Smart grids: The next wireless goldmine? page 2

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Most importantly, WiMAX will enable carriers, utility companies and other key players to build open-standards based smart meters. Ultimately, through WiMAX, third parties will be able to develop many applications and devices, helping to reduce cost. With WiMAX chipsets currently running about $36, some observers believe that the cost could become as low as $8 or $6 in the next 18 months.

In the meantime, WiMAX-based smart meters are already available in the U.S. For instance, GE, in association with Intel and Grid Net software, has built one of the first WiMAX-based smart meters. Intel Capital and GE both invested in Grid Net in 2006. Companies competing with GE include companies like Trilliant, Itron, Silver Spring Networks (also one of GE's partners) and Landis & Gyr.

However, over time, LTE could become a valuable option for many companies involved in this space as LTE becomes widely adopted and prices associated with it start to come down. LTE's larger coverage capacity and ability to support a higher number of points should play a key role here. In our opinion, it will also become critical for LTE carriers to offer a decent revenue share with utility companies and other key players.

Although being a short-range technology, ZigBee could also have a role to play in the M2M apps space as several companies have expressed some interest in the technology. In fact, U.S.-based startup Tendril Networks is well positioned to become a pioneer in this space; the company, which teamed up with Itron and Landis & Gyr, has already developed a product called Tendril Residential Energy Ecosystem (TREE), compatible with various ZigBee-based devices to be used for smart grid apps inside homes.

Lastly, if fully secured, WiFi could also become a disruptor. WiFi-based smart grid apps appear to be gaining traction in the U.S. and Europe. For instance, the city of San Jose, in association with Echelon, is currently testing a whole smart streetlight network using WiFi-based smart grids set to be launched this summer. The system may receive federal stimulus money, and if it does the city plans to revamp the entire 65,000-light network, which would help reduce energy costs by 40 percent. That figure is consistent with the performance of two European cities: Milton Keynes in the United Kingdom and Olso in Norway, which have been implemented by Echelon.

Bottom line: Smart grid apps appear to have the most potential in the M2M space. In fact, these types of apps present tremendous potential for many wireless carriers and utility companies, as they could become a new revenue opportunity. But most importantly, this could become a core technology to fight global warming and save energy. From a network technology standpoint, while WiMAX appears to have taken an early lead over LTE, it remains unclear which technology will win the battle over the time. It also remains unclear whether utility companies will choose to build their own networks or partner with wireless carriers to do so.

At the end of the day, with utility companies investing heavily in smart meter deployments, and growing support from states like California and Texas (as well as the Obama administration's regard for these types of applications), smart grid apps may face a bright future in the years to come.

Julien Blin is a senior analyst for broadband applications at Maravedis. Maravedis is a leading analyst firm focusing on disruptive technologies including smart networks using WiMAX, IEEE, and 3GPP/LTE. Maravedis works with system and service providers, vendors, regulators, and institutional investors. Learn more at www.maravedis-bwa.com [3].

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