While 2011 can be characterized as the year of the rise of LTE — both in the commercial and public-safety world — machine-to-machine (M2M) communications evolved rapidly during the year and became an avenue through which mobile operators are looking for growth as the mobile market hits saturation.

Long thought of as services that monitor oil wells or track garbage-truck drivers, the M2M sector experienced an expansion throughout 2011 that is now playing a vital connectivity role in exciting services, such as consumer telematics, video surveillance, electric vehicles and wireless home-energy management.

AT&T Mobility was the largest recipient of connected-devices growth, and part of the reason is the company’s aggressive approach toward making deals and the falling prices of 3G modules that have fallen at a dramatic rate.

In a recent interview, Glenn Lurie — president of AT&T Mobility's emerging devices business — said 3G module prices have dropped to about half of the $50 to $60 year-ago price point. That means manufacturers can add modules without significantly raising the prices of their devices.

AT&T added 1.5 million new wholesale and connected devices, dramatically more than any other carrier in the third quarter. Its biggest competitor, Verizon Wireless, saw 367,000 net additions in the third quarter.

Lurie said that, while ereaders have done much to propel AT&T's connected devices business, a combination of business-to-business customers — such as M2M, health care and smart grid — and consumer devices, such as tablets, are driving growth.

AT&T entered the market early, launching a separate division to work full time on the emerging device space. In the last three years, it has racked up deals with companies like Garmin, Barnes & Noble, Ford and Sony.

“We now have 14 million customers, and we’ve learned from them — what business models work and the usage patterns,” Lurie said. “I know we have more data than anyone else in this space, and we have more experience working on new business models.”

Lurie also said that the ramp up of LTE connected devices is moving fast, as vendors are keen on dropping LTE modules into their devices.

A recent report from the Yankee Group points to three major trends pushing traffic toward 4G networks: Carriers eventually will move traffic off of their 2G networks and repurpose that spectrum for 4G; 4G networks enable greater mobility and high-bandwidth streaming for critical application areas such as mHealth and security; and the more robust connections of 4G will enable the evolution of M2M from the support of a single, simple application to leveraging one connection for multiple uses.

The Yankee Group said the high bandwidth from 4G will enable enterprises to layer applications. For instance, an LTE module embedded in an oil tank to monitor its contents could support a motion-triggered video monitoring surveillance system to prevent theft.