An Overview of the Current Low Power Wide Area Network Market
Transforming disruptive technology developments from early hype to commercial reality is often a bumpy ride, which also the Internet of Things (IoT) is currently experiencing. The first success stories from early adopters have given rise to a huge diversification of the underlying technology base driven by a gold rush of aspiring entrepreneurs. However, larger companies are also joining the race to cut out a big slice of the promised Trillion Dollar IoT revenue cake1.
Emerging IoT connectivity technologies such as Low Power Wide Area Networks (LPWAN) are expected to connect more than half of the IoT devices on our planet but this technology market is still immature and highly fragmented. Clear technology winners are yet to emerge from an intensive phase of upcoming market consolidation, which makes it a gamble to commit to a particular technology choice. This article explores emerging LPWAN technology ecosystem and discusses the main market drivers for the adoption of these technologies.
Low Power Wide Area Networks
Data services provided by cellular networks of mobile operators have been the dominant form of long-range wireless connectivity for IoT devices. These so-called machine to machine (M2M) connections are delivered on top of 2G, 3G or 4G network technologies. However, limitations such as higher costs and energy consumption as well as the inability to provide deep indoor coverage make them not suitable for many IoT applications.
Low power wide area networks (LPWANs) promise to bring simple, more affordable and energy efficient connectivity with high link budgets. This makes them more suitable for IoT applications that require increased device autonomy and offer limited maintenance opportunities, where device and connectivity costs have to be low and where information from hard to reach areas have to be gathered. A LPWAN network can connect many end devices via a single base station over a long distance, however the trade-offs are slower data rates and small data payloads and limited number of message deliveries. Current options on the market can be roughly divided into technologies using unlicensed and licensed spectrum:
- LPWAN technologies operating in unlicensed band often utilise the sub-GHz ISM band due to improved propagation characteristics in particular for built environments. Sigfox2 and LoRaWAN3 are currently the most widely deployed unlicensed LPWAN technologies. Other contenders include proprietary technologies such as Telensa’s Ultra Narrow Band (UNB)4 , NWave5 or RPMA by Ingenu6 . Another more recent noteworthy open standard is Weightless-P7 .
- The licensed LPWAN variants have been developed by the mobile industry in response to the increasing demand for IoT connectivity and the early success of unlicensed LPWAN technologies and potential market threat they are posing to existing mobile network operators and vendors. The main contenders are two LTE based variants Narrow Band IoT (NB-IoT8 ) and CatM19 and a 2G based variant referred to as Enhanced Coverage GSM (EC-GSM-IoT10 ). Also worth noting are current research efforts for Massive Internet of Things (MIoT) under the 5G umbrella. They will be able to offer highly reliable low latency communication to many device end points. However, their impact on the current market is currently very limited due to the immaturity of these technologies.
Although LPWAN technologies offer similar service properties, they vary in terms of technical capabilities such as uplink and downlink data rates, capacity, quality of service support or link budget. For more details the reader is referred to another overview article11 or to the technical specifications of the individual standards.
One of the most interesting aspects in the current LPWAN arena are the differences in ecosystem approaches that are taken by existing LPWAN technology vendors, which in turn have influence on possible business models that stakeholders can realise along the value chain. The figure below shows a high level view of the LPWAN value chain. Chips and modules provide the enabling layer of LPWAN communication capabilities for both end devices and base stations.
A network operator provides LPWAN network infrastructure, which leverages both base stations and network software.
IoT devices are typically sensing and actuation end points or connected products, which utilise LPWAN networks to exchange information with IoT services. Often, IoT services utilise IoT application enablement platforms, which simplify the development of service by providing data and device management services and building blocks for rapid application development.
Most of the LPWAN technology ecosystems are open on the chip/module and IoT device side as well as IoT service side to ensure suitable end to end solutions to emerge for end users on the market. However, the approaches differ in how networks HW/SW and operations are managed and made accessible to other stakeholders.
SigFox controls tightly the network value chain by providing exclusive access to its network technology to a single operator per country in a franchise model. Telensa uses its own UNB technology to enable smart streetlight solutions for their customers, but does not make its technology available to a wider ecosystem. NWave is the sole supplier of both network and connectivity modules, but offers these to application partners to jointly deliver end-to-end services. Ingenu operates various private network across different countries and is now creating a public network in the US. It works with a module vendor to make its technology available to application partners.
LoRaWAN and 3GPP LPWAN variants are examples of a complete open ecosystem play where different network HW/SW vendors and network operators can freely compete. They offer choice from a diverse set of network HW/SW vendors and enable both public and private network operation. In reality licensed LPWAN variants provide a high barrier of entry for both network vendors and operators due to the high reliance on LTE network legacy and spectrum. The play will be dominated by incumbent network operators and telecom equipment vendors. LoraWAN in contrast provides opportunities for not only for traditional operators and infrastructure vendors but also for a variety of new market entrants. Some companies run LoRaWAN networks as private corporate networks comparable to WiFi, others open up their private networks to other users to become public network operators. An example of the latter is SENET12 in the US. The Things Network13 is an example of a crowd-sourced LoRaWAN community network.
