Economic Stabilization Act of 2008 provided an important benefit to utilities with respect to smart grid deployments: it enabled utilities to depreciate smart grid assets over ten years rather than the traditional twenty years, reducing the utilities’ tax obligations. In addition, in November 2009, approximately $3.4 billion was awarded to utilities as part of the American Recovery and Reinvestment Act of 2009 (ARRA) as matching grants for smart grid deployments.

2.4.1.1 Energy Policy Act of 2005 EPAct 2005 marked a major entry point for US federal government involvement in the development of smart metering. The key provisions of the law include:

• Directs utilities and state public utility commissions to evaluate methods for DR program implementation and requires utilities to offer customers TOU rates. However, the act does not require DR implementation, merely an evaluation of how DR might be implemented. Still, ABI Research believes that many states have begun investigating DR programs and smart metering as a result of EPAct 2005.

• Requires the Federal Energy Regulatory Commission (FERC) to establish a research program to assess DR resources and opportunities on an annual basis and to provide recommendations on how to best further develop DR programs in the marketplace.


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2.4.1.2 Energy Independence and Security Act of 2007 EISA 2007 extended the US federal government’s activities in smart metering with the following key provisions:

• Directs FERC to develop, in sequence, a National Assessment of Demand Response and a National Action Plan on Demand Response, identifying technical and regulatory barriers and recommendations with respect to DR. FERC and the US Department of Energy must then submit to Congress a proposal for implementing this plan.

• Directs states to consider requiring utilities to demonstrate that they fully evaluated the deployment of smart grid technology prior to any installation of non-smart-grid infrastructure.

• Authorizes the creation of a Smart Grid Regional Demonstration Initiative and a Smart Grid Investment Matching Grant Program, though funding for these programs remains unclear.

• Requires the National Institute of Standards and Technology (NIST) to develop a framework for interoperability of major smart grid components, such as HANs.

• Encourages rate-based capitalization of smart grid deployment expenses (for example, advises state regulatory authorities to allow utilities to recoup the cost of smart metering deployments through higher tariffs to ratepayers).

2.4.1.3 California Smart Metering Largely Results from a Mandate for Energy Efficiency and Reliability California’s smart metering efforts largely originated with the California Public Utility Commission’s actions to increase both energy efficiency and energy reliability. These actions are a result of a longstanding state government position encouraging energy efficiency, which has been further advanced in reaction to the 2001 energy supply crisis. The CPUC points out that over the past thirty years, while per-capita electricity consumption in the United States has increased by nearly 50%, such use in California has remained approximately level.

The CPUC, working closely with the three largest utilities in the state — Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric — issued its first Energy Action Plan in 2003. This plan was updated in 2005 and cites DR programs as key energy efficiency goals. In addition, utilities are offered incentives to implement DR programs.

In 2004, the CPUC required utilities to assemble business cases for AMI deployments, specifically to enable the electric utilities to offer CPP programs. Representatives of utilities in California say there is strong support for such initiatives from the Governor’s office. Utilities update the CPUC every six months on technology development and AMI deployment plans. The utilities must have CPUC approval of the technology vendors they select for their AMI deployments.

As in other states, the CPUC sets electric rates and a key aspect of AMI deployment in California has been the CPUC’s willingness to allow utilities to increase their rates to recover the cost of these installations. For example, PG&E received approval to recover $1.7 billion for its AMI deployment that begun in 2006 and is set to be completed in 2011. Approximately $1.4 billion is marked for capital expenses, including the meters themselves, installation costs, and the network; $200 million will cover non-capital expenses associated with the project; and $100 million is set aside as a contingency fund. PG&E expects to transition 100% of its 10 million meters to AMI capability by 2011.


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2.4.1.4 Texas Smart Metering Driven both by Regulatory Mandate and Retail Competition The deployment of smart metering in Texas is driven by an intersection of light government mandates at the state and PUC level, as well as competitive market forces. Competition in the retail provisioning of energy encourages the use of AMI as a services differentiator. Government mandates have created the aggressive market landscape that both directly and indirectly encourages (but does not require) the deployment of AMI technology.

In 2005, the Texas state legislature passed HB 2129 to support the adoption of technologies that would improve air quality through energy efficiency. A section of the law requires utilities to consider Advanced Metering Systems (AMS) — the Texas legislature’s term for AMI — as a means of achieving the efficiency goals of the legislation.

In May 2007, the Texas PUC published Rule 25.130 concerning AMS implementation by utilities. While this rule does not require them to deploy AMS, it does mandate that utilities seeking rate recovery for their deployments must meet certain conditions for AMS functionality, including:

• Two-way communications to and from the meter • Remote connection and disconnection • At least fifteen-minute interval data • Direct real-time access by customer and REP to meter data • Communication with premises’ devices • Use of open standards, with ZigBee and HomePlug specifically named in the rule

Additionally, in January 2002, Texas launched a competitive energy market. Essentially, this separates energy generation suppliers and T&D suppliers from REPs in the value chain. In contrast to a vertically integrated utility, in the Texas model the REPs compete to manage the end customer relationship, including marketing of energy supply, billing, and customer service functions. The key Texas REPs include Reliant Energy, TXU Energy, Commerce Energy, CPL Retail Energy, First Choice Power, Green Mountain Energy, and CPS Energy. In some cases, REPs are owned by parent companies that also own generation and T&D businesses. This is the case with TXU, which not only owns the TXU Energy REP, but also the Oncor T&D business, and the Luminant generation business.

REPs in Texas claim that AMI technology will help them to better compete through services’ differentiation. As electricity is essentially a commodity product, differentiation comes in the form of marketing and customer service. AMI will enable REPs to further develop and distinguish the types of services they can provide to their customers.

A key aspect of this service differentiation will be standardized interfaces used in AMI systems. Because the smart meters themselves will be deployed and operated by the T&D vendors, REPs will have to be provided with standard ways in which to access and utilize the meter data and smart meter functionality. This is supported by the Texas PUC’s requirement for the use of standard communications technologies, such as ZigBee and HomePlug.

2.4.2 Europe In Europe, much of the impetus for smart grid legislation and regulation has come from the European Union transnational government entities. The EU has emphasized a more centrally coordinated deployment of smart metering that has only recently begun to be matched by the US federal government with respect to state activities.

The key EU-level pieces of legislation that have a bearing on smart metering include: European Directive 2003/54/EC, European Directive 2006/32/EC, and the Third Energy Package. These are discussed in more detail below. In addition, as of January 2009, nine European countries


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have enacted some form of legislation or regulation that either directly or indirectly mandates or otherwise strongly encourages the adoption of smart metering. Those countries are Estonia, Finland, Germany, Italy, Portugal, Romania, Spain, Sweden, and the United Kingdom. Additionally, another six countries are actively investigating the introduction of such legislation or regulation. They are Austria, Hungary, Ireland, Latvia, the Netherlands, and Norway.

2.4.2.1 European Directive 2003/54/EC A key provision of European Directive 2003/54/EC was the unbundling of power generation and transmission from retail energy sales companies for non-household customers in July 2004 and residential consumers in July 2007. Several participants in the smart grid value chain have referenced unbundling and energy market competition as drivers for the adoption of smart metering technology. Smart meters have been deployed to facilitate a competitive retail market by efficiently switching customers to new REPs as necessary. However, for the most part, market liberalization has not occurred in many European countries. A part of the effort in the Third Energy Package described below seeks to address remaining hurdles to increased competition.

2.4.2.2 European Directive 2006/32/EC European Directive 2006/32/EC on “Energy End-Use Efficiency and Energy Services” — also referred to as the Energy Services Directive (ESD) — was passed in April 2006 and went into effect in member states during 2008. Three key provisions have an impact on smart metering:

• By 2017, member states should voluntarily institute energy savings of 9% from 2008 levels, or save approximately 1% per year. This directive would not be legally enforceable by the EU. Member states are free to set higher savings targets.

• Member states should require producers and distributors to promote energy efficiency programs. • Customers should have access to their energy consumption data presented in a clear

and understandable fashion and frequently enough to change their energy consumption in response.

The United Kingdom is one member state that has moved aggressively to implement EU directives on energy competition and efficiency. The country has one of the more competitive electricity and gas markets in Europe. In 2006, in response to the ESD, as well as the government’s stance urging the improvement of environmental conditions and combating climate change, the UK began to establish policies that will promote smart metering.

In October 2008, the government announced a goal for the conversion of all UK business and residential electricity and gas meters to smart meters over a ten-year period from 2010 to 2020. This would impact 26 million homes and involve 46 million electricity and gas meters. In December 2009, the government announced a framework for the deployment of a central hub communications system separate from the utilities’ T&D network that will consolidate and transmit energy consumption data from smart meters to the various utilities. This is meant to ensure ease of consumer choice in a competitive utility market.

2.4.2.3 Third Energy Package The EU’s Third Energy Package came into force in September 2009 and seeks to increase energy market rivalry by removing the remaining hurdles to a liberalized competitive EU energy services sector. A significant aspect of the package is the mandate for EU member countries to connect 80% of the region’s homes and businesses to smart meters by 2020 and fully 100% by 2022. ABI Research expects that the majority of the smart meter shipment volumes resulting from the mandates in this package will occur after the forecast period of this report, ending in 2015.


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Section 3.

TECHNOLOGY ISSUES

3.1 The Drive towards a Smart Grid Much like the issue of paper-based medical records in the United States, the current electricity T&D infrastructure in most countries is oddly outdated and “un-intelligent” relative to many other technology-based industries, such as telecommunications. The essential framework of the systems and management of the electricity infrastructure is largely unchanged from when large-scale deployment began in the early years of the last century. There is significant discussion underway, particularly in the United States and in other countries as well, about the best way to move from the traditional electric grid to a smart grid and what that would entail in terms of cost and functionality.

The basic model of the electric grid comprises various electricity generation facilities (coal, natural gas, and nuclear power plants) connected to consumers through a T&D infrastructure. This infrastructure includes high voltage transmission trunk lines that gradually branch off to lower voltage distribution lines that eventually reach into individual homes and businesses (as well as transportation networks). The electricity voltage (voltage is a measure of capacity and can be compared to the pressure of water in pipes) is decreased, or stepped down in a series of transformers located in substations closer to the customers on neighborhood utility poles. These transformers gradually step down the electricity traveling on 400 kilovolt transmission lines to the 120 volt lines that feed residential electrical sockets. Meters located in homes (residential or mass market), businesses (commercial and industrial), and in a small minority of other locations (mainly transportation networks and at various points within the T&D infrastructure itself) measure the consumption of this electricity.

There are a number of problems with the current grid infrastructure:

• Lack of real-time monitoring and control capabilities — Most of the deployed infrastructure is based on electromechanical equipment without the capability to communicate in a real-time automated fashion with the utilities’ back-end network operations framework. For example, utilities can determine an outage in the system only when a customer calls to complain.

• Supply-demand imbalance — Utilities must be able to meet real-time peak customer demand for electricity in order to prevent blackouts. Using current grid infrastructure, which lacks energy storage capabilities, most utilities are forced to meet peak demand either through the purchase of expensive energy on the open market or by maintaining high cost reserve peaking generation capacity (such as a reserve coal-fired power plant).

• One-way transmission functionality — The current grid is essentially analogous to a system of pipes where the water (electricity) flows only one way from the power plant to the customer. There is little or no capability for the utility to accept customer-generated electricity (net metering) such as from residential solar panels.

• Lack of interconnection points — There is no national US electric grid. Rather, a number of smaller regional grids have few interconnection points. Not only is this a challenge to grid reliability (with little ability to bring in outside power in case of emergency peak demand) but it limits the ability to deploy certain types of renewable energy resources from areas where they are plentiful to other areas where they are most needed. This is a challenge not only in the United States; the European Union is investigating the establishment of interconnection points with electric grids in North Africa to permit the use of solar power generated there by European customers.


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• Advanced age of grid infrastructure — Industry sources report that much of the current electric grid infrastructure in developed countries is aged and will soon have to be replaced, even with equipment similar in functionality to current systems.

In response to these challenges and in conjunction with plans for energy efficiency and the development of a green economy, many governments are investigating smart grids. The key functional components of these grids are the deployment of equipment at various points that integrate localized intelligence and are capable of two-way communications with the utilities’ network operations centers; high speed interconnection and transmission lines; and the necessary software in the utilities’ back-end systems to monitor and manage these systems and the resulting large increase in data coming to the utilities. Smart meters are an integral part of these deployment plans, but are only a part of the smart grid story.

3.2 Key Smart Grid Standardization Efforts Both utilities and government regulatory authorities prefer the use of open standards in smart grid deployments as far as possible. Standardization efforts with respect to the smart grid comprise both application-layer functionality and communication protocols, as described below.

3.2.1 International Standards Smart grid standards include application-layer protocols for the smart meter itself (mainly “metrology” functionality for organizing meter data), control of HAN functionality, T&D automation, and the interconnection of data from the electric grid to utility back-end server infrastructure. In addition, these standards also comprise physical- and networking-layer communication protocols. The key standards are listed below. (Please note that we have not listed standards such as ZigBee, HomePlug, Web Services/XML, Internet Protocol, CDMA, and GPRS, among others, that are used in, but are not exclusive to, smart grid deployments.)

• ANSI C12.19 and C12.22 — C12.19 and C12.22 are standards from the American National Standards Institute (ANSI) that define how to structure meter data (C12.19) and how to format the resulting structured data for transmission over heterogeneous communication networks. An analogy would be taking tax data from different sources and placing it into a standard government tax form (C12.19) and then mailing that tax form to the government in an addressed, stamped envelope (C12.22). These standards are relevant in the United States and in the rest of North America, Latin America, as well as a number of other countries, such as Taiwan and the Philippines.

• IEC 62056 and DLMS/COSEM — The Device Language Message Specification/Companion Specification for Energy Metering standard is the European equivalent of ANSI C12.19 and C12.22. DLMS is a data modeling standard similar to C12.19, while COSEM is used for data exchange, similar to C12.22. This standard is used in many countries outside of Europe, as well. The International Electrotechnical Commission (IEC) has adopted DLMS/COSEM as the IEC 62056 family of standards.

• M-Bus — M-Bus is a European standard enabling electricity meters to communicate with collocated gas, water, and heater meters. The standard defines both application and networking layer protocols as well as a two-wire wired physical layer and a wireless physical layer. Wireless M-Bus operates on the unlicensed 868 MHz frequency band.

• IEC 61850 — IEC 61850 is an international standard from the IEC that defines a data modeling protocol for electrical substation automation data, as opposed to the smart meter itself. The protocol is meant to be used with a variety of networking and physical layer communication protocols.


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Again, please note that these standards do not represent the sum total of all of the various technologies used in the smart grid, but rather are key standards relevant to smart grid deployments as of the writing of this report.

It is also important to note that there is still widespread use of non-standard technologies, particularly in NAN communications. Many smart meter vendors have their own proprietary NAN communications technologies, typically based on short-range wireless solutions using 900 MHz unlicensed spectrum. Smart meter vendor Echelon bases its power line NAN communication platform on its LonWorks, a general purpose communications technology that has been standardized for building, industrial, and transportation system communications in the United States, Europe, and China. However, LonWorks is not yet standardized as a smart metering communications technology.

3.2.2 Government Mandates Prior to 2009, governments generally mandated the use of specific technical standards with respect to smart metering and DA systems. A few governments promulgated “minimum levels of functionality” to which smart meters and related infrastructure in their jurisdictions were required to comply. The most notable of these actions have been:

• The Netherlands’ NTA 8130 standard • The Texas Public Utility Commission’s Rule 25.130 • The Statutory Order by the State of Victoria in Australia concerning a Minimum Functionality

Specification for AMI

Starting early in 2009, however, there have been two significant government actions with respect to smart grid standardization: the NIST smart grid framework development process in the United States, and the M/441 Mandate from the European Commission (EC) in the EU. Significantly, both actions are efforts — relevant to the smart gird — to develop frameworks, or suites, of existing standards along with identifying gaps in standards that need to be filled. Both rely heavily on collaborative contributions from public and private stakeholders, including vendors and standards development organizations.

NIST should have its recommendations out in 2010 while the EC effort should be available by 2011. Both efforts are in relatively early stages. As of December 2009, it remained unclear which will have more impact, or the chances for reconciliation between the two frameworks. A standards bifurcation exists in the metering world between North America, and certain other countries, which utilize ANSI-standard meters, and Europe and much of the rest of the world, which utilize IEC-standard meters. It may be that the respective smart grid frameworks will simply be applied along this existing international demarcation.

3.2.2.1 The NIST Framework NIST began a three-phase effort in 2009 to develop a framework for identifying existing relevant smart grid standards, developing standards where gaps currently exist, and providing a testing or a certification process to ensure system interoperability. Phase one of this process is complete, in the form of a report, NIST Framework and Roadmap for Smart Grid Interoperability Standards Release 1.0, that identifies nearly eighty standards (including ZigBee, IEC 6185, and IP) that apply to the smart grid, as well as fourteen major gap areas where further standards work is needed.

Phase two of the process was complete, as of November 2009, in the form of a permanent industry stakeholder partnership organization within NIST, the Smart Grid Interoperability Panel (SGIP), to drive longer term, ongoing progress in smart grid development.


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Phase three is underway and comprises coordinating the work of a variety of international Standards Development Organizations (SDO) to refine the capabilities of existing standards and develop new standardized capabilities to meet the needs of the smart grid. Additionally, this phase will seek to create testing, certification, and compliance mechanisms for smart grid interoperability. This work is set to be complete by year-end 2010.

3.2.2.2 EC Mandate M/441 and the OPEN Meter Project In March 2009, essentially the same time that the NIST effort began in the United States, the EC issued a mandate (M/411) to the three primary European standards organizations — CEN, CENELEC, and ETSI — to develop an “open architecture for utility meters involving communication protocols enabling interoperability.” The explicit goal of the mandate is to create European standards around electricity, water, gas, and heat meters that will enable consumer demand response and energy efficiency programs to be deployed more quickly. The result of the mandate is meant to be a software and hardware architecture that takes into account existing European and international standards to enable secure bidirectional communications as well as standard interfaces and data exchange formats for smart metering.

M/441 laid out a specific timeline for progress by the three standards bodies, although it is unclear if early deadlines have been met. The three standards bodies were to have presented a program of work to the EC by June 2009, and a smart metering communication framework by December 2009. Additional aspects of the mandate are meant to be completed over a thirty-month period with a progress report issued to the EC in October 2010. ABI Research is unaware if the early deadlines were achieved; the communications framework seemed to be still in development as of December 2009.

Closely associated with the M/441 mandate is the OPEN Meter Project (OPEN standing for Open Public Extended Network) launched in Madrid, Spain, in February 2009. The OPEN Meter Project is a public/private collaborative effort to develop a coherent suite of smart metering standards, coordinated by Spanish utility Iberdrola and comprising a range of stakeholders including: utilities, meter vendors, research institutes, and standards organizations. The text of the M/441 mandate specifically calls on the key European standards organizations to work in conjunction with the OPEN Meter Project, as appropriate, and, indeed, CENELEC is one of the initial nineteen founding members of the Project consortium. Project members in turn say the undertaking will be “strongly coordinated with the smart metering standardization mandate M/441 given by the European Commission to the European Standardization Organizations, CEN, CENELEC, and ETSI.”

The Project timeline loosely aligns with the goals set by the M/441 mandate: the suite of standards is meant to be complete by June 2011 and then offered to relevant European and international standards organizations.

3.2.3 Utility-specific Efforts Utilities define functional requirements for smart meters and DA infrastructure in one of three ways: through formal non-profit industry organizations, through ad hoc utility consortia, and through independent efforts:

• Industry organizations — Utilities participate in key industry organizations and alliances to help guide standards development and drive their adoption by the vendor community. Examples of organizations with respect to the smart grid and smart metering include the Utility Communications Architecture (UCA) International Users Group (with its OpenSG, OpenAMI, and OpenHAN subgroups), the ZigBee Alliance, and the HomePlug Powerline Alliance. Typically, utilities are members of all three organizations.


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• Utility consortia — Utilities also seek to establish standards and specifications through work with other utilities to help drive vendor acceptance of technical requirements for smart grid systems. For example, most of the major utilities in the United Kingdom have been cooperating for several years, with the aid of consultants, to develop a set of common functional specifications for smart metering. Likewise, the Spanish utility Iberdrola has been leading an effort on the part of several major European utilities and vendor companies, called Powerline-Related Intelligent Metering Evolution (PRIME), to define an open-source power line standard for smart metering.

• Independent efforts — Often, large utilities, such as SCE in the United States and EDF in France, simply dictate functional specifications that vendors must meet in order to win the utilities’ business. The utilities ensure that equipment and systems from multiple vendors will be able to interoperate. Vendors comply with these requests because of the large shipment volume opportunities.

3.3 Cyber Security for the Smart Grid Cyber security — what NIST defines as the systems and process needed to ensure confidentiality, integrity, and availability of the “electronic information communication systems” associated with the smart grid — has emerged as a key market issue. However, concern about cyber security appears to be much stronger in the United States than in Europe or other parts of the world. It is not immediately apparent why this is the case, other than as simply a fundamental difference in perceived security threat levels to key infrastructure in the different regions.

In the United States, the fear is that as millions of remote nodes in the electrical T&D system, including smart meters and even systems inside homes and business, become networked through two-way communication solutions, the number of potentially vulnerable points of access to core grid infrastructure capabilities will increase greatly, providing opportunities for malicious attacks.

Historically, utilities have been cognizant of the need to protect critical infrastructure and quite demanding in their requirements to vendors for secure systems and equipment. For example, major meter vendor Itron takes a layered security approach in its OpenWay AMI system that involves hardware security appliances at the utility head-end, 128-bit Advanced Encryption Standard (AES) message encryption, and signed authentication of communications between network elements using Elliptical Curve Cryptography (ECC) technology.

Various current communication standards also build security mechanisms into the standards themselves. For example, ZigBee uses 128-bit AES encryption. Internet Protocol has various security mechanisms, including IPSec, which can be utilized in the context of smart grid communications. Some vendors have argued that the proprietary nature of aspects of their system offerings provide a measure of security through a closed system unfamiliar to most potential attackers — essentially “security through obscurity.”

However, ABI Research believes that most of the industry rejects this approach and prefers open standards-based security mechanisms that can be widely reviewed and improved, if necessary. At the same time, at the other end of the spectrum, no one is suggesting that core smart grid communications take place over the open Internet; rather, the use of IP in smart grid communications, and all of the attendant, well-known security mechanisms IP offers, are meant in the context of closed, utility-specific communication networks.

As part of the overall NIST efforts at smart grid standardization, the institute is looking at smart grid security needs as well. NIST has created a Smart Grid Cyber Security Coordination Task Group (CSCTG) as a public/private collaborative body to lead in the development of a cyber security strategy for the smart grid. In September 2009, CSCTG published a draft document,


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NISTIR 7628 Smart Grid Cyber Security Strategy and Requirements, which describes the body’s initial findings and strategy recommendations. The completed version of the document is expected to be published in March 2010 with final recommendations on smart grid security architecture and requirements.

As with the overall NIST effort, ABI Research believes that the CSCTG recommendations and strategy will prove relevant to smart grid deployment efforts on a global basis. We should also note that in 2007, the private, non-profit North American Electric Reliability Council (NERC), a utility industry body, was granted authority by the US Federal Energy Regulatory Commission (FERC) and relevant Canadian authorities to regulate the reliability of its members’ bulk power transmission systems. As part of this authority, NERC has implemented mandatory, enforceable standards for Critical Infrastructure Protection (CIP) that aims to secure the electric transmission infrastructure from malicious attacks.

