Sigfox group WND debates LPWA money-making with Verizon and Proximus
The choice between licensed and unlicensed low-power wide-area (LPWA) connectivity technologies is about use cases, concurred a panel of ‘internet of things’ (IoT) operators at LPWA World in London this week. But if both technologies fit, as they do in most cases, the choice comes down to cost, and Sigfox does it better, according WND, a conglomerate of Sigfox operators rolling out in Latin America and the UK.
“If you want to make money in this business, you have to focus on one niche and do it well – and the only way to do that is to do it cheaply. From a sensor in a Tesla car to a sensor in a field – you can’t solve both problems with the same solution. So we decided we would be mass market, connectivity only,” said Chris Bataillard, chief executive of WND.
WND works in 10 countries, mostly in Latin America, “from Mexico to the tip of Argentina and Chile”. It is also deploying Sigfox networks, at speed, in the UK, with 50 per cent population coverage, and rising. “Our focus is on the mass market, the bottom end. We don’t even see ourselves as an IoT network, but a sensor network for temperature, pressure, whatever – you name it,” said Bataillard.
Significantly, the price of Sigfox chipsets has fallen to less than $1 per unit; Bataillard said it is only a matter of time before pricing slips “below 50 cents in Sigfox land”. He said: “We work on connectivity behind the scenes a lot – on driving down the price of devices for integrators. At end of day, cost is our competitive advantage.”
WND was joined on the panel at LPWA World by US carrier Verizon, which has been quick to rollout LTE-M in the US and is readying NB-IoT behind the scenes, and Belgian incumbent Proximus, a founding member of the LoRa Alliance, an early LoRaWAN operator, and the owner of a brand new NB-IoT network besides.
LTE-M chipsets from Verizon have fallen beneath the magic $10 mark recently; its pre-certified portfolio, which has just swelled to include French maker Sequans’s latest Monarch chipset, currently lists LTE-M chips for just $6.50, which excludes the $1.50 rebate available on each.
“I wish I had that problem of one dollar modules on LTE-M,” responded David Vasquez, in charge of Verizon’s IoT business development, in response to Bataillard’s 50-cent comment. Verizon has just announced Los Angeles, California, as the latest in a dozen 5G trial cities. Its NB-IoT network will join its LTE-M network in due course.
Verizon has increasing variety in its IoT weaponry, it reckons, and LPWA networking depends entirely on the use case. “It’s use case driven, end of story,” said Vasquez. The calculation is to find the most efficient way of capturing and moving data, he said. “What does the customer want, and what’s best way to deliver business outcomes?”
Vasquez added: “Those with licensed networks have found ways to optimise their infrastructure so the margins are better, and, in terms of LPWA, to enable use cases that need only bits and pieces of data [and use cases that require] a network that is basically ubiquitous – and provides services all way from telemetry through to 5G.”
Proximus started to deploy LoRa-flavoured LPWA infrastructure in 2015, with a horizontal strategy to develop devices, connectivity, and applications, as well as to open its assets to developers. “Our focus has always been driven by customers’ needs,” said Vincent Hebbelynck, its head of technology innovation. “We found we just couldn’t serve customer demands – so we introduced LoRaWAN.”
The Belgian operator has since developed its expertise in certain ‘vertical’ markets, and discovered through the process, again, that a greater variety of LPWA technologies was required. “We realised we couldn’t do everything with the networks we had, so we have also announced deployment of NB-IoT.”
The cost of connectivity has been revealed in stark relief through rollout of its twin LPWA networks. “There was quite a big difference. LoRa requires new antennas and a new network,” said Hebbelynck.
Proximus under-estimated the effort required to roll out a new network, as well as to untangle the regulatory issues around installing new antennas on shared sites in Belgium. “Some sites are shared with other operators, and it may impact technology. And if you introduce a new technology to the site, it may need new architecture and insurance.”
The company’s LoRa rollout was time-consuming and fraught; its NB-IoT rollout has been simpler, requiring only software upgrades to hardware at existing LTE sites. “Your revenue and cost investments are closer to each other,” said Hebbelynck.
By contrast, Sigfox’s coverage and investment model is opportunistic, and disruptive. “Our approach is very different. We go through all the major economic areas, which are the low hanging fruit, and we deploy where people need,” commented Bataillard.
“That’s the difference between the traditional model and the disruptive model; a traditional model has a five year Soviet plan for rolling out – with the disruptive model, we say, ‘so, you want your Chihuahua covered?’, and next month it’s covered.”
For WND, the business case for LPWA connectivity is a straight calculation of investment and return – with the multiplier turned way up to account for the high volumes and low margins. The company claims to have 90 channel partners looking to connect 800,000 devices on Sigfox networks within three years; it reckons on deploying 100-150 million sensors in the next five.
“When it comes to money, all the analysis says it’s about seven sensors per person. The US is off the charts, but worldwide it’s about seven per person that people are looking to get to by 2022-2024. Which in Latin America means we are talking about several billion,” said Bataillard.
“If we don’t have a business model that makes money at 100-150 million, then we’re doing something wrong. Because we can’t bet on getting the whole market – we’re betting the market will be smaller, and we’ll have to share it with everyone else.”
WND is backing enterprise LPWA projects on the same grounds, with ruthless maths about what will fly and what will crash. “You want to connect 5,000 garbage cans, and that’s your plan? And you want 15 million batteries? Well then, that’s the one we’re going for.”
Sigfox serves a single broad-brushed use case, characterised by longer battery life and lower throughput, albeit one that exists in myriad different scenarios. Licensed LPWA operators’ multi-faceted and expensively deployed networks serve a wider range of use cases, by contrast.
Bataillard suggested mobile operators should know their place, in the connectivity niche, rather than play as jacks-of-all-trades in multiple markets. “There are thousands of verticals in the IoT space. We have people who want to monitor honey bees and rat traps. We are not experts in either of those; that knowledge exists already. We’re just focused on providing connectivity,” he said.
Vasquez responded: “Enterprise customers don’t come to us wanting to connect honey bees; our customers are in logistics and retail, and come to us because they want to know how to save money, and how to make money – they come to us ‘because my competition is killing my margins’.”
Proximus is collaborating with certain industry verticals to develop appropriate IoT solutions, rather than claiming prior insight and final answers, said Hebbelynck. “The big shift for us, reflected in the need for more and more consultancy services, is not just about offering connectivity, but about changing skills.”
Vasquez also detailed a more expansive IoT strategy, which goes beyond straight provision of connectivity to also encompass device certification, network design and sundry consultancy services. “If this is not a billion dollar business for us, I will be applying for janitorial services,” joked Vasquez.
In the end, the low-cost easy deployment of Sigfox LPWA networks stimulates a freer enterprise culture, suggested Bataillard. “We have a site portfolio of 400,000 sites, and can deploy in any city in about a month. By doing that, we also change the culture of the people who are talking to us.”
He added: “The difference between the licensed band and the unlicensed band is not so much whether or not the bands are licensed, or what the technology is even. The difference is the mind-set. And starting from a green-field position, you can do things that are completely disruptive, as opposed to having to integrate into an existing system.
“There are advantages to both – because it’s always nice to have the comfort of a very large cash flow driving behind you. But there are restrictions as well.”