Drivers for LPWAN technology adoption
A variety of factors influence the choice of market adopters for a specific LPWAN technology and its ecosystem. These apply both to solution vendors who base their products on a specific LPWAN technology and end users who utilise LPWAN based solutions to tackle their business challenges. The main drivers for LPWAN technology adoption include:
- Technology match. How well does the LPWAN technology support application demands? Various factors play a key role here. The strongest differentiators of existing technologies are reliability, capacity and maximum uplink / downlink data rates as well as energy consumption. Licensed technologies such as NB-IoT and CAT-M1 have the upper hand when delivering reliable network services, and are able to serve more devices per base station and provide higher peak data rates. Unlicensed technologies such as LoRaWAN and SIgfox are more suited for IoT applications with lower communication and energy demands. A big drawback of Sigfox is the limited down link capacity making over the air updates for software lifecycle management very difficult.
- Network availability. The rollout of commercial services beyond pilot stage often requires the existence of LPWAN networks to support operation of significant scale.
- At the moment, Sigfox is the network with the largest geographic coverage due to its head start compared to other technologies. However, the LoRaWAN ecosystem seems to be quickly catching up with national public network rollouts ongoing in over 30 countries. LoRaWAN also provides a good viable option for private network deployments. NB-IoT and CAT-M1 have been followers on the market and were fast-tracked last year through the 3GPP standards pipeline. Public network rollouts are only at the beginning with US operators seeming to favour CAT-M1 while European operators focus on NB-IoT. An advantage of Sigfox is the global footprint as different national deployments appear as single network to their customers. For the other technologies roaming is needed to support customer device moving to different countries. Differences in spectrum regulation across countries also make it difficult to have a device work on the same transceiver module.
- Module costs. Viable IoT business cases often require IoT device costs to be kept low, in particular where a large number of IoT devices are to be deployed to enable an IoT service. Connectivity module costs are a major contributing factor to it. LPWAN module costs are typically dictated by the transceiver complexity and drop with sufficient increasing market demand. Sigfox modules currently offer the most competitive price point and are approaching the $1 mark. LoRaWAN slowly follows the trend but are yet to achieve such economies of scale. The NB-IoT and LTE-M module ecosystem is still embryonic, but even if they catch up in terms of scale, costs are unlikely to go below the $5 mark due to the increased transceiver complexity. A strategy for use cases that leave little margin for IoT device hardware is to offer the devices for free as part of a monthly or annual service subscription.
- Ecosystem confidence. Choosing the right technology ecosystem can be risky in an immature market where winners still have to be determined and technologies can disappear overnight. SIGFOX currently represents the largest LPWAN solution ecosystem and network deployment and has received over $300Mio in investments while generating only a modest $13.5 annual revenue in 2016. The LoRaWAN alliance boasts boast now more than 500 members and a constantly growing ecosystems of solutions. The strongest ecosystem however is behind the licensed LPWAN technologies such as NB-IoT and CAT-M1. Although slightly less mature at the moment, it will eventually come strong and with large scaling potential. All other LPWAN technology ecosystems are currently either nascent or less well developed. One strategy for LPWAN solution providers to navigate this uncertainty is by developing products that can be easily ported to different LPWAN technology options. Innovative LPWAN module companies such as Pycom14 provide a range of pin-compatible modules for different LPWAN technologies that can be easily swapped out during the production process, without the need for new firmware development.
- Ecosystem openness. A final important driver for large scale adoption is the openness of a technology ecosystem. When looking at the history of wireless technology, open standards and value chains are essential to build successful innovation ecosystems. Open standards typically win over proprietary standards and closed ecosystems are less likely to enable sufficient critical mass necessary for economies of scale. The most successfully deployed wireless standards such as Bluetooth, Wifi, Zigbee and the mobile standards such as GSM, UMTS and LTE are all based on open standards. They enable the necessary permissionless innovation to experiment freely with new technology solutions and business models.
After an initial hype, the LPWAN market is at a crossroads as clear technology winners are yet to emerge from an intensive phase of upcoming market consolidation. The current diversity of technology options prevents the emergence of economies of scale that are needed to drive down the price points of IoT products and solutions. Ecosystem around Sigfox, LoRaWAN and the licensed LTE variants have currently the largest chance in breaking the deadlock as they best align with the market drivers of adoption. While there is space for some of these technologies to co-exist and serve different markets demands, only few of the above discussed technologies will survive to dominate the LPWAN market by the end of this decade.
Alex Gluhak is Head of Technology and IoT Lead at the Digital Catapult, where he is responsible for interventions to help UK companies grow faster using emerging digital technologies. For the past 15 years Alex has actively contributed to the research of mobile computing and IoT technologies at companies such as Intel Labs and Ericsson. He leads Things Connected (http://thingsconnected.net/), a UK innovation support programme for products and services based on Low Power Wide Area Networks and the development of decentralized IoT data market places in the H2020 SynchroniCity project (http://iot-synchronicity.eu).
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