AT&TCity governments and mid-size utilities will be the initial focus of a machine-to-machine (M2M) partnership between AT&T and IBM announced yesterday. AT&T’s contribution will be its M2M “globally accessible” network as well as devices and SIM cards for use on that network. IBM’s contribution will include several elements including its Intelligent Operations Center, Maximo Asset Management, advanced analytics capabilities and IBM Message Sight MQTT Appliance.

MQTT is a protocol developed by IBM and M2M equipment manufacturer Eurotech specifically for wireless communications of M2M data.

In an announcement of the partnership released yesterday, AT&T and IBM cited examples of several applications they hope to enable for city governments. Among others, these included the ability to identify inefficient traffic patterns so that traffic can be re-routed and another that monitors social media updates from citizens reporting bad weather or major traffic so the city can respond appropriately.

It isn’t surprising to see utilities as one of AT&T and IBM’s initial target markets, as M2M is a key element of the smart grid, which has become a key focus for utilities worldwide. The city government market is a bit more surprising.

Applications such as these fall into a category that some people call the “smart city” — and while it’s easy to see the appeal of applications such as these, what isn’t so clear is their return on investment.

IBM has been doing a lot of work on the smart city, however, so perhaps the company knows something about the market that others don’t.

In general, M2M seems to have a new cachet since people started calling it the “Internet of things” over the last year or so. M2M connections grew 38% per year over the last three years, according to GSMA Intelligence. And Compass Intelligence forecasts 36% annual growth in M2M connections until 2016.