3.4 Wide Area Networking in the Smart Grid 3.4.1 US Market Landscape

Utilities essentially have had two options regarding the WAN connections in their smart grid infrastructure: either build their own WAN systems, or buy services from MNOs and other service providers. In the United States, many utilities have chosen to deploy their own WAN framework, usually in the form of fiber installed along with the rest of their power delivery infrastructure and maintained by telecom divisions within the utility organization. Private wireless iDEN networks, using the same Motorola technology that forms the heart of the Nextel side of Sprint Nextel, are also prevalent, and private WiMAX networks are starting to gain some traction. In this configuration, smart meters are either backhauled directly over the private WAN to the utility, or else a cluster of local smart meters connects to a local data concentrator over a NAN, typically consisting of power line or fixed RF technologies.

While most smart metering technology vendors produce solutions oriented toward NAN connectivity, a few sell systems that extend into the WAN. For example, Tantalus provides the Tantalus Utility Network (TUNet) that utilizes an intermediate WAN link from towers to data concentrators over 220 MHz spectrum, then from the data concentrators to smart meters over a meshed 900 MHz network.

In the “buy model,” the utility purchases WAN connectivity from a public telecom carrier. This might consist of a dial-up modem or cellular connection directly to a smart meter, or a data concentrator backhaul service via cellular, T1, or leased fiber connection. An interesting company — Arcadian Networks — bills itself as a “utility’s carrier” offering WAN connectivity to utilities as its primary business; the firm does not provide public connectivity, though it does offer services to companies with dispersed assets in rural areas, for SCADA-type connectivity. Arcadian Networks utilizes licensed 700 MHz spectrum and targets mainly rural utilities in twenty-three states and the Gulf of Mexico.

3.4.2 International Market Landscape Outside of the United States, and particularly in Europe, WAN connectivity is much more homogenous, comprising largely GSM/GPRS services purchased from public telecom carriers, either directly to a smart meter, or to a data concentrator. WiMAX has been deployed as a private WAN, for example, by Danish utility ELRO (which is also using GSM/GPRS) and by Australian utility SP AusNet. Other WAN connectivity options used internationally include fiber, coaxial cable, dial-up modems, and CDMA cellular services.


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There appears to be far less use of private telecom division WAN networks on the part of utilities outside of the United States. ABI Research attributes this to the deployment of smart metering from about the year 2000 onwards, when public cellular networks have been widely available, as opposed to the US, where utilities have been deploying their own WAN infrastructure since at least the early 1990s, (when public cellular networks were not widely available), to support earlier AMR deployments. It is important to note that public CDMA networks will play a role in smart metering in many countries in the Asia-Pacific region, such as South Korea, while Europe will remain almost exclusively GSM/GPRS, and, eventually, WCDMA, simply due to the deployment patterns of cellular infrastructure for voice/data services in these regions.

3.5 The Impact of the Shift to 3G Cellular Infrastructure on the Smart Meter Fundamentally, meter reading requires little bandwidth; industry sources estimate that a single meter read uses approximately 2 KB of bandwidth. In this regard, the bandwidth afforded by 2G CDMA 1xRTT and GPRS networks is perfectly adequate for most meter reading applications. However, utilities and other smart metering stakeholders are considering a number of strategic factors relative to the transition from 2G to 3G. They include:

3.5.1 Concerns Regarding 2G Network Longevity A key overarching concern among utilities is to avoid stranded smart metering assets should MNOs shut down their 2G networks and switch to 3G (or, eventually, 4G) technology. Estimates vary, but it costs at least $100 per truck roll for a utility to send a technician to a meter to upgrade the radio or otherwise “touch” the meter. Over tens of millions of meters, this represents a significant financial burden, although this burden is mitigated to the extent that the utilities use cellular technology as a backhaul means of communication, rather than connecting every deployed smart meter via cellular. This issue becomes particularly relevant with respect to cellular connectivity for smart meters because meters are meant to remain deployed in the field for fifteen to twenty years, in contrast to mobile handsets, which are replaced every two years or so (and by the subscriber directly, with no truck roll involved).

MNOs stress that customers should not be concerned about 2G networks being shut down. Although it is difficult to do in some cases, MNOs are often willing to enter into Service Level Agreements (SLA) guaranteeing network availability for a specified time period, even up to fifteen to twenty years. Also, unlike the case with analog cellular devices (analog AMPS services were officially allowed to shut down in the United States in February 2008), there are billions of handsets around the world running on 2G networks.

Further, it would cost MNOs billions of dollars to shut down 2G networks and such networks are perfectly adequate for transmitting voice and limited data communications, which are still the mainstay applications for mobile handsets. It is also true that 3G and 4G infrastructure will take time to deploy and will follow the familiar model of starting first in dense urban areas and gradually extending to less populated rural regions, during which time 2G networks will need to be maintained to provide coverage. (Having said this, in some Nordic countries coverage in 3G is already besting 2G coverage.)

Although there are additional marginal costs to running 2G and 3G networks in parallel, ABI Research believes that most MNOs will retain 2G network infrastructure through at least 2020, and will be able to offer SLAs to the utilities accordingly.

Nevertheless, utilities and other members of the smart metering ecosystem do have concerns regarding 2G network availability. For example, published news reports tell of a major North American MNO switching at least some of its 2G infrastructure from 850 MHz to 1900 MHz (providing less coverage) in order to make room for more 3G bearer channels.


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Partly in response to these concerns, module maker Cinterion Wireless Modules introduced a UMTS-only WCDMA embedded module — the EU3 — utilizing the newly opened European 900 MHz UMTS band and targeted primarily at smart grid applications. The EU3 can fall back to EDGE connectivity in areas where UMTS connectivity is unavailable. While pricing for the EU3 has not been publicly disclosed, ABI Research believes that it will be much closer to current EDGE pricing than WCDMA modules that incorporate higher speed HSPA capabilities. HSPA requires greater processing functionality, more transmit/receive RF chains, and is targeted more specifically to the needs of cellular broadband modem applications.

We should note that there is an important difference between CDMA and GSM cellular technologies with respect to the issue of network longevity. In CDMA2000 networks, CDMA 1xRTT (the 2G standard) remains the voice channel even when CDMA EV-DO (the 3G standard) is deployed; CDMA EV-DO is a data-only technology. Therefore, as long as CDMA-based MNOs do not shut down the underlying CDMA network (as for a complete shift to LTE, for example), there will always be network connectivity for 2G CDMA devices. In contrast, GSM/GPRS (the 2G standard) is a fundamentally different radio technology from WCDMA (the 3G standard). As noted in the example above, it is entirely possible that GSM-based MNOs could completely shut down GSM/GPRS networks to make more room for their WCDMA 3G deployments.

3.5.2 Reasons for and against the Shift to 3G in Smart Grid Communications Aside from 2G network longevity, there are several other strategic factors to consider in evaluating the shift to 3G connectivity: spectral efficiency, concentration ratios, and module costs.

• Spectral efficiency — Successive generations of cellular technology make increasingly efficient use of the available radio frequency spectrum, meaning that more subscribers can be served with higher bandwidth and better quality of service. MNOs generally prefer that data applications be moved to 3G technology for this reason. So far, there have not been any outright directives to application developers to switch to 3G. However, ABI Research believes that MNOs are quietly encouraging this shift and we have heard of at least one case where a major North American MNO is pricing its 3G tariff below its 2G tariff to facilitate this shift.

• Concentration ratios — In many European smart metering deployments, cellular connections that are integrated into data concentrators or aggregators that are then connected to a local cluster of smart meters through (typically) Power Line Communications technology usually link to approximately only 50 local meters. However, many North American deployments that are using SRW technology are seeing several thousands of meters aggregated through one cellular connection. In this latter instance, 3G is sometimes recommended simply to ensure adequate bandwidth for the large numbers of meters.

• Module costs — Apart from 3G coverage, the key hurdle for the deployment of 3G smart metering services is the cost of the modules. In 2009, ABI Research estimates that there was a 3X price delta between the cost of WCDMA modules and GSM/GPRS modules ($90 for WCDMA and $27 for GSM/GPRS). Likewise, there was roughly a 2X price delta between CDMA EV-DO and CDMA 1xRTT ($90 for CDMA EV-DO and $55 for CDMA 1xRTT). Given that smart meter pricing ranges from $150 to $250 and utilities seek to deploy millions of these devices, the high cost of 3G modules is a barrier both from a total BOM and a variable cost perspective. This is the case if cellular modules are integrated into every smart meter, but even in large-scale concentrator-based deployments, the cost of modules is a burden.

3.6 Distribution Automation Issues Distribution Automation (DA) refers to the networking of common elements of the T&D infrastructure, such as Phasor Measurement Units (PMU), switches, capacitor bank monitors, fault detectors, and transformers. Some of these T&D elements are already networked through


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traditional SCADA technologies. For example, the S&C Electric Company, a Chicago-based global provider of equipment and services to the electric power industry, offers the SpeedNet Radios for communication with T&D network elements. The SpeedNet Radios enable a private utility mesh network on unlicensed 900 MHz frequency bands.

As part of the overall development of a smart grid, many in the electric power industry would like to integrate existing DA communications into a unified DA/AMI communication network, and extend the scope of functionality to more in-field equipment. It is likely that DA will become more tightly integrated into a unified smart grid infrastructure. However, there are certain T&D elements, particularly PMUs and switches, which require low latency. Utility operations personnel need virtually real-time access to these devices if they are to properly manage the T&D grid. As such, depending on the architectural and technological choices utilities make in their smart metering/AMI deployments, this infrastructure may not be suitable for real-time DA communications, necessitating a separate infrastructure.

Given the variability in end-device DA equipment form factors, ABI Research believes it is unlikely that radio (or wired) communications modules will be integrated directly into DA equipment. Rather, utilities are more likely to deploy wireless router/modem equipment with serial (and other) interfaces that will then be connected via wireline to the T&D equipment.

3.7 Neighborhood Area Networks Two technologies currently dominate the NAN portion of the smart grid: power line and fixed RF. Although smart meters can be connected directly to the WAN, as discussed in the previous section, the typical model for residential deployment is for a cluster of smart meters to connect via a NAN to a data concentrator (also called a “data collector”) with the data concentrator not only providing the WAN backhaul to the utility, but in many cases, performing a portion of the data processing locally, so that each meter’s data does not have to be sent in total back to the utility.

Smart grid NANs are deployed on either one-tier or two-tier architecture. In a one-tier architecture, each meter is connected directly back to the data concentrator, which itself may be placed at the local transformer or even the utility substation. For example, Sensus Metering Systems’ FlexNet fixed RF system utilizes “primary-use” (non-public) licensed spectrum to connect directly from data concentrators on utility-owned towers over intermediate WAN distances to individual smart meters. Likewise, Aclara’s TWACS power line system uses a low powered 60 Hz signal that pass through transformers and communicates directly with the data concentrator located at a substation, without the need for repeaters.

In two-tier architecture, communications between the smart meter and the data concentrator pass through repeaters –— intermediate smart meters, for the most part — in the local cluster of smart meters. For example, Elster Electricity’s EnergyAxis system and the Tantalus TUNet utilize mesh topologies for the NAN portion of their proprietary fixed RF systems. Echelon uses a repeater approach in the NAN in its power line-based Networked Energy Services (NES) smart metering system.

3.7.1 Power Line Communications in Smart Metering Worldwide, most smart meters communicate over a power line-based LAN and ABI Research expects power line to continue to have the major share of the smart metering LAN market through the end of the forecast period, as we will explain shortly. It is important to note that we are including several types of technologies in our “power line” category: long-distance, low frequency technologies, from vendors such as Aclara, which communicate through a transformer; higher frequency, shorter distance technologies, such as Echelon’s NES system; and BPL technology, which uses high frequency RF over power lines, rather than modulation of the electrical current


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itself. ABI Research does not believe there is much traction for BPL at present, given current deployments. Power line technologies are sometimes referred to as Power Line Communications, (PLC) or Distribution Line Communications (DLC).

Power line technologies have benefited tremendously from the 2001- 2006 ENEL deployment of 30 million smart meters in Italy, which has strongly influenced other smart metering installations in Europe and the Asia-Pacific region. The ENEL model that is being adopted by other utilities comprises power line technologies in the NAN, backhauled by GSM/GPRS cellular communications from the data concentrator.

Echelon was a key participant in the ENEL project, working with the utility to create smart metering kits and the data concentrators used in the deployment, and from that experience created the NES solution that it has been selling through systems integrators to other European and Asia-Pacific utilities, such as Vattenfall AB in Sweden and CitiPower in Australia. Landis+Gyr is another key smart metering vendor selling a dual power line-GSM/GPRS system, and is finding traction in the Scandinavian countries.

Power line technologies also benefit from the avoidance of interference and range challenges in the NAN, which can plague fixed RF-based systems. In addition, in many countries, meters are located inside buildings or residences, unlike the United States, where meters are located outdoors. Power line communications connect more easily into residences than fixed RF does.

Power line communications do face two major challenges: power lines do not connect to gas or water meters, requiring fixed RF technology to be added to the deployment for utilities that provide those additional services. Second, power lines do not connect to smart thermostats, making the link to the HAN more problematic and essentially requiring fixed RF (typically ZigBee) to be added to enable HAN communications.

Although power line communications have been utilized in North America at least since the late 1990s, within the United States, fixed RF predominates in the NAN. This is fundamentally a result of the early lead fixed RF gained as AMR moved from wireless transfer of meter data to handheld devices, then to mobile drive-by platforms, and finally to fixed RF systems. PLC has gained traction in North America in the past five years, and appears likely to continue its momentum over the forecast period. By 2015, we forecast that PLC will represent the NAN connectivity for roughly 20.6 million meters, while fixed RF will be used in roughly 33.2 million meters.

3.7.2 Fixed RF in Smart Metering As described in the previous section, fixed RF came to dominate NAN connectivity in the North American smart metering market, largely due to its evolution from wireless handset-based AMR. ABI Research believes that fixed RF will continue to see strong traction in the North American market, due to the activities of major fixed wireless-oriented smart metering vendors, such as Elster Electricity, Itron, and Sensus Metering Systems, among others.

Fixed RF will face more of a challenge outside North America, for several reasons described in the previous section: the strong trend toward power line technologies in the more recent European smart metering market; the interference fixed RF faces in the NAN; and difficulties associated with penetrating inside of buildings to reach interior smart meters. Fixed RF vendors work to overcome these challenges primarily through the use of lower RF frequency signals, which propagate further and penetrate walls more easily. Typically, fixed RF systems in the NAN utilize proprietary 900 MHz RF.


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Some vendors are attempting to take a more standards-based approach. The first efforts have involved utilizing 2.4 GHz IEEE 802.15.4-based communications. For example, Trilliant Networks uses an IEEE 802.15.4 physical layer in conjunction with a proprietary networking layer. NURI Telecom utilizes the ZigBee networking layer along with an IEEE 802.15.4 physical layer. In November 2009, Itron announced its participation in a preliminary standardization effort called IEEE 802.15.4g (TG4g) Smart Utility Network (SUN). TG4g seeks to refine the 802.15.4 standard for specific use in NAN utility networks. ABI Research believes this will have to include transmission in the 900 MHz communication band, to avoid the propagation challenges of 2.4 GHz in outdoor low power wireless mesh networks. An initial draft is set to be complete in January 2010 with a final standard by the end of 2010.

3.8 Home Area Networks and “No-New-Wire” Communication Technologies ABI Research has provided an in-depth analysis of the HAN market, also known as the Home Energy Management Systems (HEMS) market, in a related report entitled, “Energy Management and Home Area Networks: HAN and DR Market Opportunity.” That report includes a full discussion of market and technology issues as well as topological choices being made by utilities and other players, and related topics, such as UI design.

In this report, we provide a brief description of the key “no-new-wires” technologies being utilized in HAN deployments. The key technologies include: ZigBee, HomePlug, Z-Wave, 6loWPAN, Wireless M-Bus, EnOcean, and LonWorks ISI. The reader should also be aware of INSTEON and KNX.

3.8.1 ZigBee Smart Energy ZigBee is an application and networking layer protocol that uses IEEE 802.15.4 ICs at the physical layer to enable a low power, low data rate wireless mesh network. The ZigBee standard is managed by the ZigBee Alliance, an international industry organization comprising approximately 300 members, including both vendors and implementers/adopters. While ZigBee is targeted at several major application areas, including home automation, commercial building automation, and healthcare, it has seen particular traction in the smart grid arena. Many smart meter vendors and utilities appear to have settled on ZigBee as the wireless networking protocol of choice for connectivity between smart meters and the devices inside the home (HAN).

Particularly important in the context of HANs is the ZigBee Smart Energy Profile (SEP), a public application first introduced in 2008. Version 1.0 of the profile specified general capabilities needed by HAN-connected devices to communicate with utility infrastructure. Version 1.5 added specific functionality with respect to DR capabilities. Version 2.0, released in June 2009, is a fairly major upgrade and departure from the two previous versions and is not backwards-compatible. Among the features added to Version 2.0 are: the use of IPv6 at the networking layer and interworking with the power line standard HomePlug GP (Green PHY) at the application layer. Reportedly, both of these features were added at the request of the utility community.

3.8.2 HomePlug Green PHY HomePlug GP (Green PHY) is a PLC standard under development by the HomePlug Powerline Alliance, an industry organization. The alliance’s first standard, HomePlug 1.0 was released in 2001 and provides for 14 Mbps throughput. HomePlug 1.0 has been ratified as IEEE 1901. HomePlug AV was released in 2005 and enables 100 Mbps throughput.

HomePlug Command and Control (HomePlug CC), which was ratified in October 2007 at the PHY and MAC layer, is intended for automation applications and provides for throughput at 5 Kbps, or 2.5 Kbps if there is noise in the power lines.


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HomePlug is currently working with the ZigBee Alliance to make the ZigBee Smart Energy 2.0 public application profile the application layer for the new HomePlug GP standard, which should be complete by 1Q 2010. HomePlug GP will be interoperable with HomePlug AV. A HomePlug AV 2.0 standard should also be complete in the 1Q 2010 time frame and offer three to four times the bandwidth performance as HomePlug AV.

3.8.3 Z-Wave Advanced Energy Control Framework Z-Wave is a low power, low data rate wireless technology introduced in 2003 by Zensys, a Danish company that was acquired by Sigma Designs in 2008. Zensys/Sigma Designs has established the Z-Wave Alliance, an industry organization with 160 members. While Z-Wave Alliance members have input into direction, ultimately Sigma Designs controls Z-Wave technology, and is the single source of silicon. Z-Wave targets the home automation market, although recently has made some inroads into commercial automation and smart energy.

In April 2009, the alliance announced the Z-Wave Advanced Energy Control (AEC) Framework. AEC leverages the large installed base of Z-Wave interoperable devices (especially for lighting control) and tight interoperability inherent in the Z-Wave specification. To this, AEC adds fairly tight integration with IP through the Z/IP specification, though this is not a full implementation of IP at the networking layer; rather it is more of a close mapping of IP to Z-Wave end devices through Z-Wave gateways. Further, AEC provides features and functionality to enable utilities to use Z-Wave in DR applications, including strong security mechanisms. So far, AEC has been integrated into only one smart meter, a design by Danish meter maker Kamstrup. It should be noted, though, that there are significant rumors in the industry of efforts to make ZigBee and Z-Wave interoperable on some level.

3.8.4 6loWPAN 6loWPAN is a standard for framing IPv6 packets for transmission over an IEEE 802.15.4 IC physical layer. 6loWPAN has been standardized by the Internet Engineering Task Force (IETF) as RFC 4944. To date, 6loWPAN has been implemented as a WSN solution, mainly by technology vendors, such as Arch Rock, for general monitoring and control applications. It has not gained significant traction in specific verticals, such as home automation, or commercial building automation, to the same extent as have some of the other technologies listed in this report. However, some smart grid vendors, such as Trilliant, have implemented versions of 6loWPAN in their offerings.

Work to make 6loWPAN more user friendly as a sensor networking standard is underway in the IETF Routing over Low Power and Lossy (ROLL) networks’ Working Group, which is looking at routing protocols that can be optimized for sensor networking. Likewise, the IP for Smart Objects (IPSO) Alliance has been formed as an industry organization to help promote the use of IP in general, and 6loWPAN specifically, for sensor networking applications.

3.8.5 Wireless M-Bus Wireless M-Bus is the short-range wireless version of the European Meter-Bus standard. Wireless M-Bus is also denoted as EN 13757-4, while wired M-Bus is denoted as EN 13757-2 for the physical and data link layers and EN 13757-3 for the application layer. Wireless M-Bus appears to be in use solely in Europe, mostly to connect residential gas, water, and heat meters to smart electric meters for multi-meter AMR/AMI applications. Technically, Wireless M-Bus could be used to connect to other devices in the home, but ABI Research is not aware of this occurring to any large degree.

http://encyclopedia2.thefreedictionary.com/Internet+Engineering+Task+Force


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3.8.6 EnOcean EnOcean is an energy-harvesting wireless sensor networking technology meant for home and commercial building automation. The solution was created by a company called EnOcean that was founded in Germany in 2001 and is itself a spin-off of a Siemens AG R&D effort. The main benefit of energy harvesting is the elimination of batteries, which can be particularly helpful in large commercial building automations systems, where the management of several thousand batteries can be difficult. The EnOcean sensors and actuators work in a star topology and typically will utilize another automation technology — such as LonWorks — as a backbone transport layer in larger installations.

Although EnOcean technology was developed by a single company, in October 2009 the EnOcean Alliance announced a public EnOcean standard (that closely conforms to the technology developed by EnOcean) controlled by the alliance. The EnOcean Company will supply several of the components to the market, as well as license IPR to other component makers. By 2012, the alliance expects the EnOcean solution to be an international IEC standard, as well.

3.8.7 LonWorks ISI Echelon Corporation’s LonWorks technology operates over power line as well as copper twisted pair and coaxial cables and has been widely adopted in various automation and control markets, especially commercial building automation, transportation utility, and advanced smart. Echelon released its Interoperable Self-Installation (ISI) technology in August 2005 to make LonWorks more applicable to the DIY home automation market. ISI enables up to thirty-two LonWorks nodes to discover each other and form a simple network with little user intervention. The technology is designed to enable consumers to quickly and easily set up simple home automations systems without professional installation.

In November 2006, Echelon established the Digital Home Alliance (DHA) as a marketing organization to promote ISI and LonWorks. DHA will not set technology direction for ISI; unlike the ZigBee Alliance or Z-Wave Alliance, it is purely a market-building organization. Echelon says that it is gaining traction with ISI in South Korea and Germany and is increasingly looking to leverage the company’s complementary smart metering business activities and focus on energy management applications.

3.8.8 INSTEON SmartLabs introduced its power line and low power, low data rate wireless INSTEON technology in 2005. The company built the INSTEON Alliance and generally followed the same approach to market development as Zensys, prior to the Zensys acquisition by Sigma Design, albeit getting an earlier start on multi-source silicon. However, at the end of 2007, the firm shifted strategic direction and is no longer working to develop an INSTEON market ecosystem. SmartLabs will continue to sell INSTEON-based lighting equipment of its own design through its SmartHome.com online store.

The reasons for this change in strategy have not been made public, but ABI Research surmises that the company was not able to gain sufficient traction quickly enough, and was forced to make the decision based on financial factors. It is unclear if INSTEON has much — if any — future as a general-purpose home automation technology. Vendors, such as Exceptional Innovation, that were proponents of INSTEON, have made it clear that they are essentially agnostic to the underlying technology.


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3.8.9 KNX KNX is a networking and application layer standard for home and commercial building automation. It is designed to be used in conjunction with various media, including RF, power line, twisted pair, and Ethernet (using the KNXnet/IP variant). Application-layer profiles have been created for lighting, blinds and shutters, security systems, energy management, HVAC systems, monitoring systems, remote control, metering, AV control, and white goods (appliances) control. KNX has been certified as an open, manufacturer-independent standard by a number of standardization bodies around the world, including: the ISO, IEC, CENELEC, CEN, SAC, ASHRAE, and ANSI.

