As IoT changes how carriers make money, Ericsson is buying new smarts

Ericsson plans to acquire MetraTech, a vendor of billing systems based on metadata, as service providers eye new services using the Internet of Things.

The acquisition, for an undisclosed sum, will give Ericsson a set of products that let customers quickly set up new types of billing, customer support and financial arrangements, the companies said. MetraTech is based on Boston, and the acquisition will include all of its 140 employees and contractors. The deal is expected to close in the third quarter.

MetraTech’s software can manage billing for both subscription and usage-based services. Its flagship products are MetraNet, available as on-premises software or a managed service, and the Metanga SaaS (software as a service) platform.

Ericsson already makes OSS (operational support systems) and BSS (business support systems) products for service providers. The Stockholm-based company said the MetraTech deal would expand both its billing technology and its presence in the U.S.

MetraNet’s customers span financial services, transportation, software and other industries, and Ericsson said the deal will allow it to serve multiple industries. Ericsson cited new revenue models emerging in IoT and in XaaS, a catch-all acronym for all types of technologies offered as a service.

Ericsson’s interest in MetraTech may have been piqued most by the needs of its traditional telecommunications customers as they gear up for the age of IoT. Carriers have long relied on fat monthly bills from subscribers who pay for voice, text and data services on a mobile device or a home phone and broadband line. In developed countries, there aren’t many more new customers to sign up for those kinds of services, so carriers now want to make money putting myriad new devices online.

Those IoT devices, such as sensors, appliances, cars and factory equipment, will call for new and different types of billing arrangements. While connected machines individually may generate less traffic than a smartphone, they could be lucrative in large numbers. It’s likely that carriers will have to navigate new types of billing arrangements to make these new businesses work for themselves and their customers.

Meanwhile, Ericsson and other network suppliers are pushing technologies for carriers’ data centers, such as NFV (network functions virtualization), to make it easier to quickly develop and activate new types of services.