Rich mix may be a game changer
For years to come, the market for low power wide area networks (LPWA) will be as fragmented as the Internet of Things it serves. With one of its most significant entrants still more than a year away, players are in a race to cultivate a market of end users that is diverse and still largely unknown.
The great hope, some say, is the rise of LPWA nets will act as a catalyst, changing the nature of the embedded and machine-tomachine markets. What are today custom solutions tailored for each application will become a kind of do-it-yourselfers paradise of modules and services, blurring the lines between vendors, users and partners.
Before it has even gotten market traction, the LPWA sector is already in a race to the bottom. The current leader is the area’s pioneer, Sigfox, said to be promising costs approaching $1 per node per year for users offering enough volume.
Nipping at its heels are members of the rapidly expanding LoRa Alliance. Following it is an array of other sub-gigahertz options almost too numerous to enumerate as well as two cellular options just getting started, LTE Cat 1 and LTE Cat M1.
That puts a lot of pressure on the cellular industry’s prince in waiting, LTE Category M2. It is expected to emerge from the 3GPP standards process soon but is not likely to be switched on in any major provider’s network until 2018, in part because it requires operators to install and test a new class of application servers. The good news is the IoT market is broad, diverse and will take years to fully cultivate. Many expect there will be enough business for all, but it’s too early to tell which technologies will be mainstream and which niche.
Analysys Mason forecasts LPWA technologies will generate $970 million in connectivity revenue in 2018, more than double the total cumulative revenue for 2015-2017 of $450 million. (Charts: GSMA)
Hugo Fiennes, the founder of module maker Electric Imp, is optimistic the rise of low cost cellular IoT networks will be a game changer. Today’s rich ecosystem of easy-to-use, IP-based chips, boards and systems for the smart home will migrate from Bluetooth and Wi-Fi to cellular, making it easy to create mix-and-match solutions.
Today’s world of M2M specialists will be overrun by a maker community. In this way, cellular IoT will enable Web 2.0 mashups of APIs creating new services, Fiennes believes.
Young Sohn, chief strategy officer of Samsung, shared a similar view of IoT in a recent keynote at the Imec Technology Forum. He gave as an example a surfing buddy who started Ring.com, a video-enabled doorbell that connects to smartphones.
“All he did was put [a few existing pieces] together with three people—that is the power of smart, connected devices and the cloud,” Sohn said. “Building products is easier the ever,” he said noting Instagram was created by three engineers in six weeks, compared with a Microsoft Windows update that took 300 engineers two years. Samsung, its rival Intel and every chip vendor with a microcontroller family are preparing for this IoT wave by rolling out families of low power modules supported by peripherals and services. Cellular module makers are hopeful this vision will come to pass, expanding their relatively pricey and power hungry M2M sector into a much larger IoT businesses.
Data prices are next big unknown
The 10 Mbit/second LTE Cat 1 modules rolling out now are mainly attracting existing M2M users who want to migrate off 2G and 3G networks they fear will be turned off soon.
But with the 1Mbit Cat M standard expected to go live next year “we see new markets, different markets people can’t get into with today’s cellular because they can’t get long battery life and price they need” said Scott Schwalbe, chief executive of NimbeLink, a small but growing vendor of cellular modems.
Today’s M2M users range from ATM machines and kiosks to digital signs, point-of-sale terminals and programmable logic controllers, largely running on 2G networks. The Cat 1 products coming online now open potential for remote monitoring oil and gas fields and farms but generally hit the same cost and power numbers as 2G, said Schwalbe. With Cat M, customers will “not be tech companies but manufacturers like chemical companies, non-tech product companies wanting to monitor or manage” products and processes, he said. “If we can get to a $50 edge sensor with battery, a whole world of embedded remote monitoring will open up,” he added.
Only cellular covers the waterfront of low to high bandwidth applications, but the IoT market is a race to the bottom in price and power.
Some are skeptical whether cellular operators will drop data prices to the ultra-low level needed to attract this new world of uses. “I share the concern that operators are challenged to understand how to pick the right price points particularly for Cat M1 and M2—whether they adapt pricing remains to be seen” said Axel Hansmann, vice president of M2M portfolio and strategy for module maker Gemalto. “The challenge is unless they get volumes of connections…it’s hard for them to monetize it,” he said.
Fiennes of Electric Imp believes carriers understand the IoT opportunities and will set prices low enough to enable them. Amazon’s Kindle showed them the path, he said. There’s no need to
support legacy 2/3G networks, so chip sets can be simple and no one will have to pay the legacy royalties Qualcomm and others charged for legacy nets, he added.