The KNX standard is administered by the KNX Association, an industry organization created in 1999 by the merging of three prior standards bodies. The association, which certifies devices and ensures interoperability, says that it has over 100 vendor companies and that KNX products are offered in more than seventy countries. The standard does seem to be mostly a European effort, however, as most of the member companies and the majority of activities appear to be in Europe. The name KNX rarely comes up in conversations with home automation or HAN vendors with whom ABI Research has spoken, even with respect to its activities in Europe. It may be that KNX has more traction in the European commercial building automation sector, rather than home automation or energy management.

3.9 U-SNAP and the Universal Metering Interface The Utility Smart Access Port (U-SNAP) Bus Specification is a connector standard designed to enable both smart meter and HAN device vendors to design communication protocol-agnostic devices. Specifically, the U-SNAP standard specifies an embeddable 3.8 cm² module form factor with serial interconnects to the host device.

The U-SNAP standard currently supports a number of communication protocols, including ZigBee, Wi-Fi, and Z-Wave, among others, currently, with HomePlug, 6loWPAN, and LonWorks expected to be supported in the future. The module handles the interworking needed between the host device and the communication protocol used by the specific module integrated.

Essentially, the host device designer simply ensures that a U-SNAP module can be inserted into the host device, with different modules supporting varied communication protocols able to be used interchangeably and “snapped-in” by the consumer in the field. The key benefits are upgradeability in the field and the elimination of the need for host device vendors to create different models to support different communication protocols.

U-SNAP is controlled by the U-SNAP Alliance, an industry organization headquartered in Washington DC that has the support of a variety of utilities, as well as smart grid vendors, and other interested companies, such as Google. U-SNAP modules are already available from vendors such as Intwine Connect, working with ZeroG Wireless, and products supporting U-SNAP modules are in the market including the Programmable Communication Thermostats (PCT) from the Radio Thermostat Company of America.

Likewise, in September 2009, UK-based Cambridge Consultants launched its own version of a universal utility bus, called Universal Metering Interface (UMI). The objectives of UMI are largely similar to U-SNAP, and UMI will be offered as an open standard, though it is not precisely clear how the technology or standard will be developed. Meter vendor Elster has come out as an early supporter of UMI.


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Section 4.

MARKET FORECASTS

4.1 Forecast Methodology The overall methodology used for this study comprised both primary and secondary research. ABI Research’s primary research included:

• Interviews with meter vendors and AMI technology vendors to determine their views on the likely issues and trends impacting adoption of smart metering technology. In addition, we obtained feedback on our forecasts.

• Interviews with cellular embedded module vendors to determine their historical shipments, including shipments by region and application area (such as AMI), and to determine their views on the likely issues and trends impacting adoption of cellular and other wireless WAN technologies into AMI applications.

• Interviews with other members of the smart grid ecosystem to determine their views on the likely issues and trends impacting adoption of AMI and smart grid technology.

Additionally, we conducted secondary research utilizing government databases, reports and regulatory/legislative pronouncements, vendor product data sheets, white papers, press releases, trade journals, and industry organization presentation materials.

Fundamentally, the forecasting process began with the initial development of a Total Available Market (TAM) forecast for meters that could be embedded with AMI communications. This was done through developing an estimate of the US meter installed base, found in government data and discussions with meter manufacturers, and then normalizing these estimates to apply to major regions of the world. This normalization process was accomplished through an algorithm that took into account population and GEP differences between different regions of the world in comparison to the United States.

Next, we forecast likely penetration of AMI technology into the overall meter TAM. Heavy reliance during this phase of the model development was made on the data provided by the US Federal Energy Regulatory Commission (FERC) in its regular reports on the state of AMI deployment in the United States. In addition, this US-specific data was supplemented by published reports on AMI deployments in other regions of the world, as well as close consultation with meter manufacturers on their views on regional market development. Please note, ABI Research is projecting the penetration of AMI technology only into electricity meters, not into gas, water, or heat meters. Typically, non-electricity meters are networked via short-range wireless technologies to electricity smart meters as an adjunct to the electricity distribution grid, rather than as an independent smart meter network.

Then, starting with historical shipment data of cellular embedded modules as a key factor, we projected the likely penetration of multiple communications technologies into the smart metering TAM. Close consultation with cellular embedded module vendors as well as cellular M2M MVNOs and MNOs engaged in smart metering activities informed this portion of the model. Additionally, cellular M2M industry participants were able to provide data on relevant ASPs and ARPU.

The overall process was iterative, with various data points used to develop an increasingly calibrated forecast over the multiple iterations of the forecasting process.


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4.2 Smart Meter Forecasts Chart 4.1 illustrates ABI Research’s forecast of the worldwide installed meter TAM, as well as our forecast of the penetration of smart meters into the overall meter TAM. As noted above, the smart meter forecast comprises only smart electricity meters; it excludes smart gas, water, and heat meters. Further detail is provided in Tables 1-1, 1-2, 1-3, 1-4, 1-5, and 1-6 in the accompanying database file. Please note that the data contained in Chart 4.1 and these tables are for the cumulative installed base of meters and smart meters — not annual new shipments. This data reflects a modest churn rate of new meters at roughly 5% per year.

While overall meter shipments are expected to grow only moderately over the forecast period, ABI Research expects smart meter shipments to expand strongly, due to the reasons discussed earlier in the study. Consequently, smart meters will form a proportionately larger share of the installed meter base by 2015 than in 2008.

Chart 4.1 Total Meter and Smart Meter Installed Base, World Market, Forecast: 2008 to 2015

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Chart 4.2 shows ABI Research’s forecast of smart meters by region. Further detail is provided in Tables 1-1, 1-2, 1-3, 1-4, 1-5, and 1-6 in the accompanying database file. Europe is currently the largest market for smart metering technology, and will remain so for the forecast period. However, other regions are expected to grow more strongly over the forecast period. Consequently, Europe’s overall share will decline by 2015.

In particular, North America will start to see strong growth in the 2010 period and onward as key projects in several US states and Canadian provinces start hitting volume deployments. The Asia-Pacific region will see the highest growth rate over the forecast period, but this region is starting from a small base. Latin America and the Middle East and Africa are expected to remain marginal markets for smart metering throughout the forecast period.

Chart 4.2 Total Smart Meter Installed Base by Region, World Market, Forecast: 2008 to 2015

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4.3 Smart Meter NAN Connectivity Forecasts Chart 4.3 provides ABI Research’s forecast of the NAN communications technologies used in conjunction with smart meters. Further details are provided in Tables 1-7, 1-8, 1-9, 1-10, 1-11, and 1-12 in the accompanying database file. As described earlier in this report, power line refers to several types of communications technologies that transmit over power lines, including BPL.

Likewise, fixed RF refers to all RF technologies that utilize a data concentrator and a fixed (often meshed) network of RF-enabled nodes, as opposed to PLC. This includes proprietary RF, IEEE 802.15.4 IC physical layer solutions with proprietary networking layers, IEEE 802.15.4 IC physical layers solutions with ZigBee networking and application layers, and Wi-Fi. Direct WAN refers to those smart meter connections where the meter is directly linked back to the utility over a wired or wireless WAN technology, and will be segmented in further detail in Section 4.4.

Due to the ENEL deployment in Italy and the consequent adoption of power line/GPRS as a common model for smart metering deployments in Europe and other regions of the world, power line accounts for the largest share of LAN connectivity in the 2008 time frame. While we expect the overall share of power lines in the market to decline by 2015, they should still see strong growth over the forecast period and remain the dominant smart metering communications technology in the NAN. Fixed RF connections should increase, particularly as smart metering grows overall in North America, where fixed RF has historically seen more traction than other connectivity technologies.

Direct WAN connections should likewise grow as utilities begin to connect to more remote meters located outside of convenient neighborhood clusters while overall smart metering deployments increase. It is important to remember that the following forecast is reflective of smart electricity meter connectivity; connections to smart gas meters and smart water meters are generally over fixed RF links from the adjacent smart electricity meter.

Chart 4.3 Smart Meter NAN Communications Technology Installed Base by Type, World Market, Forecast: 2008 to 2015

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4.4 Smart Meter WAN Connectivity Forecasts Chart 4.4 gives ABI Research’s forecast of the WAN communications technologies used in conjunction with smart meters. The forecast comprises additional subsegments of the direct WAN forecast provided in Section 4.3, as well as a segmentation of the WAN technologies used in conjunction with data concentrators. Further detail is provided in Tables 1-13, 1-14, 1-15, 1-16, 1-17, and 1-18 in the accompanying database file. Cellular refers to the following air interface standards: GSM/GPRS, EDGE, WCDMA, CDMA 1xRTT, CDMA EV-DO, WiMAX, and LTE. “Other” refers to: proprietary wireless technologies, such as iDEN and Canopy, as well as wired technologies, including phone line, fiber, and coaxial cable.

Chart 4.4 illustrates ABI Research’s view that while many more smart meters will be connected through data concentrators than directly to the WAN, the high ratio of smart meters to data concentrators (estimated at approximately 50:1 for ABI Research’s forecast, but varies from 5:1 to several thousands:1 in different industry estimates) results in far fewer data concentrators than direct WAN smart meter connections. Likewise, a common model outside of North America is for use of cellular technologies for WAN connectivity.

Chart 4.4 Smart Meter WAN Communications Technology Installed Base by Type, World Market, Forecast: 2008 to 2015

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4.5 Smart Meter Cellular Connection Forecasts Chart 4.5 provides ABI Research’s forecast of the number of cumulative cellular connections active during the relevant forecast year in conjunction with smart metering, segmented by cellular air interface standard. Further detail is provided in Tables 2-1, 2-5, 2-7, 2-9, 2-11, and 2-13 in the accompanying database file.


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ABI Research expects GSM/GPRS connections to rise moderately over the forecast period as overall cellular smart meter connections increase, due to GSM/GPRS connectivity being widely utilized in Europe and the Asia-Pacific region. Increasingly, we anticipate EDGE connectivity will grow due to the greater spectral efficiency that EDGE affords, as well as declining EDGE embedded module pricing. WCDMA will likely represent only a small portion of connections over the forecast period.

However, this may change as UMTS-only embedded modules are introduced (such as Cinterion Wireless Modules’ EU3 product, introduced in 4Q 2009) and a large enough base of potential customers becomes convinced that GSM/GPRS network infrastructure will be turned off during the time frame in which they wish to deploy GSM/GPRS smart meters in the field.

CDMA connectivity will likewise remain a minority of connections over the forecast period, reflective of its use predominantly in North America, which is a more heterogeneous market for smart metering WAN connectivity. We anticipate that WiMAX and LTE will comprise only a small portion of AMI connections over the forecast period, due to module costs and coverage concerns. However, we should note that private WiMAX AMI networks are being deployed by some utilities in Australia and the United States.

Chart 4.5 Smart Meter Cellular Connections by Air Standard, World Market, Forecast: 2008 to 2015

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Chart 4.6 reflects ABI Research’s forecast of the revenue derived from connectivity services to the cumulative cellular connections used in conjunction with smart metering, segmented by cellular air interface standard. Further detail is provided in Tables 2-2, 2-6, 2-8, 2-10, 2-12, and 2-14 in the accompanying database file.


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The revenue trends noted above essentially conform to those discussed in relation to Chart 4.5. ARPU will vary somewhat from operator to operator, and we have heard that in some instances CDMA-based operators will offer particularly competitive pricing to compensate for higher CDMA embedded module costs. However, ABI Research believes that ARPU across standards is essentially in the $10 per-month range, and is likely to decrease only marginally over the forecast period. This ARPU figure is, of course, for concentrator-based cellular deployments — the majority of the cellular AMI deployments in the market today. ABI Research believes that, in the minority of cases where cellular is embedded directly into the meter itself, ARPU is below $1 per meter.

Chart 4.6 Smart Meter Cellular Connection Revenue by Air Standard, World Market, Forecast: 2008 to 2015

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Chart 4.7 provides ABI Research’s forecast of the number of cumulative cellular connections active during the forecast years in conjunction with smart metering, segmented by region. Further detail is provided in Tables 2-3, 2-5, 2-7, 2-9, 2-11, and 2-13 in the accompanying database file.

Although the trends illustrated in Chart 4.7 largely conform to those detailed in Chart 4.2, there is a relatively higher proportion of cellular connections used in Europe and the Asia-Pacific region, in contrast to North America. The European (and, to date, Asia-Pacific) model for smart metering deployment has largely consisted of the use of cellular connectivity in the WAN. By contrast, the North American market’s connectivity type is more heterogeneous.

Chart 4.7 Smart Meter Cellular Connections by Region, World Market, Forecast: 2008 to 2015

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Chart 4.8 illustrates ABI Research’s forecast of the revenue derived from connectivity services to the cumulative cellular connections used in conjunction with smart metering, segmented by region. Further detail is provided in Tables 2-4, 2-6, 2-8, 2-10, 2-12, and 2-14 in the accompanying database file.

The revenue trends shown in Chart 4.8 conform to those in Chart 4.7.

Chart 4.8 Smart Meter Cellular Connection Revenue by Region, World Market, Forecast: 2008 to 2015

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4.6 Smart Meter Cellular Embedded Module Forecasts Chart 4.9 shows ABI Research’s forecast of the number of cellular embedded modules shipped, segmented by cellular air interface standard. Further detail is provided in Tables 3-1, 3-5, 3-7, 3-9, 3-11, and 3-13 in the accompanying database file.

ABI Research expects that shipments of GSM/GPRS modules will likely rise only slightly over the forecast period, despite overall rising shipments of cellular embedded modules into the smart metering market. We expect there to be an increasing shift to EDGE modules as those module ASPs decline and operators encourage a move to EDGE for greater spectral efficiency.

ABI Research believes WCDMA modules will remain a small minority of shipments over the forecast period, although this situation could change with the introduction of UMTS-only modules. UMTS-only modules have the potential to cannibalize a significant proportion of EDGE and GSM/GPRS shipments. Such cannibalization would be due to the ability to future-proof smart meter cellular connections in the face of a potential shutdown of GSM/GPRS cellular infrastructure, as well as the greater spectral efficiency of WCDMA relative to EDGE and, especially, GSM/GPRS.


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As noted above, we anticipate WiMAX and LTE to have only minimal impact on the AMI market over the forecast period.

Chart 4.9 Smart Meter Cellular Module Shipments by Air Standard, World Market, Forecast: 2008 to 2015

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Chart 4.10 provides ABI Research’s forecast of the revenue resulting from the shipment of cellular embedded modules, segmented by cellular air interface standard. Further detail is provided in Tables 3-2, 3-6, 3-8, 3-10, 3-12, and 3-14 in the accompanying database file.

ABI Research expects revenue from GSM/GPRS modules to decline slightly over the forecast period, due both to ASP reductions as well as a weak overall rise in GSP/GPRS module shipments in favor of EDGE. WCDMA and CDMA EV-DO will see larger revenue increases in their unit shipment volumes, due to relatively higher ASPs with respect to GSM/GPRS and EDGE modules. This applies to WiMAX and LTE modules, as well. In total, revenue will increase throughout the forecast period as shipment volumes rise, more than compensating for the downward effect of declining ASPs.

Chart 4.10 Smart Meter Cellular Module Revenue by Air Standard, World Market, Forecast: 2008 to 2015

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Chart 4.11 illustrates ABI Research’s forecast of the number of cellular embedded modules shipped, segmented by region. Further detail is provided in Tables 3-1, 3-5, 3-7, 3-9, 3-11, and 3-13 in the accompanying database file. Please note that, in contrast to the cellular connections forecast presented earlier, the module shipment forecast is segmented regionally, based on the location of the headquarters of the OEM/manufacturer integrating the modules into a final device, not the region, necessarily, where the modules are deployed in the field for end use. Most clients find this approach to module segmentation more useful for their purposes.

Chart 4.11 Smart Meter Cellular Module Shipments by Region, World Market, Forecast: 2008 to 2015

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Chart 4.12 provides ABI Research’s forecast of the revenue resulting from the shipment of cellular embedded modules during each year of the forecast, segmented by region. Further detail is provided in Tables 3-2, 3-6, 3-8, 3-10, 3-12, and 3-14 in the accompanying database file.

The revenue trends shown in Chart 4.12 conform to those in Chart 4.11.

Chart 4.12 Smart Meter Cellular Module Revenue by Region, World Market, Forecast: 2008 to 2015

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Section 5.

SELECT INDUSTRY PLAYERS

5.1 Meter and Smart Metering Technology Vendors 5.1.1 CalAmp

CalAmp (Oxnard, California) is a publicly traded provider of wireless communications equipment and systems for the public safety, industrial monitoring and controls, mobile resource management, and direct broadcast satellite markets. The company has been publicly traded since 1983 and in fiscal year 2008 (ended February 2008) earned approximately $140.9 million, down from roughly $211.7 million in fiscal year 2007. CalAmp is in the process of focusing more closely on the utility market and the opportunity for smart metering.

The company has offered the Omega product for AMR applications for a number of years and introduced the more advanced WiMetery AMI/smart grid concentrator/modem in September 2008. The WiMetery device contains 3G connectivity using modules from Sierra Wireless. It is designed for both direct meter connectivity as well as aggregation of a cluster of meters through serial and SRW interfaces. CalAmp views smart metering as a key opportunity and may align its Monitoring and Controls business unit to focus more directly on the utility market, enabling CalAmp to offer not only smart metering technology, but related solutions as well. The Omega line is still on offer, but eventually will be phased out in favor of WiMetery. While Omega was primarily offered in North America, WiMetery will be sold also in Europe and Latin America.

5.1.2 Echelon Corporation Echelon Corporation (San Jose, California) is a leading communications technology vendor. Its LonWorks communications protocol has been certified by a variety of standards bodies around the world for building, industrial, and transportation systems communication, including in the United States, Europe, and China. While Echelon’s technology features more prominently in building and industrial automation systems, the company has been involved in the utility market for a decade.

It was the work with ENEL, providing the communications component of that utility’s custom AMI implementation that convinced Echelon to develop the Networked Energy Services (NES) solution as a turnkey AMI platform for other utilities that might not have the scale to develop their own customized systems. Echelon has gained a lot of early traction in Europe, but is seeking to expand on a worldwide basis and has announced customer wins in Australia. Unlike many other technology vendors, Echelon chose to actually develop its own meter for the tightest integration, rather than to provide an adapter or retrofit kit. The company sells through systems integrators and VARs.

The NES system comprises the EM-1021 and EM-1023 electricity meters, the DC-1000/SL data concentrator, and NES system software. Meters link to the concentrator through a PLC connection. Unlike the EIS solution, the data concentrators are not meters themselves, but are only used to aggregate multiple meters for single-link WAN connections over TCP/IP networks to the NES system software, which resides at the utility’s operations center. The concentrator is placed adjacent to the local neighborhood distribution transformer. Echelon does not denote a specific WAN link, but states that GPRS is the most common WAN communications technology for AMI in Europe.

5.1.3 Eka Systems Inc Eka Systems Inc (Germantown, Maryland) is a privately held company founded in 2000 to solve the challenge of extremely large networked systems. The company decided that smart grid/utility networks were a leading application for the technology EKA had developed and in 2003 the


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company introduced its EkaNet system for utility smart metering/smart grid applications. Eka Systems first deployed its solution in Russia in 2004 and has also seen deployments in Singapore, Ecuador, and increasingly in the United States. The company has gained particular traction with municipal utilities, but is now starting to see interest from larger Investor-Owned Utilities (IOUs) as well. The company currently has about seventy-five employees.

The EkaNet system comprises nodes, relays (where needed), and gateways. The system has been developed to be self-forming and largely self-managing and highly scalable. The nodes work transparently with a variety of different meters from different vendors. The back-end management interface is not a full Meter Data Management (MDM) system, but provides many of the same features and functionality and is designed to serve as a basic MDM for smaller utilities that are not going to deploy a full MDM. The system can interface with a variety of MDM systems and is built to utilize open standards as much as possible.

5.1.4 Elster Integrated Solutions Elster Integrated Solutions (EIS) resulted from a business realignment of two key business holdings of Elster Group GmbH that was announced in October 2006: Elster Electricity LLC and AMCO Water Metering Systems. As per the realignment, Elster Electricity will focus on metering solutions targeting electric utilities, AMCO Water Metering Systems will target metering solutions for water utilities, and EIS will focus on AMI across electricity, gas, and water metering systems. EIS will work with its sister companies’ products as a solutions integrator, but will be free to work with outside vendors, as well.

Elster Electricity claims to be the largest electric meter vendor in the world. It was formed by the combination of Westinghouse Electric Corporation and ABB Electricity Metering. Elster Group is owned, in turn, by CVC Holdings, a large European private equity fund focused on utilities and energy production. EIS will initially target the North American and Latin American markets, but will eventually expand its operations on a global basis.

EIS works primarily with Elster Electricity’s EnergyAxis AMI system. EnergyAxis comprises the REX end-node meter, A3 Alpha meter-concentrator, EnergyAxis Water Module, and Metering Automation Server (MAS) at the utility’s operations center. Each A3 Alpha meter-concentrator can communicate via proprietary, unlicensed 900 MHz frequency band RF communications with up to 1,024 REX meters, though a more typical range is 600 to 700 meters. The A3 Alpha meter-concentrator connects to the MAS over a WAN connection that could entail a cellular link.

5.1.5 ESCO Technologies Inc ESCO Technologies Inc (St Louis, Missouri) is a publicly held company spun off from Emerson in 1990. ESCO has three main business segments: Communications, Filtration and Fluid Flow, and Test. The Communications segment focuses on hardware and software to enable utilities to deploy smart metering functionality. ESCO reported approximately $500 million in fiscal 2007, with about $198 from the Communications segment. The three main businesses within the Communications segment are DCSI, Hexagram, and Nexus Energy Software. DCSI provides a power line-based smart metering solution, while Hexagram offers a single-tier fixed RF-based solution using licensed frequency. Nexus Energy Software supplies an MDM solution for utilities. ESCO Technologies is not a meter vendor, and the smart metering technology of its two subsidiaries, specifically DCSI’s TWACS and Hexagram’s STAR System, are integrated into the meters of other companies, such as GE Energy, Landis+Gyr, and Itron. The company has a HAN solution and is developing another based on ZigBee technology.


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5.1.6 GE Energy GE Energy (Fairfield, Connecticut) has been in the metering business for 129 years. The company is active in all ANSI-standard countries and two years ago introduced an IEC meter. GE has been active in smart metering since 2003. However, unlike some other meter vendors, GE has opted to utilize third-party communication technologies to enable smart meter capability. Currently, the company works with AMI vendors such as Trilliant, Silver Spring, SmartSynch, and Aclara. Note that SmartSynch has its own metering technology and GE is also utilizing the smart metering technology of Landis+Gyr. GE typically works directly with utility customers, although sometimes it will sell to smaller municipal utilities through distributors. Either GE will coordinate the smart metering deployment for a utility, or the utility handles the coordination of the project itself.

5.1.7 Grid Net Grid Net (San Francisco, California) is a privately held smart grid software developer founded in 2006 with funding from Intel Capital and GE and has under fifty employees. Grid Net offers a Network Management System (NMS) for the smart grid — for both smart metering and DA applications. Grid Net calls its software platform PolicyNet. However, in the near term, the company is also providing its GE partner with hardware reference designs for a communication board for a WiMAX-based smart meter. GE also provides this communication board to Landis+Gyr, in addition to utilizing it in its own line of smart meters.

The company also provides a WiMAX-based router box design that can be used to connect to a variety of DA equipment. Grid Net does not sell directly to utilities; rather it sells through its partners, such as GE. A key recent customer win for Grid Net/GE is the Australian utility SP AusNet, which announced in November 2009 a deployment of WiMAX-based smart meters in its service area in the state of Victoria.

