T-Mobile US outsources M2M operations - a vote of no-confidence in M2M?

T-Mobile has decided to outsource its M2M operations to a third party, Raco. The latter will take control of all provisioning and management and take over T-Mobile's in-house M2M staff. Article here.

At first glance this seems crazy. M2M promises to generate almost no revenue from traffic for large numbers of applications including smart meters (see our report here) and vehicle tracking. Let's not get blinded by what's going on with eReaders, tablets and a few other bandwidth heavy devices. Most M2M apps are low bandwidth and low traffic. Hauling bits around won't generate much revenue. Where an MNO can generate revenue is from provisioning and management. Being a bit-pipe was OK-ish for mobile data services but for most M2M applications it's just not viable as a stand-alone if MNOs are serious about M2M.

So why have they done it. Two possibilities spring to mind.

Maybe this all tied up with the putative AT&T acquisition. The latter is probably stronger in M2M, although this is kinda debatable given what they consider to be M2M, see my earlier blogpost here. Maybe the idea is that they can shift all the direct clients onto a third party platform which should be easier to migrate to a merged AT&T. Is that the logic here?

More likely they've decided that it'll be too difficult in the crowded market place to guarantee that they'll get enough revenue over and above traffic. So, rather than try to fight a losing battle for what is effectively value added service revenue they'd rather just accept that they're going to make only a tiny amount of revenue from wholesale data and move on to doing something more profitable. This is in stark contrast to the prevailing mentality which is to set up specialist M2M business units and competence centres.

Of course the AT&T acquisition confuses the issue somewhat given that a huge chunk of their competition is soon to become part of the same company and they can't make big decisions like this without one eye on their new partner. However, imagining for a moment that that wasn't occuring maybe T-Mobile's decision is genius. Or at least supremely realistic. Take a punt on M2M being only a marginal opportunity for MNOs and all your competitors getting bogged down.