Low Power WAN Technologies for IoT: Build, Buy or Partner?

By Special Guest
Dan McDuffie, Strategy consultant on M2M, IoT and Mobility
July 24, 2015

Earlier this year at the behest of the International M2M Council I researched and wrote an article on Low Power WAN (LPWA) technologies for IoT, which was published on both the IMC web site and on Linked In, with great reception.  As such I began my journey into attempting to understand the key differentiators between the competing technologies out there.  No easy task it seems.  During the past few months I have been asked by many sources and readers to update this article as the space has heated up.  Further, it appears as if MNOs all over the world, as well as other Service Providers are stepping into the fold and emerging as the likely investors and/or operators of such technologies as an extension to their own existing networks. 

And so, during the past few weeks I reopened the can of worms that is LPWA technologies and took my best stab at trying to navigate both the technical and business model criteria and differentiators, from more of a Service Provider angle, with the proviso that I am no engineer. 

Firstly, a recap on the Market for LPWA:

As we all know, the great promise of the Internet of Things has rapidly emerged over the past few years from a long gestation period within the Machine-to-Machine Communications market, long dominated by cellular and satellite connectivity, and combinations thereof, which of course are expected to continue in their solid growth path well into the future.  However, it is now widely recognized that new technologies must create ubiquitous low cost networks, with lower cost modules and long battery life in order to spur new business models around the dense sensor networks promised by the IoT, and as such push Internet connected nontraditional devices from the hundreds of millions to the billions.  Though it is clear that Wifi and other short range technologies are also playing an ever increasing role in IoT solutions, in many applications there are still the long-range requirements traditionally dominated by cellular radio networks and therefore in the purview of the MNO, but cannot be addressed by cellular (even LTE Cat 0) because of a combination of cost and power constraints. 

Therefore, as cellular technologies shift to 4G and beyond there is little doubt that the traditional cellular networks, as they stand today, are not well suited to billions of low power, chatty devices sending little to no recognizable data, nor can the cost requirement of many of the new IoT business models be met with any semblance of margin for MNOs.  In the face of these rapidly diverging markets, today’s MNO must deal with subscribers (including some ‘Things’ such as Connected Cars and purpose driven Tablets) that crave an ever-increasing speed and bandwidth, where rich media and content distribution are indeed the areas of value in which the MNO can derive the best ROI.  Therefore, it only makes sense that this is where the core network investment needs to go in terms of judicious use of spectrum and network assets, which has spurred the increased focus on alternative technologies for sensor networks.

Emerging from this void are the Low Powered Wide Area Network technologies that over the past months have proven to garner both great attention and great promise.  As these technologies mature and improve, the idea of purpose-built networks for IoT is one that makes ever increasing sense, and the market is quite obviously reacting positively as many of the LPWA actors are enjoying investment capital, alliances, trials and projects on nearly every inhabited continent worldwide.

As providing reliable connectivity to the Enterprise, Muni and Government is the core of the MNO business it’s not a question of if the MNO will have an LPWA strategy, it’s when, and whether to build, buy or partner.  From there, it’s only a question of choice between what are essentially 4 competing technologies and this document is meant to lay those out as straight forward as possible, as well as the key considerations that one must take into account when analyzing them.

Positioning of LPWA Networks

Leading analysts estimate that up to 75% of the growth of active wireless devices between now and the end of the decade will come from non-hub devices such as sensor nodes and accessories, 35% connected by short range technologies such as Wifi, Bluetooth, Z-Wave, ZigBee and the like, and perhaps as little as 10% connected by traditional cellular.  This leaves over 50% of connected device growth going towards LPWA Networks, which are perfectly positioned for markets such as Smart Grid, Smart Cities and Industrial, Environmental and Agricultural Sensor networks.

And indeed these networks are being deployed today in nearly all inhabited regions of the world in a combination of emerging Network Providers, MNO/Network provider partnerships, MNOs themselves, and Public/Private partnerships.

Market Requirements

The market is concerned primarily with Quality of Service, Network Availability, Throughput and Cost.  Furthermore, network longevity is a hot button, as 10+ year network guarantees for deployments such as Smart Grid have proven elusive in the cellular world. 

The basics such as two way communications, IP addressing and security are givens.  In essence, to be a viable long range IoT network, one must offer the user a mission critical, scalable infrastructure capable of receiving information from objects, control those objects if necessary in order to derive new revenue streams and grow a subscriber base in parallel with existing M2M offerings over traditional cellular service.  In the meantime, cost constraints, driven by justifiable return on investments, require low impact on Bills of Materials, long battery life and affordable subscription cost.

For operators of LPWA Networks, both public and private, the business drivers focus on cost effective capex and opex resulting in new business opportunities through acceptable subscription pricing models that complement existing GSM centric solutions. 

When defining the selection criteria for a LPWA network rollout several areas are of interest:

  • Technology centric capabilities – Can the technology deal with the required features as demanded by the market.
  • Commercial terms and conditions – Does the technology allow the network provider to operate at attractive pricing and under acceptable QOS conditions to ensure optimal penetration of the addressable market.
  • Financial and Legal Framework – are the licensing, deployment and operational cost, including revenue share, such that the Network Provider can drive long term value creation, and under what legal terms around market exclusivity, etc.  Is the technology an open standard or a closed ecosystem?

Today there are mainly 4 competing technologies in the LPWA market segment:  LoRa, Sigfox and Neul as well as one technology following the Weightless alliance: nWave.     

86 companies have bundled their forces in the LoRa Alliance driving the LoRaWAN standard and all of them are deploying services around the LoRa technology and chipset developed by Semtech, a US-based, publicly traded chip vendor. The LoRa technology has been selected by multiple emerging independent commercial networks on 5 continents, as well as several MNOs in Europe, Asia and South Africa.  The LoRa Alliance is pushing for an Open Global Standard around this protocol and is backed by such industry heavyweights as Cisco, HP, Sagemcom and IBM.

SigFox is an LPWA technology company based in France, and one of the early movers in the space.  SigFox has developed its own closed technology and is licensing it to various chip vendors and also selecting exclusive network partners regionally, mainly startups and alternative telcos, to deploy commercial services, primarily in Europe to date but expanding world-wide since it most recent substantial fundraising efforts.

Neul is a technology initially focused on white space and have since shifted to ISM centric solutions.  Neul was acquired by Huawei in late 2014 and to date there is little further news available on the strategy being put in place.

Weightless is an alliance promoting its own fully open standards for LPWA, which has been taken up by UK/US startup nWave Technologies.  Weightless is also backed by a consortium including ARM and Texas Instruments. 

Of the four, the two most widely in active deployment are LoRa and SigFox based solutions, with nWave deploying private networks in some notable trials, with some recent high profile announcements, and Neul in stealth mode, expected to re-emerge as an LPWA or quite possibly LTE variant technology after seemingly scrapping its original White Space (TV spectrum) strategy. 

Make sure you click here to read Part 2: How to select the LPWAN Strategy for you.

Dan McDuffie is the former CEO of Wyless, a leading IoT Managed Services provider and today is a strategy consultant on M2M, IoT and Mobility for both Enterprises and Private Equity and a frequent technology writer and public speaker.   Twitter:  @DanBMcDuffie

Edited by Ken Briodagh

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