5.1.8 GridPoint GridPoint (Arlington, Virginia) is a privately held smart grid technology provider funded by Altira Group, Goldman Sachs, and New Enterprise Associates, among others. The company was founded in 2003 with the goal of helping to fuel the mass adoption of renewable energy and DR as a source of electricity. GridPoint currently has about 130 employees and $220 million in venture capital funding. The company has one of the more sophisticated offerings in the market, and has been selected as part of Xcel Energy’s SmartGridCity deployment in Boulder, Colorado.

The company is focused on enabling utilities to enhance their dealings with customers allowing them to access a range of applications, such as DR management and load control, PHEV management, and renewable energy integration. At the heart of its offering is the GridPoint Platform, an enterprise-class, Java-based software program that enables utilities to provide a range of energy management applications and integrate a variety of third-party energy management-related end devices.

In June 2009, GridPoint acquired Lixar, a home energy management software provider based in Ottawa, Canada. The Lixar acquisition brings to GridPoint an extensible, sophisticated, widget-based consumer platform to enable utilities to better engage with their customers. Each utility will brand the platform according to its own needs, and, with integration with the GridPoint Platform back-end software, can extend its capabilities easily over time.

5.1.9 Holley Metering Ltd Holley Metering Ltd (Hangzhou, China) is a privately held meter vendor founded in 1970. HML is part of the Holley Group, a large Chinese conglomerate involved not only in the metering business but also in IT, real estate, and biopharmaceuticals. HML manufactures


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traditional electromechanical meters, as well as solid-state electricity meters, gas, water, and heat meters, and claims to be one of the largest meter vendors in China, with 3,800 employees. HML produces a power line-based smart meter, and has developed ZigBee technology for use in HANs.

5.1.10 Itron Inc Itron Inc (Liberty Lake, Washington) is a publicly listed US meter vendor that operates under the Itron name in North America and under the Actaris name elsewhere. The company is a leading vendor of electric, gas, and water meters, in addition to related products and services, such as meter data management software, energy forecasting and load research, and professional services. Itron was founded in 1977 and now has offices in eighty countries, with revenue said to be around $1.4 billion in 2007. The company has developed its own in-house smart metering technology, based on a fixed RF LAN architecture that it integrates into its Centron, Sentinel, and Quantum meters. In addition, the company integrates other smart metering vendors’ technology “under glass” into its meters.

5.1.11 Landis+Gyr Landis+Gyr (Zug, Switzerland) is a global meter manufacturer with roughly a century of experience. In 1998, the company became a part of Siemens AG as Siemens Metering and was sold to the Bayard Group, an Australian private equity firm, in 2004. Bayard also acquired a number of other metering companies around the globe, including Enermet, Cellnet+Hunt, AMPY Email Metering, and StatsSignal. In May 2008, Bayard chose Landis+Gyr as the overall operating brand for the group and is in the process of integrating the products and operations of the constituent companies.

Landis+Gyr is currently a private firm The company has approximately 5,000 employees and is active in thirty countries around the globe. The firm offers meters and smart meters to its utility customers and is also active in turnkey meter deployment and management services, as well as consumer energy management devices, with its EcoMeter line of products.

5.1.12 Maestro Wireless Solutions (Fargo Telecom Group) Maestro Wireless Solutions (Hong Kong, China) is a wholly owned subsidiary of Fargo Telecom Group. Fargo was founded in 1980 as a Hong Kong trading firm and added quality control and equipment sourcing services for telecom equipment providers to its offering in 1994. In 2003, Fargo introduced its first dedicated M2M solutions (modems) under the Maestro brand and formally launched Maestro Wireless Solutions in 2007 to fully focus on offering products and services to the M2M market.

While Maestro is based in Hong Kong, it is active in more than forty countries globally through distributors and claims to have shipped approximately 150,000 modems through 2007. Maestro has seen significant traction in developing economies with harsh operating environments, such as Russia, India, and South Africa, but has more recently been making a concerted push into the North American market. The company currently has about forty employees based in Hong Kong, China, India, and Vietnam.

Maestro offers both off-the-shelf modems (FWT devices) for the M2M market as well as design and support services to its customers through its synergistic relationships with its sister companies in Fargo Telecom Group. For example, working with sister companies Smart Gears Ltd, Fargo Telecom Asia Ltd, and Fargo Telecom Technology Pvt, Maestro offers services around application design, development, deployment, and operation.


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Maestro’s off-the-shelf modem lines include the 100 Series, Industrial Series, and Heritage Series. These products are differentiated by specific features and functionality, with some functioning as modems/terminals and others serving as gateway/router devices. Strategically, the company is seeking to offer increasingly more specialized terminal devices, focused on the vertical market applications areas of: Health, Vehicle Remote Management, Automated Meter Reading, Monitoring and Control, Sales and Payment, and Home and Security.

5.1.13 Silver Spring Networks Silver Spring Networks (Redwood City, California) is a privately held smart grid system vendor. The company has approximately 200 employees and, while based in North America, is operating worldwide. Silver Spring’s current utility customers have an installed base of roughly 20 to 25 million meters. The company sells primarily to utilities, but also counts the US Defense Department as a customer for facilities and energy management functionality. Silver Spring profits through hardware and software sales, as well as professional services. Essentially, the company provides the network for a smart meter/smart grid implementation, including end points, routers, and network software.

Silver Spring focuses on providing this networking capability based on open standards, and argues that it can be an open third-party solution, in contrast to the customer buying both the meters and smart metering technology from the same vendor. Silver Spring end points can be integrated into the meters of leading vendors, such as Itron and Landis+Gyr. In July 2008, the company announced that PG&E had selected Silver Spring to implement the deployment of its smart metering technology.

In September 2009, Silver Spring Networks acquired Greenbox, a privately held home energy management system company founded in 2006 and headquartered in San Bruno, California. Silver Spring had partnered with Greenbox in a smart metering deployment for Oklahoma Gas & Electric in 2009. Greenbox provides a hosted web portal that enables consumers to track, understand, and manage their home energy usage and environmental footprint. This web portal can be hosted by Greenbox itself or by the utility deploying the DR program. The portal provides information on electricity usage and on gas and water usage as well. Greenbox had formed partnerships with Energate, the Radio Thermostat Company of America, and was open to other third-party device maker partnerships as well.

Greenbox's business model was to license its software to the utility deploying smart meters, but it also sold a gateway device directly to consumers that will hook into a home's electrical system and work like a second meter, transmitting real-time usage information to a PC. Greenbox supported the ZigBee short-range wireless standard to the smart meter as well as to other electrical devices within the home.

5.1.14 SmartSynch SmartSynch (Jackson, Mississippi) is a privately held company founded in 1999 as XP Technology Inc in Calgary, Alberta, Canada. Its customer base is primarily in the United States and Canada. The company focuses on smart metering technology for electrical utilities, mainly utilizing public networks, such as ReFLEX, and GRPS in direct, one-tier architectures. SmartSynch announced a Wi-Fi-enabled product deployment with Burbank Water & Power in October 2007 for a predominately C+I smart metering network in Burbank, California. The company’s SmartMeter System comprises modules that are embedded under glass with meter vendors such as Itron, Elster, and GE, and the Transaction Management System (TMS) at the utility’s head-end.


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5.1.15 Telenor Cinclus Telenor Cinclus (Fornebu, Norway) is a division of Nordic MNO Telenor, focused on managed services for utility smart metering deployments. The division was set up in 2003 to address the rapidly increasing Nordic smart metering market. It has approximately 190 employees. The company is most active in Sweden, Norway, and Denmark, although it also has activities in several other European countries including Hungary where its parent company, Telenor, has a presence. The firm also has a relationship with the Netherlands’ MNO KPN. Telenor Cinclus essentially manages utilities’ smart metering operations out of a network operations center in Lillehammer, Norway. The center collects meter data from assets in the field and transmits this data to the utilities’ back-end systems. The company is focused on open systems and can connect to a variety of third-party smart meters, either through its own communications modules or through third-party communications modules.

5.1.16 Trilliant Networks Trilliant Networks (Redwood City, California) is a privately held smart metering technology vendor founded in the 1980s. The company recently merged with OZZ Corporation, a Canadian provider of metering and energy management services for North American utilities. Trilliant focuses on the North American market and is said to have approximately 100 utility customers, including many involved in the Ontario smart metering deployments. Roughly 3 million smart meters have been deployed. The company provides smart metering technology and MDM software as well as meter development tools and middleware. Trilliant’s smart metering solution comprises a fixed RF mesh network topology utilizing IEEE 802.15.4 ICs and a proprietary adaptation of 6loWPAN. In addition, the company supports a range of WAN connectivity types, including GSM/GPRS and CDMA, and has introduced a ZigBee-based HAN portal, called the Trilliant Energy Management System for Consumers, as well as the Trilliant Energy Valet, an iPhone app.

5.2 Connectivity Service Providers 5.2.1 Aeris Communications

Aeris Communications (San Jose, California) is a privately held MMO founded in 1992. The company started offering its MicroBurst service via analog control channel connectivity in 1998 and transferred the service to digital cellular networks in 2003. The company offers GSM/GPRS- and CDMA-based M2M services directly in the North American market, including the United States, Canada, and Mexico. While Aerus resells GSM/GPRS air time, the company operates essentially as an MNO in delivering CDMA services. The Aeris strategy in North America is to offer connectivity directly to application providers and systems integrators. Elsewhere, Aeris offers MNOs advisory services and network elements tuned for M2M applications, essentially giving MNOs turnkey capability to launch their own M2M services. The company is particularly focused on the telematics and smart metering application markets.

In 2005, Aeris launched its AerFrame network services and application management platform, which provide its partners with APIs to customize the platform and access real-time provisioning, billing, diagnostics, and management functionality. AerFrame is essentially a framework that abstracts diverse radio network layers including different cellular networks, WiMAX, Wi-Fi, and satellite from the application provider and enables the provider to work off a single common platform. The Aeris service offerings, based on AerFrame, include MicroBurst, SMSDirect, Packet Data Services, eCallDirect, and AerCommand.

The company says that MicroBurst enables short data messages to be sent quickly with a high degree of reliability and reports that SMSDirect transmits messages with more speed and reliability than traditional SMS. eCallDirect enables a combination of event data over SMSDirect to be sent in coordination with the opening of voice channels, such as for emergency calls in


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telematics applications. AerCommand is a broadcast paging capability over the CDMA network targeted at utility applications needing low data rates at a low cost for a large number of end devices. Aeris is able to offer these services because it maintains its own network elements, rather than relying exclusively on its MNO partners.

5.2.2 AT&T Corporation AT&T Corporation (Dallas, Texas) is the second largest MNO in the United States by number of subscribers. The company has been active in the M2M market for a number of years, but has been largely quiet about its efforts until recently. AT&T has not referred to its telematics and telemetry activities as M2M, although this may change in the future. The company has a fairly large staff working on M2M activities, although these are generally cross-functional employees who are not focused exclusively on the M2M market opportunity. For example, the same employees and business units that take fleet management or POS connection services to market also work on such Business-to-Business (B2B) service offerings as package delivery notification.

The M2M business activities form part of AT&T’s Global Business Services division (that typically sells to large and medium-sized enterprises) with most subscriber metrics reported under AT&T’s “unbranded” services, which has the effect of keeping relatively low M2M ARPU subscribers separated from more traditional wireless service. AT&T has aggressively staked out a position in certifying specialized vertical devices, with over 200 devices certified to date.

The company essentially has three go-to-market models. In a co-selling arrangement, AT&T and a partner engage in joint sales and market activities and customer support. AT&T bills for wireless services and the partner bills for the application and professional services. In a VAR arrangement, the partner resells AT&T Mobility data services, although in some cases, the customer has an existing agreement with AT&T for other services and the customer may prefer to source wireless connectivity directly from AT&T in a manner similar to the co-selling arrangement. Both co-selling and VARs are handled through AT&T’s Business Alliance program.

AT&T also sells M2M connectivity directly to end customers along with applications that it sources from ASP partners. The company has a large direct sales force active in this area on a cross-functional basis. In this third model, AT&T essentially sells end-to-end managed services to customers, consisting of third-party (ASP partner) software and devices along with AT&T wireless connectivity. AT&T bills the customer for the software, devices, and services. The ASP partner is compensated in various ways, which could entail licensing fees or revenue sharing.

An integral part of AT&T’s M2M strategy is its self-service Enterprise on Demand (EoD) portal for customers. The portal was developed internally at AT&T more than ten years ago as a web services platform that can be accessed either through a web portal or tied directly into customers’ enterprise management and database software. The company says that the portal enables the customer to interact with AT&T in an efficient manner. For example, the customer may buy additional SIMs or manage many service attributes directly, related to provisioning and billing. With its tight IT-network integration, and available web services integration, AT&T says that EoD enables operational efficiency and low management costs for all parties, which is critical for serving the low ARPU M2M market. As a complement to the EoD portal, AT&T and Jasper Wireless announced a partnership in May 2009, in which the Jasper Wireless service platform will be made available as an option to AT&T customers.

AT&T is focused on a number of application verticals, many with M2M components. It has traditionally been most involved in fleet management, with OEM telematics, alarm monitoring, and POS also as key segments. (The company now has BMW as a client in terms of OEM telematics.) New segments include Healthcare, Industrial Monitoring, and Utilities. AT&T recently announced a co-sell agreement with Itron, a key utility meter vendor and smart metering services application provider.


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5.2.3 CrossBridge Solutions CrossBridge Solutions (Lincolnshire, Illinois) is a privately held MVNO founded in 1993. The company was originally created as the ARDIS DataTAC network, in collaboration with Motorola and IBM, to enable connectivity for IBM field service technicians. The company later changed its name to Motient and became CrossBridge Solutions after its 2006 acquisition by GeoLogic Solutions. GeoLogic Solutions was a leading provider of “18 wheeler for hire” fleet management solutions and had been Motient’s major customer.

In 2004, Motient announced that it was shutting down its DataTAC network and negotiated master reseller deals with Sprint and the original AT&T Wireless to become an M2M-focused MVNO. GeoLogic decided to gain more control over this transition by purchasing the remaining DataTAC towers, and the iMotient MVNO portion of Motient, subsequently changed the name of this entity to CrossBridge Solutions. In January 2008, in a consolidation in the fleet management industry, XATA Corporation, a leading provider of private fleet management solutions to companies such as Safeway Foods and SYSCO Foods acquired GeoLogic Solutions.

CrossBridge Solutions is currently a master reseller of the Sprint, AT&T Mobility, and Orbcomm (satellite service) networks. The company is run as a separate division within XATA Corporation. In addition to its direct focus on remote monitoring, asset tracking, AVL, and medical applications, it provides network connectivity for XATA Corporation’s acquired public fleet management solutions (the former GeoLogic Solutions business). However, XATA Corporation’s original private fleet management solutions business has a separate connectivity deal negotiated directly with Sprint. CrossBridge Solutions focuses on the US market, though its devices are able to roam onto networks in Canada and Mexico.

5.2.4 Jasper Wireless Jasper Wireless (Sunnyvale, California) is a privately held MMO founded in 2004 with venture capital from Sequoia and Benchmark. Jasper Wireless is currently active in more than sixty countries and is expanding at a rate of five countries per quarter. The company focuses on traditional M2M applications, such as vehicle telematics as well as adjacent markets including navigation and embedded CE devices.

Jasper Wireless has significantly changed its strategy over the course of 2008 and 2009. Originally, the company offered connectivity services directly to application provider customers and focused on differentiating its offering through a global SIM that supplied roaming connectivity at local rates as well as the sophistication of its service delivery platform, in providing such functionality as flexible rate shaping. Now, the company focuses on offering its platform as a turnkey service to MNO partners that want to enter the M2M market quickly without a great deal of internal development work. With this offering, Jasper Wireless provides technology, marketing, and subject matter expertise to its MNO partners. Currently, the company has announced partnerships with KPN in Europe and AT&T in the United States.

5.2.5 KORE Telematics KORE Telematics (Reston, Virginia) is a privately held MVNO serving the North American GSM/GPRS (including SMS, EDGE, and HSPA) and CDMA markets with what it says is reliable, fully digital, standards-based wireless connectivity for data, video, and voice. KORE works with AT&T Mobility and Verizon Wireless in the United States and Rogers Communications in Canada, and has a global reach in over 200 countries. The company is currently serving more than 550 ASPs, and targets the key M2M segments of telematics, security, asset tracking, EPOS, vending, and AMI, with special expertise developed in the vertical markets of government, security, and utilities (with more vertical market specialization areas to come).


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Although the company’s core area of operations is in North America, KORE Telematics does have multinational customers operating worldwide. The company is a founding member of the m2mGlobal Alliance, which was launched in 2008 to offer global coverage, with local support, for multinational M2M applications. The alliance focuses on offering native (Tier One) connectivity in major markets including North America, Europe (including the United Kingdom), and Australasia. Roaming connectivity is provided in secondary markets, from the Tier One base, for access to all regional operators, and to ensure secure, long-term roaming capabilities when not in native connectivity mode.

The company offers a web-based self-management gateway platform to its partners called PRISM, and has implemented redundant network service centers in the United States and Canada for what it says is highly reliable service delivery. KORE Telematics is the only M2M provider that is a voting member of the PCS Type Certification Review Board (PTCRB) and is working to influence and educate this important mobile device certification body on the specific needs of M2M device certification. In addition, the company is able to self-certify devices on Rogers’ network in Canada. KORE Telematics has introduced a number of innovative service offerings including low cost tariff models for exception-based applications where the tariff is spread across the data used by all of a customer’s remote devices as well as an ultra high use 3G offering for services such as video surveillance.

5.2.6 Mach Communications Mach Communications (Kensington, Australia) is a specialist M2M connectivity service provider. The privately held company was founded in 2003 and launched into continuous service in 2006. The company provides services over the Vodafone Australia network, other networks in Australia, New Zealand, Asia, and the Orbcomm M2M satellite network and contends that it is the largest non-MNO M2M service provider in Australia. The company's key M2M application focus areas to date have been the health sector, utilities, asset tracking and courier dispatch, and security and asset monitoring. The Mach Communications’ strategy is tied to its founding membership in the m2mGlobal Alliance along with partners KORE Telematics and several other firms across the globe. The alliance enables its members to offer global services at local rates and with localized customer care.

5.2.7 NTT DoCoMo NTT DoCoMo (Tokyo, Japan) is the Japanese incumbent mobile operator. It is directly involved in the Japanese M2M market and is active in certain international M2M markets through its investment in the MVNO Telargo. NTT DoCoMo entered the M2M market to expand beyond cellphone service, which is reaching saturation in Japan. Although the company’s efforts span the organization, a dedicated M2M team resides in the corporate marketing division. The company offers direct M2M services to its customers in the areas of AMI, EPOS, vending, fleet management, remote monitoring, pet and personal tracking, and remote content delivery. NTT DoCoMo offers services over both its 3G FOMA (WCDMA) network and its 2G DoPa (PDC-P) network. The company supplies customers with its own modules that it calls “ubiquitous” and terminal equipment. The company provides integration and deployment support as well as after-sale service and support, in addition to its connectivity business.

5.2.8 Numerex Corporation Numerex Corporation (Atlanta, Georgia) is a leading US-based communications provider for cellular M2M services, with about 140 employees. Like KORE Telematics and Wyless, Numerex resells radio network access from mobile operators to ASPs. However, the company is in the process of deploying its own network elements, making it an MMO, as opposed to an MVNO. Numerex has reorganized into three divisions: Networx, which offers GSM/GPRS, CDMA 1xRTT, and satellite connectivity; Techworx, which provides modules and modems along with other M2M


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components and equipment; and Flexworx, which provides consulting and support services as well as application-specific M2M service offerings, such as its Security Solutions Division (branded as Uplink), Satellite Solutions Division (branded as Orbit One), Asset Management Solutions (branded as FastTrack), and Mobile Solutions (for vehicle tracking). Numerex focuses on the North American market, although its satellite coverage is global.

Unlike other MMOs and MVNOs, Numerex has directly entered some application markets. This is the case with the security vertical, where Numerex participates in the market with its Uplink solution. Uplink offers full-featured security including modem equipment and back-office support targeted mainly at independent security dealers who are served through a network of Uplink distributors. Uplink competes against Telular, Alarm.com, and Honeywell’s AlarmNet, although, in a sense, it also competes with Aeris, Jasper Wireless, and KORE Telematics when those companies pair up with security application providers.

5.2.9 Orange Business Services Orange Business Services (Paris, France) is the customer-facing enterprise solutions division of France Telecom. Orange includes an M2M services group initiated in 2002. Orange is currently focused on providing M2M services based on mobile connectivity in France, the United Kingdom, Belgium, Poland, and Spain, among other countries. In May 2009, France Telecom designated its Belgian subsidiary, Mobistar, as the International M2M Center (IMC) for the France Telecom Group as a whole. The IMC organization will reside within the Orange Business Services M2M group. Essentially, each country’s business unit is being encouraged to develop M2M businesses, which will be supported by the IMC technologically, and in cases where the M2M customer scales, internationally.

In addition, Orange is a member of the FreeMove Alliance (FMA), a primarily European organization seeking to reduce roaming tariffs that includes T-Mobile, TIM, and TeliaSonera. An M2M working group within the FMA and FMA members have agreed to cross-provide M2M connectivity, enabling customers to access services on the other carrier members’ networks at local rates and with local customer service, without incurring international roaming charges.

International services managed by the IMC and local M2M business operated by the country-level business units are the first two pillars of Orange’s M2M strategy. The third is providing direct custom and packaged M2M service offerings on a case-by-case basis in select markets. Orange Fleet Link is the company’s first packaged M2M service and is targeted at fleet management applications. Other specific applications being evaluated as potential offerings include equipment monitoring, PAYD insurance, telesurveillance, environmental monitoring, and health solutions. As part of Orange’s development efforts, the company offers a web-based middleware platform for customers. The company has also created a dedicated M2M SIM that it says is longer lasting than the traditional SIM and is planning to launch a reinforced SIM dedicated to M2M that will also support extreme temperatures, vibration, and so on.

5.2.10 Rogers Communications Inc Rogers Communications Inc (Toronto, Ontario, Canada) is the largest Canadian MNO based on number of subscribers. It operates the nation’s only coast-to-coast GSM/GPRS-family network. The company has been involved in telemetry and telematics applications since the 1990s when it launched a Mobitext network. Rogers initiated GSP/GPRS-based M2M services in 2003. Rogers segments its M2M services between telematics and M2M (telemetry).

The company sees its strength as providing the underlying GSM/GPRS connectivity for application provider partners to supply services to end customers. Rogers views M2M as a strategic service offering that differentiates the carriers from those who provide only voice and


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traditional data services. M2M can also give Rogers entry into new accounts for additional telecommunications services. In November 2009, Rogers announced a partnership with Jasper Wireless to use Jasper’s platform to enable connected CE and M2M device come to market.

Rogers is increasingly seeing the need to “front” its application provider partners with branding and support to reassure the end customers. Essentially, Rogers will work with two or three partners that it recommends in a given application area, providing network connectivity and marketing, while the application provider partner supplies the hardware, application software, and expertise to enable the application. Rogers is currently doing this with fleet management, under the mFleet brand, and may extend this strategy to telemetry applications. A crucial element is to develop a replicable turnkey solution with its partners to benefit multiple end customers by controlling their costs. In addition, the company currently works with a small number of MVNOs, but notes that the MVNO/master reseller model has not really gained traction in Canada, primarily since nationwide connectivity directly from the MNOs is already available.

5.2.11 Sprint Sprint (Overland Park, Kansas) is one of the few MNOs to announce WiMAX as its 4G strategy, but believes 4G will be well-positioned to service the M2M market, with up to ten times the spectral efficiency of CDMA EV-DO. In 2008, Sprint transferred its WiMAX network infrastructure to Clearwire, in which Sprint is a major shareholder, along with Intel and others. Sprint WiMAX customers including those using M2M will be served through the Clearwire network. In July 2009, Sprint announced an outsourcing contract with Ericsson in which the latter company will assume day-to-day operation of the Sprint CDMA and iDEN networks. This deal is not expected to impact the M2M business in any material way. It should be noted that Sprint does not set aside specific hardware network elements to service its M2M traffic; all M2M traffic runs over and through the core voice/data network infrastructure.

