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Bifurcation of cellular IoT connectivity and the irony of fragmentation of LPWA

NOV 20, 2023 | Matt Hatton
region: ALL vertical: ALL HyperconnectivityInternet of Things

One of the big challenges for cellular-based IoT connectivity at the moment is the plethora of different options for addressing low-end constrained devices. I'm currently working on a slide deck for a client workshop on its connectivity strategy. And I've come to the section about access networks. And it strikes me that the technology options available are back-to-front. Let me explain.

Wide area IoT connectivity has bifurcated. There are applications that need high bandwidth data streams, and there are those that need low cost, probably battery powered, constrained connectivity for sending sensor data. Those two markets are quite different. One generates revenue per connection in dollars, the other in cents. One uses, effectively, the same networks as smartphones etc., while the other wants dedicated constrained networks (i.e. low power wide area). One can be supported on existing platforms and processes, while the other demands 'hyperscale' approaches, with low-touch, low cost etc. And, indeed, we will probably find that these markets will be addressed in different ways with different channels and probably even completely different players.

One irony is this: the part of the market that has the most wiggle-room in terms of price sensitivity has basically only one technology option: 5G. OK, LTE Cat 4 and above for a little while, but essentially it's a simple evolution path. Contrast this with the low end of the market (i.e. constrained applications), where every cent is critical, where there are a host of different technology options: LTE Cat 1, LTE Cat 1 bis, LTE-M, NB-IoT, 5G RedCap (although it's not really fit-for-purpose yet), and eventually eRedCap. And that's before we consider non-3GPP options like LoRaWAN and Sigfox which might or might not be appropriate. Fragmentation adds to cost. Maybe only a few cents, but that's critical.

And, as noted above, some of these technologies need network upgrades, so there's even further additional cost associated with deploying them. At least for LTE-M and NB-IoT.

The upshot is this: The part of the wide-area IoT connectivity space that needs to pare back costs as much as possible suffers tremendously from fragmentation reducing economies of scale, and in some cases not being able to piggyback on existing networks and thus improve the network economics. In contrast the other half of the market, connected cars, CCTV, bodycams etc. has effectively a single roadmap, shared with billions of smartphones, and the economies of scale that brings.

Of course there is some element of inevitability about this. We must be conscious that at the constrained end of the spectrum there is a question of which constraints you're happy to work with. For instance, Cat 1 bis has better availability globally today, but is relatively poor for things like in-building coverage and isn’t part of the 5G roadmap so there’s questions about longevity. In some cases the constraints will be cost, in others power, in others geographical location. The choice of technology will vary depending on which constraint is most pressing. Everything is a trade off for constrained devices.

What's the answer? Well, we can't really put the genie back in the bottle with regard to some of the fragmentation: LTE-M, NB-IoT and Cat 1/Cat 1 bis will all be part of the mix. There's a political angle to this too, with some countries favouring particular technologies over others. But what would certainly help is not making the issue worse. For instance with the pushing of extra new technologies into the mix. 5G RedCap, for instance. IoT has a tendency to lob in a new technology every 12 months. This is confusing and exasperating for adopters. Which should they choose? How future-proof will it be?

The analogy I come up with is deflation. In a deflationary market the economy is wrecked by the fact that people put off spending to wait for prices to get cheaper. We have the same equivalent here: holding off on adopting new technology because there might be a brighter, shinier, newer tech just around the corner. What adopters need to hear is: this is the tech that'll be the one to use, that'll be around for 20 years.

For more on Cat 1 bis and how it compares to other technologies, check out our recent report ‘LTE Cat 1 bis is a real contender in cellular-based IoT, at least in the medium term’.

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