Who will be the network operators for IoT – telcos, cable, or new market entrants? (Reality Check)
The inside-out deployment model could be the key to unlocking the benefits of IoT
In the race to own the emerging internet of things (IoT) market, IoT networks, and IoT applications, it is widely accepted that new low-power wide-area networks (LPWANs) are required for many of the applications that need low cost, long battery lifetime, and long-range connectivity – such as agriculture, smart city, smart metering, smart building, and industrial asset tracking.
The initial deployment philosophy was to follow cellular network deployment models using existing tower infrastructure, but it is apparent now that this might not be the most optimal model. Many IoT applications need very low-cost connectivity to make it cost-effective to support hundreds of low data rate sensors. So, the same cost structure as a cellular network deployment is not viable.
Cellular network operators in the U.S. mostly rent tower space for their network from companies like Crown Castle and American Tower and pay fees that range from $300-$1000 or more per antenna per month. Assuming that 30,000 towers would be needed to deploy a LPWAN in major US cities, this would result in a network operational cost (not including any capital expense) of approximately $150 million per year.
Additionally, many IoT applications need deep indoor coverage requiring additional network densification. In mobile applications, if connectivity is not possible, then the user can easily move to a better location. But IoT has numerous fixed wireless applications, such as water metering, where the water meter can’t be easily relocated to a better location. Providing the deep indoor coverage needed for many IoT applications can require more towers than cellular networks use, even though most LPWAN technologies have significantly better link budget or coverage than cellular.
An alternative: inside-out
An emerging alternative is the inside-out deployment model that relies heavily on low-cost indoor gateways for deep indoor network coverage. These gateways can be engineered into Wi-Fi routers, cable modems, or other consumer or commercial equipment at a negligible BOM cost. These indoor gateways can be scaled and deployed much more quickly than a solely tower-based deployment model and at a much more attractive cost structure.
Light outdoor coverage from towers or other elevated points will still be required to achieve comprehensive network coverage in all areas. Coordinating the network coverage and mobility is a network server with the scalability to handle a regional network that might be composed of millions of gateways and billions of sensors.
With the inside-out model, network coverage for an entire region can be achieved at a fraction of the time that would be needed for the permitting of sites and climbing of towers, and at a cost structure that has the potential to enable even low-cost, high sensor count targeted applications.
Which service provide can deliver IoT?
The key to executing the inside-out model is access to equipment, customers, and locations where low-cost gateways can be installed with a benefit for the user to ensure that the devices remain in operation.
Cellular companies have the most direct access to consumers on a nationwide footprint to be able to deliver products or services to consumers, and they have relationships with tower companies, but they don’t always provide equipment where home LPWAN gateways could be easily integrated. Consolidation in the space, such as AT&T and DirectTV, is giving some operators more footprint inside of the home.
Cable operators, on the other hand, have the best access to equipment inside of consumers’ homes and businesses, but cable operator coverage over most countries looks like a patch-work quilt with different providers operating in only predefined areas making it difficult for a single entity to provide nationwide coverage.
A consortium or alliance of cable companies similar to CableLabs could provide nationwide coverage, but the speed at which this consortium could be formed might allow a new market entrant to be the first mover. Companies like Amazon or Google are both dabbling in consumer equipment, have direct access to consumers, and have been considering networks for years so they might also be viable contenders.
The inside-out model will allow networks to be deployed quickly and the potential exists for new network operator market entrants to capture this emerging space. Key decisions that will determine the market leaders for IoT will be made in the next six to nine months, so stay tuned.