In October 2009, Sprint announced its new Emerging Solutions business unit. The company serves the M2M market through four separate channel strategies: open, wholesale, indirect, and direct. In the open approach, Sprint will quickly certify a device to the network, with no further partnering with the device or application vendor. In the wholesale model, MVNOs and larger corporate clients (application developers) partner with Sprint to offer their own branded services in which Sprint is completely transparent to the end customer; all marketing, sales, service, and support are derived from the partner, with only the underlying network connectivity provided by Sprint.

In the indirect model, a reseller/application provider resells Sprint’s data services to its customers, activates services on behalf of the customers, and monthly bills come from Sprint. In the direct model, Sprint’s sales force co-sells and co-markets services in conjunction with partners, and searches for opportunities for those partners. Sprint bills customers directly for services, while the partner bills for hardware, software, and any related consultative support.

The direct model is the highest priced option, because the Sprint sales force receives commissions for actively bringing in new business. Sprint identifies and works with specific partners for particular vertical market opportunities. Currently, more than 50% of the company’s M2M sales are generated by direct sales.

5.2.12 Swisscom Swisscom (Bern, Switzerland) is the incumbent fixed-line and MNO in Switzerland. The company provides mobile service to approximately 4,300,000 out of a total of 6,500,000 Swiss mobile subscribers. Primarily active in the Swiss market, the firm has some ancillary businesses in Italy (via its acquisition of broadband services provider FastWeb) as well as Southeast and Eastern Europe and the United States.


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Swisscom had a fairly conservative approach to M2M until late 2007; prior to this time, the company mainly confined its M2M business to selling SIM cards with special data rate pricing plans. However, in 2007, the company decided to enter the market more aggressively and now has a dedicated M2M organization within the corporate B2B unit that has a mandate to build an M2M service to provide customers with more value than a simple data pricing plan. The company’s main areas of focus are transport (trucking), utilities, and vending machines. (A separate group within Swisscom provides cellular connectivity for POS terminals.) The company believes it can create a profitable business in data management and data hosting of customers’ globally distributed M2M devices.

5.2.13 Telefonica O2 Telefonica (Madrid, Spain) is a leading international fixed-line and mobile operator, active in Spain and twenty-four other countries in Europe, Latin America, Asia, and Africa under the Telefonica, movistar and O2 brands. The company is organized into three main groups to address each of these areas: Telefonica Espana, Telefonica Europe, and Telefonica Latinoamerica. The firm’s M2M activities are centered within the Telefonica Espana organization, although Telefonica Europe is involved in automotive and fleet management services in the Czech Republic and Slovakia. It is important to note that Telefonica has employees dedicated to M2M marketing and sales in all of its operational regions, not just in Spain. The company is primarily active in security alarms, AMI, EPOS, elevators, and e-Health, among other areas.

Telefonica’s M2M offering is marketed under the Mundo Maquina (Machine World) brand. The company is one of the most directly involved MNOs in the M2M market. Telefonica provides a turnkey one-stop shop solution designed to provide customers with everything from the module/modem and a global SIM to the application. Customers connect to the Mundo Maquina service either directly through Access Point Name (APN) gateways in an offering called Easy M2M or indirectly through a web services interface to a Telefonica Smart M2M platform server, in an offering called Smart M2M. The company enables M2M connectivity through either fixed-line or wireless connections and supports multiple wireless technologies, in addition to cellular including ZigBee, Wi-Fi, satellite, and Near Field Communication (NFC).

The company has also simplified its tariffs for M2M, bundling connectivity and applications into a single fee based on usage. These profiles and rates include M2M Basic, M2M Medium, M2M Plus, and M2M Night. In addition, the company offers M2M-dedicated test laboratories and a Global Center of Excellence Program for partners.

5.2.14 Telenor Group Telenor Group (Oslo, Norway) is a mobile operator active in thirteen countries in Europe and the Asia-Pacific region. The company entered the M2M market in 2000 with its Telenor Sweden business unit acting as the telematics and M2M competence center for the Group. However, most of the market growth has been since 2006. At first, Telenor Sweden sought to offer customers a great deal of vertical specialization, but more recently, changed its focus to a more horizontal strategy, targeted on optimizing the underlying communications networks for M2M. The key aspects include a single global embeddable SIM card optimized for M2M; automated provisioning with charges starting when the SIM cards are actually used in-field; service-level agreements; the Telenor M2M Platform as a management console; a dedicated M2M testing facility; and around-the-clock support service.

Telenor’s M2M efforts have undergone a more radical strategic shift since October 2008, when Telenor Connexion, a wholly owned subsidiary, was established to pursue large-scale multinational M2M opportunities as well as to serve as the Group’s new M2M competence center. Most Telenor Sweden M2M employees have been transferred to the Telenor Connexion.


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Individual Telenor business units will continue to pursue their own localized M2M deals with the assistance of Telenor Connexion technical support. Telenor Connexion will have its own dedicated network elements for M2M connectivity.

The company’s key M2M market segments are smart metering, security, automotive telematics, and remote monitoring. Telenor is starting to see strong growth in fleet management and asset tracking. In addition, the Group has a majority interest, along with Norwegian power grid company, Skagerak Energi, in Telenor Cinclus, a smart metering ASP that offers turnkey AMI data management for utilities and utilizes the Telenor network. In June 2009, the Group established Telenor Objects as a wholly owned subsidiary to focus on developing an application middleware platform above the communication layer to facilitate M2M application management across cellular as well as other types of network infrastructure, such as RFID.

5.2.15 TELUS TELUS (Vancouver, British Columbia, Canada) is the incumbent telecommunications service provider in Western Canada, formed in 1999 by the merger of two telcos. The company has a roaming agreement with fellow CDMA operator Bell Canada’s wireless infrastructure, and provides services across Canada and internationally, competing most directly against Bell Canada and Rogers Communications. TELUS has approximately 35,000 employees and 5,600,000 wireless subscribers. The company has decided to deploy an HSPA network in advance of a planned upgrade to LTE as its 4G technology choice. TELUS has publicly stated that it will maintain its existing CDMA network infrastructure at least through 2013. TELUS plans to use the HSPA network extensively for M2M and embedded CE device connectivity.

TELUS has launched an M2M initiative, under the direction of a newly appointed National Program Manager — Wireless M2M. Although the company had limited M2M activities prior to the launch, these were specific custom engagements with enterprise customers, focused on the oil and gas sector in Alberta, Canada, as opposed to ongoing programs. Under the wireless M2M program, TELUS is utilizing two channel strategies. In the first, the company works with dedicated ASP partners to bring applications to market. This is similar to the approach of many other telcos. In the second, TELUS wants to work with large end customers (typically utilities for AMI applications) to directly provide connectivity. TELUS does not have current agreements to supply connectivity to MVNOs directly, but it is exploring this option; it does have roaming agreements with some M2M-focused service providers.

5.2.16 Verizon Wireless Verizon Wireless (Basking Ridge, New Jersey) is the largest MNO in the United States and is a JV between US-based wireline carrier Verizon Communications and Vodafone. Verizon Wireless has been involved in the M2M market for over a decade, providing the cellular networking enabling the GM OnStar consumer telematics service. However, for most of this time, the company has tended to have a relatively arm’s-length approach to the market — serving as a wholesale connectivity provider to third-party aggregators, such as MVNOs and master VARs, or else directly serving only the largest corporate customers, such as GM.

Starting in 2007, Verizon Wireless made two significant moves to enter the M2M market more directly and comprehensively. First, the company announced its Open Development Initiative (ODI), which enables device developers to rapidly certify their products on the Verizon Wireless network, shortening what would normally be a twelve-to-eighteen-month process down to four weeks or less. While the ODI program is open to all device developers, many of the initial devices certified through the program have been intended for M2M applications. Additionally, ODI introduces several new business relationship models for Verizon Wireless to work with partners.


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In a retail model, the partner markets and distributes a product and Verizon Wireless activates services and develops a billing relationship with the partner’s customer, in addition to assisting with network customer support. In a wholesale model, the partner certifies the device, either through Verizon Wireless directly or through a third-party certification house, buys wholesale connectivity from Verizon Wireless, and develops its own distribution, activation, billing, and support relationship with the customer, with some network support assistance from Verizon Wireless. Essentially, the retail model enables the partner to make a margin on the device itself, while the wholesale model enables the partner to also become part of the service value chain, making a margin on the connectivity. ODI enables a custom option for additional flexibility in developing a business model as well.

In July 2009, Verizon Wireless and Qualcomm announced a fifty-fifty joint venture to transform the Qualcomm Enterprise Services (QES) into a separate M2M platform and professional services company. The JV (still unnamed as of this writing) will not be tied to either Qualcomm devices or Verizon Wireless connectivity, but will be free to pursue other partnerships. The JV has its heritage in the acquisition of nPhase by Qualcomm in 2006. nPhase developed a robust platform for provisioning and managing devices on cellular and wired networks, as well as a professional services capability to help partners bring applications to market.

The nPhase/QES unit worked both as an MVNO and Mobile Virtual Network Enabler (MVNE) in regards to network connectivity. For example, it provided connectivity directly to CardioNet for that company’s cardiac monitoring solution. With Amazon’s Kindle product, nPhase/QES provided network enablement services, while Amazon contracted directly with Sprint for connectivity. Since the acquisition by Qualcomm, the nPhase/QES business unit has integrated network elements, such as Home Location Registers (HLR) and Smart Mixed-Signal Connectivity (SMSC), directly into its infrastructure. In its relationship with Verizon Wireless and other MNO partners, the JV will essentially act as an enablement platform and professional services unit.

5.2.17 T-Mobile USA T-Mobile USA (Bellevue, Washington) is the US operating entity of T-Mobile International AG & Co, the mobile communications subsidiary of Deutsche Telekom AG & Co. Deutsche Telekom is the incumbent German carrier and one of the largest global telecommunications companies, claiming 80 million customers worldwide. T-Mobile USA’s M2M activities were formerly conducted by its VAR Group, whose principal focus was M2M, but these activities are now managed by a dedicated T-Mobile M2M group within the firm (T M2M). The head of T M2M is in close contact with counterparts at five or six other T-Mobile country-level M2M organizations, but each is independent and charting its own market strategy. T M2M is focused on gaining rapid traction in the M2M market and becoming the easiest MNO to work with for M2M application providers.

T-Mobile is actively striving to create standards for M2M and has developed its own embedded SIM that it is proposing for ETSI standards consideration. The company is also working with other MNOs to create better M2M roaming rates. The company has traditionally worked through MVNOs and master resellers, such as RACO Wireless. However, with the change to the T M2M organizational structure, T-Mobile USA is now also serving M2M ASPs directly. The three areas the company sees as most promising are telematics, asset monitoring, and home security.

5.2.18 Vodafone Group Public Ltd Co Vodafone Group Public Ltd Co (London, United Kingdom) is the world’s largest MNO by revenue, with direct operations in the United Kingdom, Germany, Spain, Italy, Australia, and New Zealand, and indirect operations around the world through subsidiary undertakings, JVs, associated dealings, and investments. One example of an associated undertaking in the United States is Vodafone’s JV with Verizon in creating Verizon Wireless. Vodafone has had country-level M2M


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operations active for several years, and now is offering global M2M services through the company’s Global Enterprises division, which oversees the firm’s relationships with multinational corporations and customers with large scale opportunities.

Vodafone has set aside dedicated network elements for the M2M business and created a global M2M service platform. The company is seeing significant opportunity in smart metering, telematics, and product-to-service offerings by large OEMs, although the company is also active in a range of other M2M application areas. However, Vodafone focuses on the network connectivity aspect including professional services to aid the customer in planning and launching services, rather than on the applications directly.

5.2.19 Wyless PLC Wyless PLC (Uxbridge, United Kingdom) is a privately held M2M alternative connectivity service provider that bills itself as an M2M Global Network Enabler. The company was founded in 2003 and currently has about forty employees. Wyless maintains offices in the United States, Sweden, Spain, Israel, and Pakistan in addition to its UK headquarters. In 2Q 2009, the company announced its eighth consecutive quarter-on-quarter revenue growth.

Wyless’ core focus is providing a connectivity management platform and professional services on top of globally available connectivity for its M2M ASP and end-customer clients. The company works in partnership with the T-Mobile Group and the Telefonica/O2 Group to provide cellular connectivity and value-added services to over 500 customers in more than 120 countries. The company connects to its carrier partners’ networks through APN gateways, while maintaining its own RADIUS servers. In addition to GSM/GPRS connectivity, the company also enables fixed-line and satellite connectivity.

Customers access the Wyless network through the Porthos portal, a web services portal that can be accessed as a web site or integrated into the customer’s own back-end reporting systems. Wyless offers both a global roaming SIM as well as fixed SIMs at local rates. The company is looking into offering embedded SIMs. The firm’s key end application services include fleet management, remote monitoring, ATM/POS, retail worker mobility using PDAs, and digital road signage, among others. The company is examining the possibility of offering its software as a service to MNOs.

5.3 Module Vendors 5.3.1 AnyDATA

AnyDATA (Irvine, California) is a privately held embedded cellular module and device vendor with offices in the Asia-Pacific region and Latin America and approximately 350 employees. The company’s products include smartphones, modems, modules and routers, and tracking devices. AnyDATA has been making embedded cellular modules for about ten years, using Qualcomm as its sole chipset supplier. When Qualcomm introduced WCDMA/HSPA products, AnyDATA introduced such products as well. The company’s modules are standardized on the MiniCard form factor. AnyDATA is selective about its customers and targets high volume opportunities. AnyDATA has no present plans to integrate SRW functionality into its modules. The company has seen significant gains with its tracking products.

5.3.2 Cinterion Wireless Modules Cinterion Wireless Modules (Munich, Germany) was formerly a part of Siemens AG’s Automation and Drives division, but was acquired by private equity investors Granville Baird and T-Ventures (the venture capital arm of T-Mobile) in a deal completed in June 2008. As Siemens Wireless Modules, and now as Cinterion, the company has been the industry’s embedded cellular M2M


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module market share leader on both a unit shipment and revenue basis every year since 2003, when ABI Research first started tracking the market. This trend continued in 2008, when the company represented approximately 27% of total industry unit shipments.

Cinterion provides modules using the GSM/GPRS, EDGE, and WCDMA/HSPA air standards and targets virtually all M2M application areas including telematics, ATM/POS, tracking and tracing, home security, remote monitoring, and telemedicine along with industrial PCs and PDAs and cellular-enabled routers and gateways.

The company organizes its modules into four product families: Evolution, Focus, Verticals, and Terminals. Evolution is the newest product family and includes LGA form factor modules introduced in 2009. The Focus family includes older generations of connected HSPA, GSM/GPRS, and EDGE modules. The Verticals family comprises environmentally hardened modules suitable for automotive and tracking applications. Finally, Cinterion also offers a line of modems in its Terminal family.

Two key announcements in 2009 included the October introduction of a UMTS-only module, the EU3. The EU3 works on the newly opened 900 MHz UMTS band in Europe and is targeted at utility applications. Second, a partnership agreement with module vendor Novatel Wireless, announced in November, offered both GSM family (Cinterion) and CDMA family (Novatel Wireless) embedded modules using the same form factor to ease the development burden on OEMs using both partners’ modules.

5.3.3 Enfora Enfora (Richardson, Texas) is a privately held company created in 1999 as a spinoff of the wireless division of iNet Technologies. Enfora operates primarily in North America, Latin America, and Europe, although the company has also established a presence in Asia-Pacific and the Middle East and Africa. The company has exclusively sourced cellular baseband ICs from Texas Instruments in the past, and has a contractual supply agreement with TI through 2012 and options to extend beyond then. Enfora offers three module families: the Enabler II, Enabler III Low Power, and Enabler III. The Enabler II comprises GSM/GPRS or EDGE devices. The Enabler III Low Power consists of a GSM/GPRS module that integrates GPS functionality and draws less than 10 mA in an idle state. Finally, the Enabler III comprises GSM/GPRS/EDGE devices that come in either connected or BGA form factors.

Strategically, the company is increasingly moving its focus away from pure module sales to integrated platforms, services, and middleware. Enfora’s integrated platforms include modem and router equipment that the company builds using its own embedded modules and software. Examples of these include the Spider and MT platforms used in vehicle and asset-tracking applications. Additionally, Enfora can help vertical OEMs get to market quickly through the company’s custom design and integration services, in which Enfora designs integrated systems for the OEM customer using its own components and then either manages manufacturing directly or turns the designs over to the customer to manage. Finally, Enfora offers gateway software that enables customers to abstract the underlying cellular network from their enterprise back-end infrastructure.

5.3.4 Huawei Technologies Co Ltd Huawei Technologies Co Ltd (Shenzhen, China) was founded in 1988 and is now one of the largest telecom equipment vendors in the world, with sales in over 100 countries globally. The company has aggressively moved into the cellular PC connectivity market and, along with Ericsson and Qualcomm, has been increasingly taking market share in part through bundling its cellular modems with its telecom equipment sales to mobile operators. In 2008, Huawei entered


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the M2M embedded cellular module market and quickly gained significant traction, claiming slightly over 1 million modules shipped in M2M applications in that year. Indeed, other module vendors and other members of the M2M value chain have indicated to ABI Research that they view Huawei as one of the most significant new factors in the market, with the potential for radically reducing the overall pricing structure of the M2M module industry.

The majority of Huawei’s M2M module sales to date are in China, although the company has also seen success internationally, in Japan with NTT DoCoMo, and in Australia with Telstra. The company is focusing on Europe and North America as well. Huawei provides products using the GSM/GPRS, WCDMA/HSPA, and CDMA air standards, and is targeting modules for all M2M application areas.

5.3.5 iWOW Technology iWOW Technology (Singapore) is a privately held company founded in 1999. iWOW is organized as a holding company (iWOW Technology) that owns two business units: iWOW Communications and iWOW Connections. iWOW Communications is a design house that primarily assists handset OEMs with the design of mobile handsets, in terms of hardware, software, and firmware. iWOW Connections is a product OEM organization and is the center of iWOW’s M2M business, with about thirty-five employees. The company focuses on GSM/GPRS, EDGE, and WCDMA/HSPA air standard technologies and currently uses TI as its sole supplier, though the company has a transition plan in place for the time that TI finally closes down its cellular baseband IC business in approximately three years. All of iWOW’s modules are connected at present, although the company is investigating various surface mount form factors. In addition, the company is developing ZigBee-based products.

iWOW’s strategy is essentially to be a “fast follower” — it works with technologies already established in the market place. Most of the company’s modules are sold in the Asia-Pacific region (China and India, primarily), as well as in Europe and South Africa. The company focuses on AMI, defense and homeland security, home security, vehicle tracking, ATM/POS, and SCADA-type remote monitoring. In the future, the company will increasingly target AMI, government-related projects, and automotive OEM telematics. The company, overall, is fairly selective in its client base and seeks to work closely with a smaller number of customers, rather than sell through distribution channels or compete on price.

5.3.6 Motorola M2M Wireless Modules Motorola M2M Wireless Modules (Tel Aviv, Israel) is a cross-functional division within Motorola Inc. It develops and sells wireless modules both to external customers and to internal divisions within Motorola. The division offers a full line of iDEN, CDMA, and GSM-family modules. In September 2008, the company announced the X24 WiMAX module and in February 2009, it introduced the G30 GSM/GPRS modules in the LGA surface-mount form factor.

Motorola’s wireless module sales are targeted evenly across all major geographies. Slightly over one-third of sales are in North America, followed by Europe and Latin America. Sales to Latin America are growing strongly, and Asia-Pacific is also a significant region for Motorola. The Middle East and Africa is the only region with less than double-digit percentage unit sales for the division. The company has a strong telematics presence; roughly half of its shipments are to telematics and AVL applications. BMW is a key end customer.

In 2006, the Motorola Automotive Business Unit was sold to Continental AG. However, the Automotive Business Unit was an internal customer of Motorola Wireless Modules, and that relationship continues even though Continental AG is now an external customer. The rest of Motorola’s business is divided among telemetry and WLL applications, such as AMI, vending, and ATM/POS.


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5.3.7 Sierra Wireless Sierra Wireless (Richmond, British Columbia, Canada) was founded in 1993 and became a publicly traded company in 1999. The firm is primarily a vendor of CDMA EV-DO and WCDMA PC Cards, USB modems, and embedded modules for notebook PCs. However, Sierra Wireless is increasingly seeking to leverage its notebook PC 3G connectivity experience to serve the M2M market. The company acquired AirLink Mobile in 2007 to enter the M2M terminal/modem market and in February 2009, the company successfully completed its acquisition of Wavecom.

The addition of Wavecom expands Sierra Wireless’ activities in the M2M space into the broader 2.5G segment of the market and, consequently, expands the range of M2M applications that the company now serves. While previously, Sierra Wireless had been focused on niche high data rate applications, such as remote digital signage, the company now serves other markets, such as AMI and remote monitoring. In addition, although Wavecom had a difficult 2008, it was still the second largest player in the M2M module industry, behind Cinterion, and in 2007, was nearly the same size as Cinterion, in terms of unit sales. Consequently, the acquisition greatly expands the sheer size of Sierra Wireless’ activities in the M2M market.

The combined company benefits from a number of factors. Wavecom brings Sierra Wireless a greater international M2M distribution channel, while Sierra Wireless can leverage its traditionally stronger mobile operator relationships in promoting its expanded M2M business. The larger company benefits from expanded sales volumes by combining both M2M and the traditional PC connectivity business to drive down supply costs. Also, both companies were oriented toward a differentiation strategy that leads to a good cultural fit. Sierra Wireless brings advanced 3G technology, while Wavecom brings its Anyware Technology software development arm, the inSim embedded SIM technology, IDS, and Star Service offerings.

Both parts of the company boast a heritage of equipment design and development services. A key challenge will remain for the new Sierra Wireless: the same large multinational vendors — Huawei, Ericsson, and Qualcomm — that led Sierra Wireless to seek relief in the more and more competitive PC connectivity market are now increasingly entering the M2M market.

5.3.8 SIMCom Wireless Solutions SIMCom Wireless Solutions (Shanghai, China) is a wholly owned subsidiary of the SIM Technology Group, founded in 2001. SIMCom Wireless Solutions sells the vast majority of its modules to the Asia-Pacific market, although the company does ship some modules to the European market as well. Most of the company’s modules are used in FWT applications, although the firm also has traction in the AMI, remote monitoring, and security segments. The company ships both GSM/GPRS (the SIM300D and SIM340D modules) and WCDMA/HSPA (the SIM5218 module) devices in addition to a TD-SCDMA module. SIMCom Wireless Solutions also offers the GT300 Personal Tracking Device.

SIMCom Wireless Solutions is representative of the key market factors placing tremendous pressure on gross margins in the cellular M2M module industry, due to competition from Asia-Pacific-based module vendors that are able to offer products at extremely low price points. SIMCom Wireless Solutions stresses that only half of this advantage is a result of its physical location in China, with lower labor and physical infrastructure costs. The company argues that the other half is derived from organizational operational efficiencies.

For example, R&D is done by small teams, each with long collaborative experience working on a total solution, as opposed to a larger assembly-line process. The company sees its key value in being able to more efficiently and cost-effectively develop solution designs, consolidate component sourcing, and deliver modules to customers, so that these customers do not have to


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develop connectivity solutions on their own. The parent company ships a vast number of handsets on an ODM basis, giving the company great leverage in its sourcing and supply chain, which it positions to the advantage of its customers.

