Some observers have suggested that the rise of Low Power Wide Area Networks (LPWANs) may spell the demise of IoT revenues for mobile operators (MNOs). At face value this seems credible. After all, GSM connectivity requires the paid use of licenced spectrum which mobile network operators have an oligopoly on. As a result, IoT innovators are increasingly looking for lower cost solutions to enable broader adoption and achieve the explosive market growth predicted.
It may be worth £2 per month to connect a vending machine if the average saving from better scheduling and stock management is £5. But £24 per year to keep tabs on a lamp that costs just £50 to replace might not make so much sense, says Matthew Owen, managing director, M2M Intelligence.
Crucially, even if the ROI works in the long run, local authorities creating smart cities need to be aware of the upfront costs when investing in individual data points, including rubbish bins, parking spaces and street signs.
This is the attraction of LPWAN. Lower data transfer speeds are a trade-off for the lure of low cost hardware with no or low module licence fees and no airtime costs. According to Beecham senior analyst David Parker, providing ‘networks optimised for machine connectivity with much lower deployment costs than traditional cellular networks’ makes a lot of sense – particularly in cases where small pockets of data are sent from static assets.
Recently, there’s been a focus on enabling LPWANs to transmit data over much greater distances; potentially as far as 50km in rural areas and between 5 and 10km in urban areas as we look to widen the possibilities of what can be achieved. Here in the UK for example, we’re seeing research into how the TV white space spectrum can be exploited for IoT applications.
But now, MNOs are joining the party, realising that LPWAN offers a new revenue stream with the added benefit of avoiding cannibalisation of existing average revenue per user from GSM. This is where organisations like the LoRa Alliance are gaining ground.
With LPWANs predicted to account for more than a quarter of the entire IoT connectivity market – 345 million connections – by the end of the decade, they ‘represent the most dynamic and potentially game changing development in the M2M/IoT market’, Parker said earlier in the year.
There will always be a huge demand for IoT GSM connectivity from mobile assets and those needing larger data bundles, so it’s a win-win not only for MNOs, but also MVNOs.
In fact, far from a threat, the benefit from LPWAN to MNOs is that demand for huge numbers of new, very small GSM connections could be reduced. Historically, this has been a part of the business where they’ve struggled to make a profit due to network overheads.
From a connectivity perspective, we’ll likely see the market make the switch towards 4G and 5G when it comes to taking care of big data IoT, while LPWANs will address low data IoT needs.
But it’s not all rosy yet, with the LPWAN industry deeply embroiled in the complexities of competing and proprietary standards. Reminiscent of the media battles between VHS and Betamax or HD DVD and Blu-ray, LPWAN is part of the future – but which flavour and when is anybody’s guess.
The author of this blog is Matthew Owen, managing director, M2M Intelligence.
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