LPWAN Progress: Are We There Yet?

K. Weldon
K. Weldon

Summary Bullets:

  • Operators were racing to roll out LPWAN networks in 2017, with the aim of generating massive numbers of new IoT deals and new connections.
  • The LPWA World event in London on May 22 and 23 may help provide a reality check on market traction.

The agenda for LPWA World this week in London provides some clues about the burning issues that need to be addressed, as the networks that mobile operators built out in 2017 are now in place and looking for action. Nearly every major operator offering IoT services and some that are new to the game got on the LPWAN bandwagon in 2017, as the market for inexpensive, energy- and battery-efficient technologies to support low-bandwidth IoT use cases looked hugely promising. The hope was (and remains) that many companies that wanted to deploy IoT for mobile use cases but couldn’t afford the high cost of traditional 3G/4G cellular networks would flock to these new fit-for-purpose low-cost/low-power networks. The operators also see potential new growth opportunities in market segments they haven’t been able to penetrate well, such as smart cities/smart lighting and agriculture. While some providers are offering non-standardized networks based on LoRa and SigFox, most mobile operators launched NB-IoT and LTE-M in 2017.

According to the GSMA, there have been 48 launches (i.e., buildouts in 48 countries) of either NB-IoT or LTE-M by 26 operators as of April 2018. Of these, 31 launches were for NB-IoT, although there are some operators that are building out both or are planning to do so in the near future, as each technology has its own benefits when it comes to issues including bandwidth, costs, and voice support.

So, how are they doing?

As the operators that have deployed the technology can attest, the expectation is that that eventually the lower costs and extended battery life of LPWANs will draw thousands of companies deploying massive numbers of connections for use cases leveraging the Internet of Things. In particular, use cases for utility/energy management, asset tracking, and smart cities, which often require only sporadic/periodic remote sensor readings of far-flung equipment or assets, would provide the bulk of opportunities. What has been missing in a lot of the public marketing and monetization plans has been a strategy to go beyond connectivity (which is critical, considering the even lower average ARPU for LPWANs than for 3G/4G cellular connectivity) to offer higher-value services. These can include device and connectivity management, application enablement and management, bundled hardware/software/connectivity packages, end-to-end vertical solutions, custom dashboards, advisory and business advisory services, and support for seamless low-cost global roaming. These are the kinds of offerings that are increasingly offered by operators to support IoT deployments for large businesses and MNCs using their 4G networks (and often their wireline networks and WiFi networks as well). The conversation about LPWANs, on the other hand, has centered on low-cost connectivity which is supposed to draw such a vast number of connections to the IoT that, despite the low ARPU, the networks would pay for themselves.

To be fair, we are still at the beginning of the LPWAN era (and 5G for mobile IoT is a ways off). But, the first rumblings are starting to be heard and they are mixed. At this week’s LPWA World, for example, a session with Vodafone, whose NB-IoT network is live in nine markets, urged operators to look at providing IoT solutions beyond connectivity to generate cash, noting the low margins associated with LPWANs. The agenda for the conference is also telling, as it includes the following sessions: “Monetizing IoT and Driving New Business,” “The World’s Largest LoRaWAN Network; More than Just a Connection” (from Tata Communications), “Operator Strategy Panel: Maximising the Return on Your LPWAN Investment,” “LPWAN: Lowering the Entry Barriers to IoT” (from SigFox), and “A Multi-Technology and Platform Approach to Monetization.”

Clearly, there is some concern in the industry that the anticipated massive uptake of LPWANs will not be realized as easily as they had hoped, but the rollouts continue and optimism remains, tempered with realistic concerns about how best to monetize the investments.

What do you think?

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