5.3.9 Telit Communications Telit Communications (Trieste, Italy) is a publicly traded wireless module vendor that operates three wholly owned Telit Wireless Solutions regional operating companies in North America, Latin America, and Asia-Pacific, in addition to the company’s business in Europe. The company provides GSM/GPRS, WCDMA, and CDMA 1xRTT modules, and also has a WCDMA module that is backwards-compatible with EDGE, although EDGE has never been a strong focus for Telit, which believes that the market will shift from GSM/GPRS directly to 3G technologies. In addition, the company focuses heavily on highly integrated modules that combine complementary technologies like GPS, and will increasingly incorporate other functionality, such as ZigBee and Wi-Fi. While the company strives to keep form factors stable across product families for the benefit of the customer, this has not stopped product innovation, and Telit has launched a BGA form factor module in addition to its connected products.

In Europe, Telit targets the automotive, telematics, AMI, POS, personal tracking, and security segments, followed by niche fixed-telemetry applications. In North America, Telit focuses on telematics (particularly fleet management), AMR), and security. In the Asia-Pacific region, Telit is concentrates on telematics, OEM automotive, POS, and embedded laptop connectivity. Most recently, the company has introduced its Infinita offering, which essentially seeks to offload module device management functionality from customers and offer it as a managed service.

5.4 Other Key Smart Metering Players 5.4.1 4Home Inc

4Home Inc (Sunnyvale, California) is a privately held company focused on enabling service providers to offer managed home monitoring and home automation services to their subscribers. The company was founded in 2002 and launched publicly at CES 2007. 4Home has approximately thirty employees. The company raised about $4.2 million in Series A funding in 2006, and completed a Series B round of funding more recently to raise its total venture funding to approximately $7 million. Further, the company derived about $1.3 million in revenue in 2007 and claims to be cash-flow positive and profitable.

The company’s solution includes the control point embedded software for CPE, and the Portal Server that resides in the service provider’s network operation center. The ControlPoint platform is available in a reference design — to control point 1000 — but it can also be integrated into a variety of CPE. The company envisions residential gateways as a key platform type, but also sees interest in software integrated into set-top boxes and network-attached storage devices. The reference design costs about $400; the service provider would subsidize half and the subscriber would pay the rest. If the software is embedded into a router or set-top box, the company estimates that the price would decrease by about $100.

The Portal Server is an appliance server bundled into a Dell 1U rack server. The Portal Server combines the functions of a broadband application server, a human interface server, and a management server, and is the control interface for subscribers accessing their home monitoring systems remotely. Ultimately, it is the Portal Server on which the company’s business model rests: the firm charges an upfront list price and percentage of the annual maintenance fee on the Portal Server, while the ControlPoint is licensed for a small fee per user.


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4Home is targeting four main application service areas: home monitoring, media management, energy management, and — farther in the future – home health care. Home monitoring, particularly intersecting security, is where the company sees the most traction right now. The firm also sees a major driver in the commoditization of triple play broadband services and believes that in 2008 every major telco broadband service provider was testing managed home automation services. The company is currently working with about twenty-five service providers, including Telstra in Australia and Chungwha Telecom in Taiwan. At CES 2009, the company introduced 4HomeEnergy, the adaptation of its platform for specific use as HAN technology. SENSUS Metering Systems, a major electricity meter vendor, is the first announced licensee of the technology.

5.4.2 AlertMe AlertMe (Cambridge, United Kingdom) is a privately held provider of home monitoring and energy management technology, which closed an £8M round of funding in 2009 to focus on smart energy. The company was founded in 2007 and has approximately thirty employees. AlertMe has a small direct-to-consumer channel, where consumers purchase technology from the AlertMe web site. However, this is more for AlertMe’s product development benefit: to have a base of customers with whom it is closely tied as it rolls out its technology. More central to the company’s strategy is its reliance on telco and broadband service-provider partners to offer AlertMe technology as part of their own service bundles.

In addition, utilities are also becoming important channel partners as the company develops its energy management platform offering. Both the home monitoring and home energy platforms are designed to be turnkey hardware/software systems (eventually the hardware will be licensed to others) meant to be easy and intuitive for consumers to use. The systems communicate to partners’ back-end systems through the consumers’ broadband connections or through GPRS connections embedded in the platform controller.

5.4.3 Ambient Devices Ambient Devices (Cambridge, Massachusetts) is a privately held company founded in 2001 to commercialize patent-pending technologies developed by the MIT Media Laboratory. Ambient focuses on developing systems and components that can be integrated into third-party OEM devices. The company has a particular emphasis on what it calls "polite" or "glanceable" technology that can be integrated into users’ lives in a way that does not feel overwhelming. In essence, the company provides a way for OEMs to integrate data from the Internet, such as weather information, sports, or energy-pricing into their devices or service offerings.

The key components of Ambient Devices’ offerings include the Ambient Information Network and the AMB-4001-W1 datacast decoder chip. The Ambient Information Network is a back-end service delivery infrastructure and wireless network that uses a nationwide pager network to provide constantly updated data to Ambient-enabled devices. The company bundles wireless service connectivity with its devices with no monthly charge. Examples of Ambient-enabled products include umbrellas with handles that glow when rain is forecast, as well as displays that show seven-day weather forecasts, stock market performance, and sports scores. In addition, LG has introduced a refrigerator that embeds an Ambient-enabled panel to provide weather data.

The company has two energy-related products: the Energy Joule is a small plug-in display that uses color codes and simple digital display information to advise consumers on current energy pricing. The Ambient Orb alters color to reflect changes in energy pricing. PG&E is piloting the Ambient Orb in a Demand Response program in California.


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5.4.4 Arcadian Networks Inc Arcadian Networks Inc (Valhalla, New York) is a privately held network services provider backed by Gila Ventures and Goldman Sachs. The company has deployed a private wireless WAN network on licensed 700 MHz spectrum that is now available in twenty-three US states. Arcadian Networks focuses on providing connectivity for companies with dispersed assets in rural areas. This comprises utilities for infrastructure, including meters, distributed generation, and substations. The company can provide roughly T1 level of bandwidth with SLAs and low latency. Arcadian Networks essentially offers an alternative between utilities building their own private networks or using public cellular networks for connectivity.

5.4.5 Blue Line Innovations Inc Blue Line Innovations Inc (St John’s, Newfoundland and Labrador, Canada) is a privately held company founded in 2003. The company produces a standalone energy management system called the PowerCost Monitor, or the BLI 28000, that monitors and measures home energy use in real-time. The system comprises two parts. An outdoor sensor unit attaches to both digital electromechanical meters and sends data to an indoor power monitor over a proprietary 433 MHz connection. The sensor unit does not interfere with meter reading, is ruggedized for outdoor use, and can be installed by the homeowner without an electrician or service disruption. The indoor power monitor unit then displays the cost of energy used in real-time, is programmable for local utility rates, displays both time and outside temperature, and shows the total amount spent on electricity by the household. The system is completely self-contained and does not communicate through an Internet connection with any outside entities.

Blue Line Innovations has developed partnerships with a number of utilities, including Hydro One in Canada. The company has also partnered with meter maker Elster to produce BLI AMI 900 (the EnergyAxis Edition) that integrates the PowerCost Monitor into Elster's EnergyAxis smart metering system. This product uses a proprietary 900 MHz short-range wireless technology from Elster. The company also sells an OEM version of the PowerCost Monitor to Black & Decker.

5.4.6 Control4 Control4 (Salt Lake City, Utah) is a privately held whole-home automation system vendor. The company provides both hardware and software components. The software is the cornerstone of the system and, starting in 2008, became available on equipment from other vendors. However, Control4 believes that having its own equipment has been essential to expanding its business. The hardware components include controllers, keypads, touch screens, smart thermostats, AV devices, such as receivers and amplifiers, dimmers and switches, and universal remote controls.

Customers also have access to the 4Sight subscription home monitoring service that is available through dealer-installers. Control4 is working to have this accessible through other types of service providers as well. The 4Sight service offers both remote home monitoring and control to customers; the ability for dealer-installers to remotely service systems; and e-mail alerts that can be sent to customer on the basis of user-defined rules.

The company has a multitude of drivers, such as security panels, to enable other subsystems to be connected to the Control4 home automation solution. Control4 uses ZigBee and ZigBee PRO as its low power wireless connectivity technology, and provided technical input in the development of the ZigBee PRO stack. In addition, the company’s systems can be bridged to Z-Wave and INSTEON. Control4 expects that all automation communications will migrate to wireless from structured wiring, while multimedia communications will remain on structured wiring.


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Control4 systems are sold mainly through AV dealer-installers, although the company’s systems are also available in retail stores, such as Best Buy. In addition, the company is working with home builders. The firm is primarily active in the United States, but has sales in thirteen other countries.

The company sees four main entry points in home automation deployment: home theaters in which the customer adds home automation elements; whole-home audio deployments in which the customer adds home automation elements; deployments that start as whole-home automation systems; and, energy management systems. This is reflected in the company’s family of controllers: some are oriented towards home theaters systems, some towards whole-home audio, some are purely for whole-home automation solutions, while, most recently, the company has introduced a Home Energy Manager platform.

5.4.7 Current Cost Current Cost (Andover, United Kingdom) is a privately held company founded in 2004. The company's main focus is providing In-Home Displays (IHD) that connect to standard utility meters. The company’s system uses a transmitter that clamps to the meter and sends household consumption data to the IHD over proprietary 433 MHz short-range wireless technology. Energy consumption data can be can be viewed not only on the IHD, but also can be downloaded to PCs, as well, to be graphed and viewed in a variety of formats.

So far, the company has introduced three generations of IHDs. The first, known as The Classic, simply displayed overall energy consumption in the home. The second and third generations are able to provide more granular visibility into the energy consumption of individual appliances in the home. Current Cost also provides smaller displays for use around the home to provide snapshots of power use and are meant to be used in conjunction with the main IHD. The company will soon be introducing individual appliance monitors. The company claims to have shipped over 600,000 IHDs starting with a 5,000 device pilot project with UK utility Scottish and Southern Electric (SSE).

5.4.8 Coronis Systems, an Elster Group Company Coronis Systems (Perols, France) is a division of the Elster Group meter manufacturing company located in the south of France and had about forty-five employees at the end of 2008. Coronis was founded in 2000 by former employees of meter manufacturer Itron. The founders saw the need for the creation of a short-range wireless sensor networking technology, which the company calls Wavenis. Coronis was acquired by the Elster Group in 2007.

It is important to note that Wavenis is not used solely in smart metering applications. Other applications and industries using the technology include: security, home automation, oil and gas, pharmaceuticals, restaurant refrigeration, recreational vehicle monitoring, irrigation, air handling, and active RFID for containers in Asia-Pacific. However, large shares of Wavenis technology sales are in the utility/AMI space. While the company is a part of Elster Group, the technology is also used by metering manufacturer Sensus Metering Systems in Europe. Coronis is striving to make the technology an open standard. To that end, an industry organization called the Wavenis Open Standard Alliance was soft-launched in the middle of 2008 with a public launch in the first quarter of 2009. The initial six members are Coronis, France Telecom, a South African utility, and three European technology design firms. Wavenis technology will eventually be able to be sourced from multiple vendors.

5.4.9 CURRENT Group CURRENT Group (Germantown, Maryland) is a privately held smart grid company founded in 2000 with global operations and offices in the United States and Switzerland. The company has


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approximately 200 employees. CURRENT has completed smart grid projects in the European Union, in Latin America, and in the United States — most prominently as part of utility Xcel Energy’s smart grid/smart metering project in Boulder, Colorado. The company is also working with Spanish utility Iberdrola on its PRIME project to develop an open standards-based PLC technology for smart grid/smart metering applications.

CURRENT’s smart grid technology is centered on networking and automating Transmission and Distribution (T&D) infrastructure, rather than on smart metering specifically, although the company’s technology can form a part of a utility’s overall smart metering infrastructure. The system comprises sensors and analytical software that interoperates with a variety of communication technologies and exchanges information with third-party Meter Data Management (MDM) systems through Service-Oriented Architecture (SOA) technology. The company typically goes to market as part of a consortium of firms that brings a total smart grid/smart metering solution to the utility.

5.4.10 ecobee Inc ecobee Inc (Toronto, Ontario, Canada) is a privately held maker of smart thermostats (also known as programmable communicating thermostats), with sales in Canada and the United States. The company’s thermostats provide a sophisticated touch-screen interface to program a variety of modes and functions related to the control of air conditioners, humidifiers, and other climate control systems. Users can also register their thermostats and have access to customized web portals to view and control the thermostats with even greater precision than with the touch-screen interface. While the thermostat is primarily meant to be used as a standalone system, it can also be used in conjunction with utility DR programs. For instance, the thermostat can receive utility pricing event data, emergency event data, as well as enable the customer to override utility DR actions.

In addition, the consumer’s individualized web portal can be integrated with utility billing information. The thermostat is web-enabled through a Wi-Fi connection to the consumer's broadband Internet connection and also has optional ZigBee expansion slots. The company plans to eventually make its thermostats controllable via smartphones. The thermostats comply with the ZigBee Smart Energy profile.

5.4.11 Ember Corporation Ember Corporation (Boston, Massachusetts) is a privately held company founded in 2001, based on research work done at MIT in the 1990s on low power wireless mesh networking. The company is a leading provider of IEEE 802.15.4 ICs using its EmberZNet ZigBee protocol software stack. Ember’s two chip products are the EM250 System-on-Chip (Soc) and the EM260 co-processor. The EM250 integrates a 16-bit microcontroller MCU, Flash, RAM, and IEEE 802.15.4 RFIC. The EM260 integrates an IEEE 802.15.4 RFIC, Flash, and RAM, but minimizes the MCU resources, which runs only the EmberZNet ZigBee stack, while the customer uses its own MCU for application processing. The EM250 is for customers who want the most tightly integrated solutions, while the EM260 is for those who prefer to have their own MCUs for application processing.

The company is now shipping the EmberZNet PRO ZigBee PRO stack. In addition, the firm has developed AT Builder, a point-and-click tool for home automation developers to use in creating their applications. Ember says that developers can cut the time for fully interoperable solutions down to a matter of days or a week. Ember is active in the markets for smart metering, commercial building automation, and home automation. In addition, the company operates in the industrial automation, asset management, and defense markets.


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5.4.12 eMeter Inc eMeter Inc (San Mateo, California) is a privately held MDM vendor. The company has approximately 160 employees with offices in Sydney, Australia, and London, United Kingdom, in addition to its California headquarters. eMeter competes against five MDM vendors as well as custom-developed MDM systems built for specific utilities by their system integrators. MDM software is a relatively new product category in the utility space, and serves as enterprise middleware between the smart metering technology system and the utilities’ back-end enterprise architecture. eMeter’s MDM system is called EnergyIP and uses a SOA approach to interconnect with other utility infrastructure.

The company is part of the Siemens’ Smart Grid group and generally goes to market in partnership with a large Tier One systems integrator or smart grid technology vendor. eMeter derives revenue through a per-meter standard perpetual licensing plus maintenance model. The company launched the Energy Engage customer engagement software offering in June 2009.

5.4.13 Energate Inc Energate Inc (Ottawa, Ontario, Canada) is a privately held HAN technology vendor founded in 2004 by a team with many years of experience in the programmable thermostat market. The company had approximately fifty employees at the end of 2008 but claims to be growing rapidly. Energate is directly active in the North American market, but some of its partners have used Energate technology in deployments in Europe and the Asia-Pacific region.

The company’s business model is to directly target utilities with HAN technology, but Energate also works with AMI and home automation technology partners who incorporate Energate technology into their own systems for utilities and other customers. In some cases, the utility puts together a consortium that enables DR deployment; in other cases, the utility expects Energate to organize the consortium. In some instances, the utility has an AMI partner that creates the consortium. Energate's Home Energy Management Platform is the company’s offer in the HAN space and comprises hardware and software centered on a Programmable Communicating Thermostat (PCT) and load control switches.

5.4.14 EnergyHub Inc EnergyHub Inc (Brooklyn, New York) is a privately held maker of home energy management systems founded in 2007. The EnergyHub system comprises a starter kit containing a touch screen dashboard and temperature control unit. The basic system can provide the functionality of a programmable communicating thermostat and also communicates with wirelessly enabled smart meters to monitor whole home energy usage. With the addition of optional wall sockets and wall strips, the system can also monitor and control the consumption of energy by individual appliances. Different components of the system ”converse” using ZigBee short-range wireless technology.

The system can work on a standalone basis to enable consumers to monitor their own energy consumption, or can be used in conjunction with utility DR programs. In the context of utility DR programs, the system can receive DR signals from the utility and enable the consumer to respond in either automated or manual fashion.

In addition, EnergyHub posts micro-sites for the utilities to enable them to communicate with their customers, and enable the customers to better visualize their energy consumption. The hosted micro-sites also enable consumers to measure their energy consumption relative to that of their neighbors. It is important to note that EnergyHub is working to enable its system to interact with one-way communicating AMI meters as well as more modern two-way communicating smart meters. EnergyHub's first announced utility partnership is with New York-based Con Edison, for a pilot project in Queens, New York, revealed in September 2009.


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5.4.15 EnerNOC Inc EnerNOC Inc (Boston, Massachusetts) is a publicly traded DR aggregator focused on industrial and commercial end users of energy, rather than the residential market. The company was founded in 2001 and went public in 2003 and now has approximately 370 employees. EnerNOC has focused on the North American market to date, although it recently entered the United Kingdom as well.

EnerNOC says its value proposition to the utilities and grid operators who are its primary customers is that it enables DR capabilities in a streamlined turnkey fashion. The company receives a recurring revenue stream from its customers to provide DR (and related services). The company pays its industrial and commercial DR program participants an ongoing fee to be part of the program and an additional fee to respond to a DR event. There is no cost or risk to the end user of energy to participate; there are no penalties if the end user cannot meet a specific DR event.

5.4.16 EnOcean Alliance The EnOcean Alliance is an industry organization promoting the development and adoption of the EnOcean energy-harvesting SRW technology. The alliance currently has over 120 member companies and is in the initial stages of becoming formally ratified as an international standard by the IEC. The first alliance-produced EnOcean specification was announced in October 2009 and while virtually identical to the EnOcean technology produced by the vendor EnOcean GmbH, is now controlled by the member companies. Essentially, EnOcean GmbH’s relationship to the technology will be as a component vendor as well as IPR licensor, similarly to the model Qualcomm uses for CDMA technology.

5.4.17 Exceptional Innovation LLC Exceptional Innovation LLC (Westerville, Ohio) is a privately held company founded in 2004 by a team that had worked together previously developing point-of-sale solutions for leading retailers worldwide. The company is focused in the near term on developing whole home automation systems, centered on its Life/ware software, but is also a strong believer that the service provider channel — managed home automation services — will experience strong growth and the company is positioning itself accordingly. Exceptional Innovation is increasingly working with utility DR programs. The company is active primarily in North America, but is expanding into other regions.

Life/ware is designed to run on Microsoft’s Windows Media Center PC platform or it can be run on the Life/controller hardware device from Exceptional Innovation, using the Windows XP embedded operating system. The Life/ware software platform is complemented by the controller as well as a touch-screen device and device adapters. The Life/ware system utilizes subsystems, such as security alarms, to provide comprehensive functionality. A key aspect of this strategy is the use of Web Services for Devices (WSD) to create a standard layer for device interoperability.

In the HAN/DR market, Exceptional Innovation works with service providers to offer consumer energy management software through various existing media platforms, such as cable TV, TiVo, or even as an iPhone app. The key point is that Exceptional Innovation software would enable other companies to provide a subscription service to consumers without the consumer having to buy specific equipment or devices for energy management functionality. Data would be collected from the utility company or the meter directly and provided to the consumer, along with eventual advice on how the consumer could optimize his or her household to use energy more efficiently. Exceptional Innovation expects trials of such services using its technology in 2010 with fuller ramp-up in 2011.


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5.4.18 Freescale Semiconductor Freescale Semiconductor (Austin, Texas) is a global provider in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. The privately held company has design, research and development, manufacturing and sales operations in more than thirty countries. Freescale is one of the world's largest semiconductor companies with 2007 sales of $5.7 billion.

Freescale's Simple MAC (SMAC) provides a straightforward and cost-effective solution for wireless networking. Based on the 802.15.4 PHY, it supplies commands to create simple point-to-point and star networks. The small code size allows the use of a low cost MCU combined with the MC13201 RF transceiver, creating the ideal platform for applications looking to "cut the cord." In addition, features such as repeaters and over-the-air updates help to create a feature-rich protocol in a small package.

Freescale's Synkro Protocol is a lightweight networking stack built on top of the IEEE 802.15.4 standard. The protocol was created to control, monitor, and automate consumer electronic products including televisions, DVD players and recorders, set-top boxes, audio video receivers, remote controls and much more. Synkro overcomes the growing technology challenges that today’s consumer electronic products face with thirty-year-old Infrared (IR) technology by removing the line of sight and field of vision issues while providing a fast bidirectional link to enhance the user experience. Freescale's Synkro starts with 802.15.4, but incorporates improvements to avoid interference by adding channel agility and low latency transmissions to address the specific needs of consumer electronics.

There are two ways to develop a Synkro application: the Synkro API and Synkro BlackBox. The Synkro API allows application development using the embedded processor running the Synkro Protocol. This is the lowest cost solution. The Synkro BlackBox provides access to the complete Synkro API through a serial command set. This alternative allows application development on a separate processor that enables a more flexible system definition to meet the specific needs of end products.

5.4.19 Google Google (Mountain View, California) announced its PowerMeter energy management dashboard in February 2009. PowerMeter, which should be available in early 2010, monitors household energy consumption data obtained from smart meters as well as from in-home energy management devices. The graphical user interface comprises a Google gadget that shows up on users’ iGoogle home pages. Similar to other Google gadgets, PowerMeter tracks historical data and can extrapolate future consumption trends. PowerMeter is intended to be a free opt-in service for which consumers will need to sign up. Google has announced a partnership with smart meter maker Itron, which will enable its meters to communicate with the PowerMeter service.

In addition, Google has announced partnerships with a number of utilities: San Diego Gas & Electric in California, TXU Energy in Texas, JEA in Florida, Wisconsin Public Service Corporation in Wisconsin, White River Valley Electric Cooperative in Missouri, Glasgow EPB in Kentucky, Toronto Hydro-Electric System Limited in Canada, and Reliance Energy in India.

5.4.20 GreenWare GreenWare (Hong Kong, China) is a privately held company founded as a partnership between Asia-based M2M modem OEM Fargo Telecom and investment firm SustainAsia. GreenWare will focus on energy efficiency applications ranging from the smart grid to more generalized remote monitoring to cut pollution and waste by businesses. The core value offering is a web-based software platform married to Fargo Telecom hardware. GreenWare will hire its own staff,


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focusing on system architecture, with additional hardware support from Fargo Telecom. Geographically, the company will start operations in Hong Kong, Vietnam, and Shanghai. Fundamentally, the goal is to provide a solution for medium-scale customers that may not find the need for a complex, large-scale enterprise system from IBM or SAP, but are too large for simple custom solutions from local integrators.

5.4.21 GridWise Alliance Inc GridWise Alliance Inc (Washington, DC) is an industry organization focused on lobbying for smart grid initiatives on behalf of its 110 corporate members. The alliance’s membership is growing constantly and comprises the entire value chain of smart grid, as well as other relevant stakeholders, including equipment vendors, service providers, software companies, telecom companies, consultants, venture capitalists, and universities. The alliance is North America-based, but has international members and partnerships with global organizations.

The alliance operates by building consensus among its members for specific policy recommendations for which it then lobbies. It does not argue for specific technologies, just overall smart grid-related policy actions. All work within the alliance is done in the context of subject matter/sector work groups. The key groups include federal policy, state policy, cyber-security/standards, implementation, and education.

