While connectivity is the current focus, it says, it sees M2M applications as the next big focus area in Europe, where Frost & Sullivan expects a Compound Annual Growth Rate (CAGR) of 33 per cent for the main Europea countries between 2011 and 2016, with the number of SIM connections expected to reach 75 million in 2016. The UK market is in the lead followed by Germany.

The report says that in the last five years, the M2M market in Europe has significantly evolved - telcos are fine-tuning their market strategies to better reflect their core capabilities, it claims.

"The largest driver for M2M telecom service providers has been relying on their core connectivity expertise," explained Frost & Sullivan Telecommunications and Connected Public Sector Industry Manager Saverio Romeo . "Besides tapping into immediate M2M application areas where legislation is a driver for adoption – such as eCall for connected cars in Europe and in smart meters – M2M telcos are also increasingly positioned for the wave of M2M functions that are dictated by business objectives."

The report expects stead progress, however, for a 'surge' to occur, further consumer education is required. M2M telcos must continue to provide consulting services to build use cases and define an acceptable return on investments, says Romeo.