Checking the menu for prices
Today’s LTE Cat 1 modules are emerging at about the same $25-25 prices as the 2G modules they replace with fully certified modems selling for $70-100. Carriers already charge M2M users a wide array of prices from $1 to 10 or more a month based on their data use. Schwalbe of NimbeLink expects to see Cat M1 modules by this fall with networks starting to launch by the end of the year. “We haven’t got any M1 pricing yet, but I expect it will definitely be less than Cat 1, but higher than the $5-8 of LoRa and Sigfox, somewhere in between—maybe $15,” he said.
Cat M1 chips are starting to sample and going through certification. They will likely be run at half duplex rates of 300-400 Kbits/second for GPRS-like (2.5-G class) performance, said Craig Miller, vice president of marketing for chip vendor Sequans.
Cat M1 adds a sleep mode and drops the requirement of checking the cellular network every second or two, thus lowering power significantly compared to 2G and Cat 1 nets.
The ink isn’t dry on the 3GPP’s Cat M2 spec targeting max data rates of 200 Kbits/s but likely used at about 40 Kbit/s average. At such rates, confirmations will be too slow for retail users and over-the-air firmware upgrades will become impractical. In addition, M2 devices won’t support mobility or voice, high-end features some legacy M2M apps require.
Sequans will support Cat M2 initially through a firmware upgrade of its existing Monarch chip set used for M1. If the market pans out as hoped, it will eventually design a cost-optimized chip specifically for M2.
M2 won’t replace M1, says Miller, because both have unique attributes that will attract different users.
Strategy Analytics says service providers could be generating more than $13 billion from LPWA nets by 2022.
Carriers take diverging paths
For carriers, Cat1 and M1 are software upgrades for their existing networks. But M2 will require they deploy a new set of application servers defined by 3GPP for carrying non-IP traffic. The additional testing and costs mean few carriers are expected to turn M2 networks on until 2018.
China will be an exception. It is expected to skip M1 and go straight to M2 given spectrum availability there.
In another major wrinkle on the cellular road map, some carriers are expected to deploy a new low-cost version of 3G in Europe and other locations lacking LTE. The so-called Extended Coverage GSM (ECGSM) may compete with legacy 2G and 3G networks, creating a patchwork quilt especially across Europe.
For example, some Scandinavian carriers have said they will shut down 3G but keep 2G nets for IoT. In the U.S., AT&T announced it will shut down its 2G nets in 2017, hoping to force a migration to more efficient LTE options.
The carrier-by-carrier choices are creating some angst.
“It’s hard to commit to an offering if you have white spots, and if we have to adopt combo modules, products get more expensive again,” said Schwalbe of NimbeLink. “A lot needs to be addressed in M2 before we can say what the impact will be for our customers,” he added.
“Things are getting more complicated the more choices you have and choices come with constraints, so it takes time to understand,” said Hansmann of Gemalto.
For its part, AT&T is rolling out Cat 1 services now with modules starting as low as $14.99. It aims to test Cat M1 by the end of the year and turn M1 services on next year. So far, it has no public timetable for Cat M2 services or even trials.
The telco giant has more than 28 million mainly M2M-class consumer and industrial IoT users today. They range from low bandwidth apps like asset tracking to surveillance videocams and connected cars, said Cameron Coursey, vice president of IoT product development at AT&T.
Orange uses a bit of everything
Service providers such as Orange may use a bit of everything. It has more than nine million M2M users in operations spanning Europe and Africa, said Arnaud Vamparys, vice president of radio access networks for the carrier.
2G and EC-GSM provides good national coverage, he said. LTE offers more options with Cat M1 already in lab tests, and Orange is also rolling out a national LoRa network that aims to cover 1,200 cities in its home country of France by mid-2016.
“Unless you have served some customers, you don’t understand the real market — that’s why we are deploying LoRa,” said Vamparys. “We made a good decision not to wait until 2017 [for Cat M1] to start learning,” he said.
Orange evaluated several non-cellular network options before picking LoRa. While the carrier would not share details of its findings, “LoRa is the best case a customer can get for power, coverage and viable throughput,” said Vamparys. “We are agnostic, we want the best connectivity and customer experience,” he added.
Orange ran a LoRa trial in Grenoble with more than 50 partners before deciding to deploy a national network. It says it will remain committed to the network even after the new 3GPP options become available.
“We had good feedback [on LoRa] from partners like Schneider Electric that uses it in a smart building platform…and we support asset management and many other use cases,” he said.
Today about half the cellular IoT users are still on 2G nets. Demand for 3G is low, and some users even require LTE Cat 3 or 4 to support uses such as video streaming kiosks, said Schwalbe of NimbeLink For today, NimbeLink is busy helping more than 50 customers design in Cat 1 hardware. Which of the many new options takes off, for what uses and when remains to be seen, he said.
– Rick Merritt, Silicon Valley Bureau Chief, EE Times