5.4.22 HomePlug Powerline Alliance The HomePlug Powerline Alliance (San Ramon, California) is an industry organization formed in 2000 to promote the use of the HomePlug PLC technology in several application areas: home networking, home AV networking, home broadband access, and home automation. The alliance now totals over seventy-five companies including Texas Instruments, Huawei Technologies, LG Electronics, RadioShack, Arkados, Sharp, Intellon, TCL, Yitran Communications, Comcast, Cisco/Linksys, Motorola, and GE Security. The alliance serves as an interoperability testing, certification, and marketing organization for its members.

The alliance’s first standard, HomePlug 1.0 was released in 2001 and provides for 14 Mbps throughput. HomePlug 1.0 has been ratified as IEEE 1901. HomePlug AV was released in 2005 and enables 100 Mbps throughput. HomePlug Command and Control, which was ratified in October 2007 at the PHY and MAC layers, is intended for automation applications and provides throughput at 5 Kbps, or 2.5 Kbps if there is noise in the power lines. The alliance is currently working with the ZigBee Alliance to make the ZigBee Smart Energy 2.0 public application profile the application layer for the new HomePlug Green PHY (GP) standard, which should be complete in 1Q 2010. HomePlug GP will be interoperable with HomePlug AV. A HomePlug AV 2.0 standard should also be complete in the 1Q 2010 time frame and offer 3x to 4x the bandwidth performance as HomePlug AV.

5.4.23 iControl Networks Inc iControl Networks Inc (Palo Alto, California), is a privately held firm founded in 2003. The company concluded a Series C round of funding that raised $23 million for a total funding of approximately $45 million. iControl’s Security 2.0, which the company refers to as a home management platform, is supplied by service provider partners as a layered service on top of their traditional offerings. The company works with security alarm monitoring companies, broadband and telco service providers, and utilities. The company has announced a partnership with GE Security to integrate iControl technology into GE Security panels as well as panels from alarm monitoring companies ADT Security Services, Monitronics, and VOXCOM Security Systems.


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Security 2.O is a turnkey platform for service providers comprising the hosted backend infrastructure that is branded to the partners’ specifications, and includes branded customer support, billing, and fulfillment. The customer premise equipment consists of the iHub gateway, which can either be a standalone device or technology integrated into the service providers’ broadband CPE device or security panel. The system provides home monitoring sensors, web cams, and traditional security alarm systems. Information from the home is accessible via touch screens, the web, and smartphones and additional control functionality is enabled through third-party devices. The platform communicates over both ZigBee and Z-Wave technology.

5.4.24 Intamac Systems Intamac Systems (Northampton, United Kingdom) is a privately held provider of web-based home control and monitoring systems founded in 2001. Intamac has offices in Australia, Canada, and South Korea, and has about thirty-five employees. The company focuses on multiple home control applications areas, including energy monitoring and management, home security, telehealth, as well as traditional home automation functionality (control of lights, blinds, and so on) The company supplies service provider partner companies with a managed service offering that enables consumers to remotely monitor and control the devices, systems, and appliances in their homes.

Intamac has seen success partnering with large service provider organizations: the company’s Home Manager service forms the technology behind the BT Home Monitor VP1000 offering, as well as the Bell Home Monitoring product kit. The company has also partnered with other energy management firms, such as UK-based Current Cost. Intamac secured funding in 2009 to introduce a range of ZigBee-controlled consumer devices that will connect to and be controlled by the Home Manager platform.

5.4.25 Lagotek Corporation Lagotek Corporation (Bellevue, Washington) is a privately held vendor of whole home automation system technology, founded in 2005 by a group of former Microsoft employees. The company says its focus is on making the whole home automation technology easy to install, affordable, and reliable, with the goal of having automation a common feature in mainstream homes. Two key aspects of this strategy are the distributed intelligence of Lagotek’s architecture, and the company’s emphasis on wireless technology. The company operates primarily in North America, with customers in the United States, Canada, and Mexico, as well as South Africa.

The company system is distributed and software-based, essentially comprising “brains” that can control the overall solution and act as backup in case an element of the system is unavailable. This eliminates single points of failure and enables control from a range of devices, such as a traditional touch panel, PC, or smartphone. A customer could control the entire system from a single smartphone.

As part of its distributed control system, the company uses the concepts of “modes” and “rules” to instill a high degree of control flexibility. Modes are essentially scenes, but are capable of being mapped to any and all of the connected devices in the home. Wolves are pre-set commands that trigger system actions in response to specific events. Lagotek points out that controlling a whole home automation system from a smartphone device would be time-consuming, but would be simplified with the use of modes.

5.4.26 Microsoft Corporation Microsoft Corporation (Redmond, Washington) announced its Hohm online energy management application in June 2009. The application is designed to enable consumers to monitor their energy consumption and access recommendations on how to increase their overall energy


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efficiency. While Microsoft has licensed algorithms from Lawrence Berkeley National Laboratory and the US Department of Energy to provide consumers with personalized energy-saving recommendations, the functionality of the current beta release is relatively limited, requiring users to enter their energy consumption data manually, unless their utility has partnered with Microsoft, in which case the data can be downloaded to the application automatically.

However, it is still unclear how much granularity of energy consumption usage will be available, or if Microsoft will enable connections to other devices within the home, as most other home energy management systems do today. At present, Hohm is more of a “recommendation engine” than a true energy management portal. Microsoft has announced a number of utility partnerships for its Hohm application, including Seattle City Light, Sacramento Municipal Utility District (SMUD), Xcel Energy, and Puget Sound Energy. In addition, the company has announced two smart meter vendor partnerships, with Itron, and Landis+Gyr.

5.4.27 OpenPeak Inc OpenPeak Inc (Boca Raton, Florida) is a closely held vendor of multimedia IP phones. The company closed $30 million in funding in 2007. The company's main products are the OpenFrame introduced in 2008 and the ProFrame introduced in January 2009. The OpenFrame is essentially a multimedia update to the traditional fixed-line home phone. Using a large 7-inch touch screen, home users can access not only their phones, but other common apps as well including music files, photos, and local weather and news. The ProFrame platform extends the functionality of OpenFrame to corporate users.

In June 2009, the company announced its Home Energy Management Solution. Built upon the OpenFrame platform, this solution enables access to real-time pricing and energy usage data. The platform also provides a centralized user interface for thermostats and for DR notifications by utilities to their customers. The platform supports common communication technologies, such as ZigBee and Wi-Fi. In September 2009, the company announced that smart meter maker Itron would be the first meter vendor to support the Home Energy Management Solution platform, connecting the platform to Itron’s OpenWay smart meter platform.

5.4.28 Pacific Gas and Electric Company Pacific Gas and Electric Company (San Francisco, California) is a wholly owned subsidiary of PG&E Corporation and is one of the largest natural gas and electricity providers in California, serving customers in the northern and central parts of the state. PG&E initiated planning for its smart metering program in 2004 at the request of the California Public Utility Commission, which mandated that state utilities develop business cases analyzing the deployment of smart metering technology (specifically, the capability to provide Critical Peak Pricing (CPP) as an option to customers. The CPUC is allowing PG&E to recover approximately $1.7 billion from its customers for the deployment of smart meters through higher utility rates.

The utility initiated its deployment of smart meters in 2006 and plans to have approximately 10 million units converted to smart meters by early 2012. PG&E is working with Silver Spring Networks and Itron for the smart meter and smart metering technology portion of the deployment. While PG&E will enable all smart meters to communicate with devices inside the home (HANs) via open standard communication technologies (IEEE 802.15.4 radios flashed with ZigBee, and, possibly HomePlug as a separate PLC option), it is still investigating the possible business models and functionality it will utilize for HANs. Currently, the utility plans to offer customers at least the option to participate in the utility’s SmartAC program. This will be a voluntary air-conditioning cycling program that will enable customers to receive a rate benefit in return for allowing the utility to cycle down the AC as needed for limited periods of time. This program will be initiated in the 2013 time frame.

http://encyclopedia.thefreedictionary.com/Sacramento+Municipal+Utility+District


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5.4.29 Portus Singapore Pte Ltd Portus Singapore Pte Ltd is a privately held company founded in Australia in 2000 that has been headquartered in Singapore since 2003. Portus is a developer of a managed home automation system platform, called DIAS. DIAS enables home control, home monitoring, home security, and home energy management. It comprises software combined with broadband CPE devices. The solution uses DSL and Ethernet as the uplink to the service provider, and Z-Wave for interconnection to other sensor devices throughout the home. (The company is fairly agnostic to short-range communication technologies, however). The gateway uses the Open System Gateway initiative (OSGi) standard to enable remote management of the device and services by the service provider, and can work with providers in custom-building back-end server software platforms. While the company targets both broadband service providers and utilities, it is finding more traction with utilities around the world and deploying the DIAS system as an energy management/HAN platform.

5.4.30 PowerHouse Dynamics llc PowerHouse Dynamics llc (Blue Hill, Maine) is a privately held company with under a dozen employees that is focused on developing HAN technology. Fundamentally, the company’s eMonitor system enables homeowners and utilities to manage energy usage in the home. The system comprises a base unit that attaches to a multitude of load centers through links to the centralized circuit breaker box. In addition, ZigBee-enabled outlet units extend the number and types of devices that can be connected into the system to be monitored and controlled. All products are ZigBee-enabled using the Smart Energy application profile. Systems attach through the home’s broadband connection to back-end servers maintained by PowerHouse Dynamics that enable the company to provide customers with highly granular energy usage data. The system can work in conjunction with smart meters or separately from them.

5.4.31 RWE AG RWE AG (Essen, Germany) is a large integrated Investor-Owned Utility (IOU) with operations in Central Europe and the United Kingdom. As an integrated utility, RWE has mining and generation operations, in addition to T&D and retail utility (electricity and gas) operations. RWE launched a smart metering initiative in the Germany city of Mulheim in July 2008 and, to date, has deployed roughly 100,000 smart meters. Over a number of years, RWE plans to install approximately 9 million smart electricity meters, and about 1 million smart gas meters. This is partly in response to a German law stipulating that all new and renovated homes and apartments must have smart meters installed starting in 2010.

However, RWE will be collecting data only on a monthly basis, not fifteen-minute intervals. The deployment will use a combination of PLC and cellular technologies. Although RWE is mainly interested in automating its meter reading operations, as opposed to instituting DR programs, it has announced a collaborative effort with Nokia to deploy various “smart home” services. This effort is in the earliest stages, so the eventual services that may actually be deployed are still unknown.

5.4.32 Sequentric Energy Systems LLC Sequentric Energy Systems LLC (Wilmington, North Carolina) is a privately held company founded in 2004. The company has been received funding primarily from its founder, Daniel Flohr, and is run as a lean operation. The company is focused on enabling utilities to deploy closed HAN/DR systems to their rate payers. Sequentric does not believe in a retail HAN model and does not think that utilities are interested in open systems. Consequently, the company has developed a system of radio modules and controller/gateway devices based on 433 MHz wireless technology and a Sequentric-developed wireless protocol called SeqR.


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Through this type of closed system, Sequentric believes it can offer its utility customers an inexpensive HAN platform that has carrier-class reliability and security. The company is targeting installation costs at less than $150 per home. Another key component of the system is server software residing in the utility’s NOC.

The Sequentric solution is meant to provide the utilities with highly granular visibility and control over a plethora of load centers in the home, from large systems that have their own circuit breakers that are monitored and controlled at the circuit box, to smaller devices that are monitored and controlled via smart wall plug adapters. Using Sequentric-derived algorithms, the utility can balance the load profile in an individual home and across its rate base, dramatically reducing its reliance on peak generating capacity.

5.4.33 Tendril Networks Tendril Networks (Lafayette, Colorado) is a privately held provider of home energy management system technology. The company’s EMS is the Tendril Residential Energy Ecosystem (TREE), comprising both in-home software as well as utility back-end HAN/DR management software. Tendril has enabled the TREE platform with a number of UI options, including: in-home displays, web portals, mobile devices, and smart thermostats. The in-home software interfaces with other devices to provide consumers with energy consumption data. In July 2009, GE announced that it is working to integrate the TREE software to work with GE’s upcoming line of smart appliances. The utility back-end software enables utilities and energy retailers to manage million of customer DSM systems and communicate directly with customers on service issues.

The TREE platform provides consumers with real-time energy consumption data, cost information, and estimated monthly bills. In March 2009, Tendril announced a device to receive the wireless signal from one-way AMR meters, which are more widely deployed than the two-way communicating smart meters, and using the data in the home EMS as well as transmitting the data to the utility.

5.4.34 uControl Inc uControl Inc (Austin, Texas) is a privately held provider of advanced home monitoring and home security solutions. Like iControl and Xanboo, the company is now focusing on managed turnkey solutions for telco and broadband service providers, as well as traditional security services providers. This is a recent change for the company, as uControl originally went to market with a direct–to-consumer model.

uControl’s Security, Monitoring, and Automation (SMA) solution comes in either dual connect or triple connect versions, with dual connect comprising traditional phone lines along with a broadband link back to uControl’s network operations center. The triple connect option integrates cellular connectivity with the other two backhaul technologies. The company is expanding its capabilities to offer managed automation services. Currently, uControl equipment is compatible with Z-Wave, ZigBee, and INSTEON.

5.4.35 Xanboo Inc Xanboo Inc (New York, New York) is a privately held vendor founded in 2000. The company is principally focused on home monitoring applications, although it is increasingly becoming involved in small business monitoring, as well. Screening freezers or general temperatures is an application seeing traction in the small business market. AT&T is a key partner; Xanboo technology powers AT&T’s Home Monitor service, as well as the newer Remote Monitor service targeting small businesses that AT&T introduced in November 2007. Other announced service provider customers include Mediacom and Telecom Italia. The company is primarily active in North America although it is seeing some business in Latin America and Europe.


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The company focuses on sales through service provider channels, but has also developed a partnership with a firm that will enable it to target thousands of small security dealerships. The partner will be responsible for maintaining relationships with the dealers, and will be the “brand” for the service. The partner will look like any other service provider to Xanboo. Xanboo is seeing interest from the security industry for integrating home monitoring functionality. Security companies can integrate Xanboo’s turnkey service to a desired degree; the service can essentially run in parallel with traditional security offerings.

Xanboo’s product line essentially consists of a variety of sensor devices using the 400 MHz RF spectrum (although the company is agnostic about radio standards and its system can incorporate Z-Wave, ZigBee, and so on), and a gateway device that links through the home’s broadband Internet connection. Xanboo hosts servers that maintain the connections between subscribers’ cellphones or remote PCs and their homes. The company basically provides packaged services that other firms can resell to their subscribers.

5.4.36 ZigBee Alliance The ZigBee Alliance is an open industry organization comprising more than 150 companies focused on bringing low power, low data rate wireless mesh technology to market for a variety of monitoring and control applications. In addition to home automation, the alliance is focused on energy management, industrial automation, and building automation. The ZigBee protocol addresses the networking, security, and application layers of the mesh network, utilizing 802.15.4 ICs at the physical layer. In addition to defining the protocol itself, the alliance manages interoperability testing, protocol evolution, and branding and marketing of the ZigBee protocol.

5.4.37 Z-Wave Alliance The Z-Wave Alliance is an industry organization founded in 2005 by Zensys — the developer of Z-Wave technology — and a group of other equipment vendors and service providers. The alliance numbers more than 160 members and serves them as an interoperability testing, certification, and marketing organization. The key members include Zensys, Intel, Monster Cable, Intermatic, Leviton, Universal Electronics, Wayne-Dalton, Danfoss, and Cooper Lighting Devices.



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Section 6.

COMPANY DIRECTORY

4Home Inc www.4home.com Accenture www.accenture.com Aclara Power Line Systems Inc aclaratech.com Aeris Communications www.aeris.net/ AlertMe www.alertme.com Ambient Devices www.ambientdevices.com AnyDATA www.anydata.com Arcadian Networks Inc www,arcadiannetworks.com AT&T Corporation www.att.com Atos Origin www.atosorigin.com Blue Line Innovations Inc’ www.bluelineinnovations.com CalAmp Corporation www.calamp.com Cinterion Wireless Modules www.cinterion.com Cisco Systems Inc www.cisco.com Control4 www.control4.com Coronis Systems www.coronis.com

CrossBridge Solutions www.crossbridgesolutions.com Current Cost www.currentcost.com Digital Home Alliance www.digitalhome.com Digi International www.digi.com/ Echelon www.lonworks.echelon.com ecobee Inc www.ecobee.com Eka Systems Inc http://www.ekasystems.com/ Elster Integrated Solutions www.elsterelectricity.com/ Ember Corporation www.ember.com eMeter Inc www.emeter.com/ Energate Inc www.energateinc.com/ EnergyHub www.energyhub.net EnerNOC Inc www.enernoc.com Enfora www.enfora.com EnOcean Alliance www.enocean-alliance.org ESCO Technologies Inc www.escotechnologies.com


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Exceptional Innovation LLC www.exceptionalinnovation.com FreeMove Alliance www.freemoveallince.com Freescale Semiconductor www.freescale.com GE Energy www.gepower.com Google www.google.com Grid Net www.grid-net.com GridPoint www.gridpoint.com/ GridWise Alliance Inc www.gridwise.org HomePlug Powerline Alliance www.homeplug.org Huawei Technologies Co Ltd www.huawei.com Holley Metering Ltd www.hollymetering.com/en IBM Corporation www.ibm.com iControl Networks Inc www.icontrol.com Infineon Technologies AG www.infineon.com Intamac Systems www.intamac.com IPSO Alliance www.ipso-alliance.org Iskraemeco www.iskraemeco.si Itron Inc http://www.itron.com/

iWOW Technology www.iwow.com.sg Jasper Wireless www.jasperwireless.com KMX Association www.knx.org KPN Group www.kpn.com KORE Telematics www.korewireless.com Lagotek Corporation www.lagotek.com Landis & Gyr www.landisgyr.com Mach Communications www.machcommunications.com.au Maestro Wireless Solutions Co Ltd www.maestro-wireless.com Microsoft Corporation www.microsoft.com Motorola Inc www.motorola.com m2mGlobal Alliance www.m2mglobal.cm NTT DoCoMo www.nttdocomo.com Numerex Corporation www.numerex.com NURI Telecom www.nuritelcom.co OpenPeak Inc www.openpeak.com Orange Business Services www.business.orange.co.uk



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Pacific Gas & Electric Co www.pge.com Portus Singapore Pte Ltd www.portus.com.au PowerHouse Dynamics llc www.powerhousedynamics.com Qualcomm Inc www.qualcomm.com Rogers Communications Inc www.rogerscommunications.com RWE AG www.rwe.com Sensus Metering Systems www.sensus.com Sequentric Energy Systems LLC www.sequentric.com Sierra Wireless www.sierrawireless.com Silver Spring Networks www.silverspringnetworks.com SIMCom Wireless Solutions www.sim.com/wm SmartLabs Inc www.smartlabsinc.com SmartSynch www.smartsynch.com Southern California Edison\ www.SCE.com Sprint www.sprint.com Swisscom www.swisscom.ch Tantalus Systems Corporation www.tantalus.com Telefónica www.telefonica.com

Telenor Cinclus www.telenorcinclus.com/uk Telenor Group www.telenor.com Telit Communications www.telis.com TELUS www.telus.com Telvent www.telvent.com Tendril Networks www.tendrilinc.com T-Mobile USA www.t-mobile.com Trilliant Networks www.TrilliantNetworks.com uControl Inc www.ucontrol.com U-SNAP Alliance www.usnap.org Verizon Wireless: USA www.verizonwireless.com Vodafone Group Public Ltd Company (HC) www.vodafone.com Wyless PLC www.wyless.com Xanboo Inc www.xanboo.com XATA Corporation www.xata.com ZigBee Alliance www.zigbee.org Z-Wave Alliance www.z-wave alliance.org


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Section 7.

ACRONYMS

1xRTT One Times Radio Transmission Technology (CDMA 2000)

AEC Advanced Energy Control (Z-Wave)

AES Advanced Encryption Standard

AMCO American Meter Company

AMI Advanced Metering Infrastructure

AMPS Advanced Mobile Phone System (Cellular System)

AMR Automated or Advanced Meter Reads

AMS Advanced Metering System(s)

ANSI American National Standards Institute

API Application Programming Interface

APN Access Point Name

ARPU Average Revenue per User

ARRA American Recovery and Reinvestment Act of 2009

ASHRAE American Society of Heating, Refrigeration, and Air-Conditioning Engineers

ASP Average Selling Price

ASP Authorized Service Provider

AV Audiovisual

AVL Automatic Vehicle Location

B2B Business to Business

BGA Ball Grid Array

BOM Bill of Materials

BPL Broadband over Power Line

C&I Commercial and Industrial


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CAGR Compound Annual Average Growth Rate

CC Command and Control (HomePlug Powerline Alliance)

CDMA Code Division Multiple Access

CE Consumer Electronics

CEN Comité Européen de Normalisation (French: European Committee for Standardization)

CENELEC Comité Européen de Normalisation Électrotechnique (European Committee for Electrotechnical Standardization)

CES Consumer Electronics Show

CIP Critical Infrastructure Protection

CPE Customer Premises Equipment (home telecommunications equipment)

CPP Critical Peak Pricing

CPUC California Public Utility Commission

CSCTG Cyber Security Coordination Task Group (NIST)

DA Distribution Automation

DHA Digital Home Alliance

DIY Do It Yourself

DLC Distribution Line Communications

DLMS/COSEM Device Language Message Specification/Companion Specification for Energy Metering

DoPa DoCoMo Packet Transmission

DR Demand Response

DSL Digital Subscriber Line

DSM Demand Side Management

E0D Enterprise on Demand (AT&T)

EC European Commission

ECC Elliptical Curve Cryptography


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EDF Électricité de France

EDGE Enhanced Data for GSM Environment

EISA Energy Independence and Security Act of 2007 (US)

EMS Energy Management System

EPAct Energy Policy Act of 2005 (US)

EPOS Electronic Point of Sale

ESD Energy Services Directive (Europe)

ETSI European Telecommunications Standards Institute (France)

EU European Union

EV-DO Evolution Data Optimized (aka Evolution Data Only)

FERC Federal Energy Regulatory Commission

FMA FreeMove Alliance

FOMA Freedom of Mobile Multimedia Access (NTT DoCoMo; Japan)

FWT Fixed Wireless Terminal(s)

GP Green PHY (HomePlug Powerline Alliance)

GRPS General Radio Packet System

GSM/GPRS Global System for Mobile Communications/ General Packet Radio Service

HAN Home Area Network(s)

HEMS Home Energy Management Systems

HLR Home Location Register

HML Holley Metering Ltd (China)

HSPA High Speed Packet Access

HVAC Heating, Ventilating, and Air Conditioning

iDEN Integrated Digital Enhanced Network (Motorola variant of TDMA wireless)

IEC International Electrotechnical Commission

IEEE Institute of Electrical & Electronics Engineers Inc


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IETF Internet Engineering Task Force

IHD In-Home Display(s)

IMC International M2M Center (France Telecom)

IOU Investor-Owned Utilities

IP Internet Protocol

IPR Intellectual Property Rights

IPSO IP for Smart Objects Alliance

IPv6 Internet Protocol Version 6

IR Infrared

ISI Interoperable Self-Installation (Echelon LonWorks)

ISO International Standards Organization

ISO/RTO Independent System Operators/Regional Transmission Organizations

JV Joint Venture

KB Kilobytes

LFC Compañía de Luz y Fuerza del Centro (Mexico)

LGA Land-Grid-Array

LTE Long Term Evolution (3GPP 4G technology)

M2M Machine to Machine

mA Milliampere

MAC Media Access Control

MAS Metering Automation Server (Elster Integrated Solutions)

MCU Multipoint Control Unit

MDM Meter Data Management

MHz Megahertz

MIT Massachusetts Institute of Technology

MMO M2M Mobile Operator


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MNO Mobile Network Operator (wireless telecommunications)

