1. Emerging Market for Low Power Services and Applications
1.1 IoT development & Growing Demand for LPWA
The Internet of Things – IoT – has moved from fiction to reality. By 2020, there will be over 14
billion network-enabled devices, according to the International Energy Agency. This compares to
approximately 3.2 billion people using the internet. IoT dramatically widens the internet’s scope from
people-operated computers towards autonomous smart devices. Often, these devices are connected to
the internet for remote diagnostics & control, leading to cost savings. In addition, innovative IoT
hardware & services can generate new revenues – for example, connected glasses used for industrial
applications, more efficient logistics serving new market segments, or industrial appliances sold in a
per-usage business model. In many cases, business users & private users can control their IoT
application through existing smartphones and tablets, through mobile applications that interact with web
servers which the connected objects connect to.
Many mobile operators have set up dedicated IoT/M2M business units in order to serve the growing
number of companies looking to embrace the business benefits that mobile IoT brings. Larger operators
have even made acquisitions so that they can serve a wider part of the value chain and capture revenues
beyond pure connectivity. As the market grows, it is becoming obvious that there are many mobile IoT
use cases for which existing cellular networks are not suitable.
The reasons are simple: Coverage, battery life and device cost. First, coverage: Existing cellular
networks already offer very good area coverage in mature markets. However, many potential
“connected objects” are located in vast remote areas, far away from the next cellular base station. If
there is coverage, it is often weak which requires the device transmitter to operate at high power,
draining the battery. In addition, cellular networks are not optimized for applications that occasionally
transmit small amounts of data. A battery life of several years combined with an inexpensive device
cannot be realized on existing cellular standards, as they do not support the required power saving
mechanisms.
The third aspect is device cost: Mobile devices working on GSM, 3G and LTE are designed for a
variety of services, including mobile voice, messaging and high-speed data transmission. However, NB-
IoT applications do not utilize any of this; they just require low-speed but reliable data transfer, and an
appropriate level of reliability. Therefore, using cellular devices for NB-IoT applications means using
devices that are too expensive for the application. Many of the NB-IoT use cases require a low device
price, not just in order to have a positive business case for the service operation, but also due to practical
aspects such as ease of installation or risk of theft.
In summary, there are strong market trends pointing at growing demand for NB-IoT applications,
while the networks that can efficiently serve such applications are not in place yet. This whitepaper
examines trends in the market for NB-IoT applications and discusses technology options that operators
can choose from in order to enter this new business.