MVNE Mobile Virtual Network Enabler

MVNO Mobile Virtual Network Operator

NAN Neighborhood Area Network(s)

NERC North American Electric Reliability Council

NES Networked Energy Services (Echelon)

NFC Near Field Communication

NIST National Institute of Standards and Technology (US)

NMS Network Management System

NOC Network Operations Center

ODI Open Development Initiative (technological project)

ODM Original Design Manufacturer

OEM Original Equipment Manufacturer

OPEN Open Public Extended Network

OSGi Open System Gateway initiative

PCS Personal Communication Services

PCT Programmable Communication Thermostat

PDA Personal Digital Assistant

PDC-P Packet Data Convergence Protocol (3GPP)

PG&E Pacific Gas & Electric

PHEV Plug-In Hybrid Electric Vehicle(s)

PHY Physical Layer Device

PLC Power Line Communication

PMU Phasor Measurement Unit

POS Point of Sale

PRIME Powerline-Related Intelligent Metering Evolution


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PSC Public Service Commission(s)

PTCRB PCS Type Certification Review Board

QES Qualcomm Enterprise Services

RAM Random Access Memory

REP Retail Energy Providers

RF Radio Frequency

ROLL Routing over Low Power and Lossy (IETF)

SAC Standardization Administration of China

SCADA Supervisory Control and Data Acquisition

SCE Southern California Edison

SDG&E San Diego Gas & Electric

SDO Standards Development Organization(s)

SEP Smart Energy Profile (ZigBee Alliance)

SGIP Smart Grid Interoperability Panel

SIM Subscriber Identity Module (ETSI GSM technical specification)

SLA Service Level Agreement(s)

SMA Security, Monitoring, and Automation

SMAC Simple MAC (Freescale Semiconductor)

SMS Short Message Service

SMSC Smart Mixed-Signal Connectivity

SMUD Sacramento Municipal Utility District

SOA Service-Oriented Architecture

SoC System-on-Chip

SRW Search and Retrieve via the Web

SSE Scottish and Southern Electric

SUN Smart Utility Network


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QoS Quality of Service

T&D Transmission and Distribution

TAM Total Available Market

TCP/IP Transmission Control Protocol/Internet Protocol

TDMA Time Division Multiple Access

TI Texas Instruments

TMS Transaction Management System

TOU Time of Use

TREE Tendril Residential Energy Ecosystem

TUNet Tantalus Utility Network

TWACS Two-Way Automatic Communication System

UCA Utility Communications Architecture

UI User Interface

UMI Universal Metering Interface

UMTS Universal Mobile Telecommunications System

USB Universal Serial Bus

VAR Value-Added Reseller (usually of technology products)

WAN Wide Area Network

Hz Hertz (formerly cycles per second)

WCDMA Wideband Code Division Multiple Access

Wi-Fi Wireless Fidelity

WiMAX Worldwide Interoperability for Microwave Access, Inc. (group promoting IEEE 802.16 wireless broadband standard)

WLL Wireless Local Loop

WSD Web Services for Devices

XML Extensible Markup Language


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Table of Contents

Section 1. ........................................................................................................................................ 2 Executive Summary....................................................................................................................... 2 1.1 Making the Electrical Grid “Smart” .......................................................................................... 2 1.2 The Evolving Smart Grid Value Chain/Competitive Landscape ............................................. 3 1.3 Forecasting the Smart Grid..................................................................................................... 4

Section 2. ........................................................................................................................................ 5 Market Issues ................................................................................................................................. 5 2.1 Introduction to the Smart Grid................................................................................................. 5 2.1.1 The Market Landscape ........................................................................................................ 5 2.1.2 The Benefits of a Smart Grid ............................................................................................... 6 2.1.2.1 Automated Meter Reads ................................................................................................... 6 2.1.2.2 Demand Response, Time of Use, and Critical Peak Pricing ............................................ 6 2.1.2.3 Remote Connect/Disconnect ............................................................................................ 6 2.1.2.4 Remote Fault Detection .................................................................................................... 6 2.1.2.5 Net Metering...................................................................................................................... 7 2.1.3 Smart Grid Market Drivers ................................................................................................... 7 2.1.3.1 Regulatory Mandates........................................................................................................ 7 2.1.3.2 Energy Efficiency and Reliability....................................................................................... 7 2.1.3.3 Operational Efficiency ....................................................................................................... 7 2.1.3.4 Environmental Concerns................................................................................................... 7 2.1.3.5 Improved Customer Service ............................................................................................. 8 2.1.3.6 Reduction of Energy Theft ................................................................................................ 8 2.1.3.7 Energy Market Competition .............................................................................................. 8 2.1.4 Smart Grid Market Challenges............................................................................................. 8 2.1.4.1 Evolving Standards Landscape ........................................................................................ 8 2.1.4.2 Project Complexity ............................................................................................................ 9 2.1.4.3 Business Case Complexity ............................................................................................... 9 2.1.4.4 Project Costs..................................................................................................................... 9 2.1.4.5 Consumer Acceptance.................................................................................................... 10 2.2 Value Chain and Competitive Landscape Trends ................................................................ 10 2.2.1 Utility Landscape................................................................................................................ 11 2.2.2 Smart Meter and AMI Technology Vendors....................................................................... 12 2.2.3 HAN/DR Vendors ............................................................................................................... 13 2.2.3.1 Platform Plays ................................................................................................................. 14 2.2.3.2 Consolidation Trends ...................................................................................................... 14 2.2.3.3 The Impact of Google and Microsoft............................................................................... 15 2.2.4 Smart Grid Communication Services Providers ................................................................ 15 2.2.4.1 Cellular Connectivity Providers ....................................................................................... 15 2.2.4.2 Turnkey Managed Service Providers.............................................................................. 16 2.3 Regional Trends.................................................................................................................... 17 2.3.1 North America .................................................................................................................... 17 2.3.2 Europe................................................................................................................................ 18 2.3.3 Asia-Pacific ........................................................................................................................ 19 2.3.4 Latin America ..................................................................................................................... 19 2.3.5 Middle East and Africa ....................................................................................................... 20 2.4 Legislative and Regulatory Impact Analysis ......................................................................... 20 2.4.1 North America .................................................................................................................... 21 2.4.1.1 Energy Policy Act of 2005............................................................................................... 21 2.4.1.2 Energy Independence and Security Act of 2007 ............................................................ 22


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2.4.1.3 California Smart Metering Largely Results from a Mandate for Energy Efficiency and Reliability ........................................................................................................................................ 22 2.4.1.4 Texas Smart Metering Driven both by Regulatory Mandate and Retail Competition ..... 23 2.4.2 Europe................................................................................................................................ 23 2.4.2.1 European Directive 2003/54/EC ..................................................................................... 24 2.4.2.2 European Directive 2006/32/EC ..................................................................................... 24 2.4.2.3 Third Energy Package .................................................................................................... 24

Section 3. ...................................................................................................................................... 25 Technology Issues....................................................................................................................... 25 3.1 The Drive towards a Smart Grid ........................................................................................... 25 3.2 Key Smart Grid Standardization Efforts ................................................................................ 26 3.2.1 International Standards...................................................................................................... 26 3.2.2 Government Mandates ...................................................................................................... 27 3.2.2.1 The NIST Framework...................................................................................................... 27 3.2.2.2 EC Mandate M/441 and the OPEN Meter Project .......................................................... 28 3.2.3 Utility-specific Efforts.......................................................................................................... 28 3.3 Cyber Security for the Smart Grid......................................................................................... 29 3.4 Wide Area Networking in the Smart Grid .............................................................................. 30 3.4.1 US Market Landscape ....................................................................................................... 30 3.4.2 International Market Landscape......................................................................................... 30 3.5 The Impact of the Shift to 3G Cellular Infrastructure on the Smart Meter ............................ 31 3.5.1 Concerns Regarding 2G Network Longevity ..................................................................... 31 3.5.2 Reasons for and against the Shift to 3G in Smart Grid Communications.......................... 32 3.6 Distribution Automation Issues ............................................................................................. 32 3.7 Neighborhood Area Networks............................................................................................... 33 3.7.1 Power Line Communications in Smart Metering................................................................ 33 3.7.2 Fixed RF in Smart Metering ............................................................................................... 34 3.8 Home Area Networks and “No-New-Wire” Communication Technologies ........................... 35 3.8.1 ZigBee Smart Energy......................................................................................................... 35 3.8.2 HomePlug Green PHY....................................................................................................... 35 3.8.3 Z-Wave Advanced Energy Control Framework ................................................................. 36 3.8.4 6loWPAN............................................................................................................................ 36 3.8.5 Wireless M-Bus .................................................................................................................. 36 3.8.6 EnOcean ............................................................................................................................ 37 3.8.7 LonWorks ISI...................................................................................................................... 37 3.8.8 INSTEON ........................................................................................................................... 37 3.8.9 KNX.................................................................................................................................... 38 3.9 U-SNAP and the Universal Metering Interface ..................................................................... 38

Section 4. ...................................................................................................................................... 39 Market Forecasts.......................................................................................................................... 39 4.1 Forecast Methodology........................................................................................................... 39 4.2 Smart Meter Forecasts.......................................................................................................... 40 4.3 Smart Meter NAN Connectivity Forecasts ............................................................................ 42 4.4 Smart Meter WAN Connectivity Forecasts ........................................................................... 43 4.5 Smart Meter Cellular Connection Forecasts......................................................................... 43 4.6 Smart Meter Cellular Embedded Module Forecasts............................................................. 47

Section 5. ...................................................................................................................................... 52 Select Industry Players................................................................................................................ 52 5.1 Meter and Smart Metering Technology Vendors .................................................................. 52 5.1.1 CalAmp .............................................................................................................................. 52


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5.1.2 Echelon Corporation .......................................................................................................... 52 5.1.3 Eka Systems Inc ................................................................................................................ 52 5.1.4 Elster Integrated Solutions................................................................................................. 53 5.1.5 ESCO Technologies Inc..................................................................................................... 53 5.1.6 GE Energy.......................................................................................................................... 54 5.1.7 Grid Net.............................................................................................................................. 54 5.1.8 GridPoint ............................................................................................................................ 54 5.1.9 Holley Metering Ltd ............................................................................................................ 54 5.1.10 Itron Inc ............................................................................................................................ 55 5.1.11 Landis+Gyr....................................................................................................................... 55 5.1.12 Maestro Wireless Solutions (Fargo Telecom Group)....................................................... 55 5.1.13 Silver Spring Networks..................................................................................................... 56 5.1.14 SmartSynch...................................................................................................................... 56 5.1.15 Telenor Cinclus ................................................................................................................ 57 5.1.16 Trilliant Networks.............................................................................................................. 57 5.2 Connectivity Service Providers ............................................................................................. 57 5.2.1 Aeris Communications ....................................................................................................... 57 5.2.2 AT&T Corporation .............................................................................................................. 58 5.2.3 CrossBridge Solutions ....................................................................................................... 59 5.2.4 Jasper Wireless.................................................................................................................. 59 5.2.5 KORE Telematics............................................................................................................... 59 5.2.6 Mach Communications ...................................................................................................... 60 5.2.7 NTT DoCoMo..................................................................................................................... 60 5.2.8 Numerex Corporation......................................................................................................... 60 5.2.9 Orange Business Services................................................................................................. 61 5.2.10 Rogers Communications Inc............................................................................................ 61 5.2.11 Sprint................................................................................................................................ 62 5.2.12 Swisscom......................................................................................................................... 62 5.2.13 Telefonica O2................................................................................................................... 63 5.2.14 Telenor Group.................................................................................................................. 63 5.2.15 TELUS.............................................................................................................................. 64 5.2.16 Verizon Wireless .............................................................................................................. 64 5.2.17 T-Mobile USA................................................................................................................... 65 5.2.18 Vodafone Group Public Ltd Co ........................................................................................ 65 5.2.19 Wyless PLC...................................................................................................................... 66 5.3 Module Vendors .................................................................................................................... 66 5.3.1 AnyDATA ........................................................................................................................... 66 5.3.2 Cinterion Wireless Modules ............................................................................................... 66 5.3.3 Enfora................................................................................................................................. 67 5.3.4 Huawei Technologies Co Ltd ............................................................................................. 67 5.3.5 iWOW Technology ............................................................................................................. 68 5.3.6 Motorola M2M Wireless Modules....................................................................................... 68 5.3.7 Sierra Wireless................................................................................................................... 69 5.3.8 SIMCom Wireless Solutions .............................................................................................. 69 5.3.9 Telit Communications ........................................................................................................ 70 5.4 Other Key Smart Metering Players ....................................................................................... 70 5.4.1 4Home Inc.......................................................................................................................... 70 5.4.2 AlertMe............................................................................................................................... 71 5.4.3 Ambient Devices ................................................................................................................ 71 5.4.4 Arcadian Networks Inc ....................................................................................................... 72 5.4.5 Blue Line Innovations Inc................................................................................................... 72 5.4.6 Control4.............................................................................................................................. 72 5.4.7 Current Cost....................................................................................................................... 73


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5.4.8 Coronis Systems, an Elster Group Company .................................................................... 73 5.4.9 CURRENT Group............................................................................................................... 73 5.4.10 ecobee Inc........................................................................................................................ 74 5.4.11 Ember Corporation........................................................................................................... 74 5.4.12 eMeter Inc ........................................................................................................................ 75 5.4.13 Energate Inc..................................................................................................................... 75 5.4.14 EnergyHub Inc ................................................................................................................. 75 5.4.15 EnerNOC Inc.................................................................................................................... 76 5.4.16 EnOcean Alliance............................................................................................................. 76 5.4.17 Exceptional Innovation LLC ............................................................................................. 76 5.4.18 Freescale Semiconductor ................................................................................................ 77 5.4.19 Google.............................................................................................................................. 77 5.4.20 GreenWare....................................................................................................................... 77 5.4.21 GridWise Alliance Inc....................................................................................................... 78 5.4.22 HomePlug Powerline Alliance.......................................................................................... 78 5.4.23 iControl Networks Inc....................................................................................................... 78 5.4.24 Intamac Systems.............................................................................................................. 79 5.4.25 Lagotek Corporation ........................................................................................................ 79 5.4.26 Microsoft Corporation....................................................................................................... 79 5.4.27 OpenPeak Inc .................................................................................................................. 80 5.4.28 Pacific Gas and Electric Company................................................................................... 80 5.4.29 Portus Singapore Pte Ltd................................................................................................. 81 5.4.30 PowerHouse Dynamics llc ............................................................................................... 81 5.4.31 RWE AG........................................................................................................................... 81 5.4.32 Sequentric Energy Systems LLC..................................................................................... 81 5.4.33 Tendril Networks .............................................................................................................. 82 5.4.34 uControl Inc...................................................................................................................... 82 5.4.35 Xanboo Inc ....................................................................................................................... 82 5.4.36 ZigBee Alliance ................................................................................................................ 83 5.4.37 Z-Wave Alliance............................................................................................................... 83

Section 6. ...................................................................................................................................... 84 Company Directory...................................................................................................................... 84

Section 7. ...................................................................................................................................... 87 Acronyms...................................................................................................................................... 87 Scope of Study ........................................................................................................................... 101 Sources and Methodology ........................................................................................................ 101 Notes ........................................................................................................................................... 102

Please be aware that an Excel worksheet containing all market forecasts accompanies this document. When downloading this report as a PDF from the ABI Research web site, please check to see if the Excel worksheet is also available for download. If you have any questions regarding this, please contact our client relations department.

TABLES

Table 1-1. Total Utility Meter Market by Meter Type with Smart Meter Penetration, World Market, Forecast: 2007 to 2015

Table 1-2. Utility Meter Market by Meter Type with Smart Meter Penetration, North America, Forecast: 2007 to 2015


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Table 1-3. Utility Meter Market by Meter Type with Smart Meter Penetration, Europe, Forecast: 2007 to 2015

Table 1-4. Utility Meter Market by Meter Type with Smart Meter Penetration, Asia-Pacific, Forecast: 2007 to 2015

Table 1-5. Utility Meter Market by Meter Type with Smart Meter Penetration, Latin America, Forecast: 2007 to 2015

Table 1-6. Utility Meter Market by Meter Type with Smart Meter Penetration, Middle East & Africa, Forecast: 2007 to 2015

Table 1-7. Total Smart Meter Communication Technology Cumulative Shipments by Technology Type, World Market, Forecast: 2007 to 2015

Table 1-8. Smart Meter Communication Technology Cumulative Shipments by Technology Type, North America, Forecast: 2007 to 2015

Table 1-9. Smart Meter Communication Technology Cumulative Shipments by Technology Type, Europe, Forecast: 2007 to 2015

Table 1-10. Smart Meter Communication Technology Cumulative Shipments by Technology Type, Asia-Pacific, Forecast: 2007 to 2015

Table 1-11. Smart Meter Communication Technology Cumulative Shipments by Technology Type, Latin America, Forecast: 2007 to 2015

Table 1-12. Smart Meter Communication Technology Cumulative Shipments by Technology Type, Middle East & Africa, Forecast: 2007 to 2015

Table 1-13. Total Smart Meter Concentrator Communication Technology Cumulative Shipments by Technology Type, World Market, Forecast: 2007 to 2015

Table 1-14. Smart Meter Concentrator Communication Technology Cumulative Shipments by Technology Type, North America, Forecast: 2007 to 2015

Table 1-15. Smart Meter Concentrator Communication Technology Cumulative Shipments by Technology Type, Europe, Forecast: 2007 to 2015

Table 1-16. Smart Meter Concentrator Communication Technology Cumulative Shipments by Technology Type, Asia-Pacific, Forecast: 2007 to 2015

Table 1-17. Smart Meter Concentrator Communication Technology Cumulative Shipments by Technology Type, Latin America, Forecast: 2007 to 2015

Table 1-18. Smart Meter Concentrator Communication Technology Cumulative Shipments by Technology Type, Middle East & Africa, Forecast: 2007 to 2015

Table 2-1. Total Smart Meter Cellular Connections by Air Standard, World Market, Forecast: 2007 to 2015


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Table 2-2. Total Smart Meter Cellular Connectivity Revenue by Air Standard, World Market, Forecast: 2007 to 2015

Table 2-3. Total Smart Meter Cellular Connections by Region, World Market, Forecast: 2007 to 2015

Table 2-4. Total Smart Meter Cellular Connectivity Revenue by Region, World Market, Forecast: 2007 to 2015

Table 2-5. Smart Meter Cellular Connections by Air Standard, North America, Forecast: 2007 to 2015

Table 2-6. Smart Meter Cellular Connectivity Revenue by Air Standard, North America, Forecast: 2007 to 2015

Table 2-7. Smart Meter Cellular Connections by Air Standard, Europe, Forecast: 2007 to 2015

Table 2-8. Smart Meter Cellular Connectivity Revenue by Air Standard, Europe, Forecast: 2007 to 2015

Table 2-9. Smart Meter Cellular Connections by Air Standard, Asia-Pacific, Forecast: 2007 to 2015

Table 2-10. Smart Meter Cellular Connectivity Revenue by Air Standard, Asia-Pacific, Forecast: 2007 to 2015

Table 2-11. Smart Meter Cellular Connections by Air Standard, Latin America, Forecast: 2007 to 2015

Table 2-12. Smart Meter Cellular Connectivity Revenue by Air Standard, Latin America, Forecast: 2007 to 2015

Table 2-13. Smart Meter Cellular Connections by Air Standard, Middle East & Africa, Forecast: 2007 to 2015

Table 2-14. Smart Meter Cellular Connectivity Revenue by Air Standard, Middle East & Africa, Forecast: 2007 to 2015

Table 3-1. Total Smart Meter Cellular Module Shipments by Air Standard, World Market, Forecast: 2007 to 2015

Table 3-2. Total Smart Meter Cellular Module Revenue by Air Standard, World Market, Forecast: 2007 to 2015

Table 3-3. Total Smart Meter Cellular Module Shipments by Region, World Market, Forecast: 2007 to 2015

Table 3-4. Total Smart Meter Cellular Module Revenue by Region, World Market, Forecast: 2007 to 2015

Table 3-5. Smart Meter Cellular Module Shipments by Air Standard, North America, Forecast: 2007 to 2015


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Table 3-6. Smart Meter Cellular Module Revenue by Air Standard, North America, Forecast: 2007 to 2015

Table 3-7. Smart Meter Cellular Module Shipments by Air Standard, Europe, Forecast: 2007 to 2015

Table 3-8. Smart Meter Cellular Module Revenue by Air Standard, Europe, Forecast: 2007 to 2015

Table 3-9. Smart Meter Cellular Module Shipments by Air Standard, Asia-Pacific, Forecast: 2007 to 2015

Table 3-10. Smart Meter Cellular Module Revenue by Air Standard, Asia-Pacific, Forecast: 2007 to 2015

Table 3-11. Smart Meter Cellular Module Shipments by Air Standard, Latin America, Forecast: 2007 to 2015

Table 3-12. Smart Meter Cellular Module Revenue by Air Standard, Latin America, Forecast: 2007 to 2015

Table 3-13. Smart Meter Cellular Module Shipments by Air Standard, Middle East & Africa, Forecast: 2007 to 2015

Table 3-14. Smart Meter Cellular Module Revenue by Air Standard, Middle East & Africa, Forecast: 2007 to 2015


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SCOPE OF STUDY

Massive regulatory effort and business investment is currently underway around the world to upgrade various countries’ electrical grids with significant new capabilities, specifically in the areas of increased network communications, remote and automated management of network elements in the field, and new power management functionality (distributed generation and power storage, including support for Plug-In Hybrid Electric Vehicles (PHEVs)). A key aspect to this upgrade to a smart grid is the deployment of millions of new smart meters by utilities around the globe, but particularly in North America, Europe, and certain countries in the Asia-Pacific region, most notably Australia. It is important to keep in mind, though, that Distribution Automation (DA), and Home Area Networking/Demand Response (HAN/DR) are also key aspects of the evolving smart grid.

This study examines the market for smart grid technology with a strong focus on the deployment of smart electricity meters and the various technological and topological choices to connect these meters to the utilities’ head-end systems. The key market adoption drivers and challenges are discussed, value chain and competitive landscape issues are analyzed, regional trends are outlined, and there is a particular focus on the key regulatory and legislative activity occurring in support of smart grid development. In addition, the standards and technology associated with the smart grid are extensively examined. Highly granular five-year forecasts are provided for both smart metering as well as the communication technology options used to connect smart meters. Finally, profiles are provided for a wide range of select players in the smart grid value chain. ABI Research estimates that the total installed base of smart electricity meters, capable of two-way communications, will rise from roughly 76 million in 2009 to approximately 212 million by 2015.

SOURCES AND METHODOLOGY

An analyst was assigned to coordinate and prepare this Research Report. Research and query specialists helped lay the data and information groundwork for the analyst, who also developed a focused interview strategy.

ABI Research teams follow a meticulous process when examining each market area under study. The three basic steps in that process are: information collection, information organization, and information analysis.

The key element in ABI Research’s information collection process is developing primary sources, that is, talking to executives, engineers, and marketing professionals associated with a particular industry. It is from these conversations that market conditions and trends begin to emerge, free from media hype.

Analysts use secondary sources as well, including industry periodicals, trade group reports, government and private databases, corporate financial reports, industry directories, and other resources.

Analysts’ conclusions take several forms. The text addresses hard data and well-defined trends and is supported by forecast tables and charts. The text also addresses issues and trends that are difficult to quantify and present in neat, tabular form. Lying at the margins of an industry, they are often precursors of the next technology wave.


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NOTES

CAGR refers to compound average annual growth rate, using the formula:

CAGR = (End Year Value ÷ Start Year Value)(1/steps) – 1.

CAGRs presented in the tables are for the entire time frame in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter time frames may be given as well.

Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2009 US dollars unless otherwise noted. Percentages may not add up to 100 due to rounding.



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Published 1Q 2010

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