IoB Insiders Head of Analysys Mason’s Digital Economy research practice, Tom Rebbeck, imagines a dystopian future for LPWA networks as part of the process of premortem.
Imagine it’s 2021. Low-power, wide-area (LPWA) networks have failed. NB-IoT was a flop. Sigfox and Ingenu are no more. Support for LoRa is dwindling. Given the hopes we had for LPWA back in 2016, how could it go wrong?
Psychologist Gary Klein has developed a technique called a premortem where a team imagines a future in which their project has failed and they try to understand why. By changing perspective on a problem, the aim is to identify and if possible solve issues before they occur.
LPWA is at a pivotal point and the time may be right for a premortem. NB-IoT and LTE-M networks will be launched commercially in 2017. LoRa, Sigfox and Ingenu networks will all expand their reach. Supporters of all technologies are hoping that 2017 is the year connection numbers ramp up.
Operators are building LPWA networks in the belief of a huge market potential – over 3 billion connections by 2025 according to our forecast at Analysys Mason, with similar numbers from other analyst firms.
These forecasts cannot mask the uncertainty for LPWA networks. The number of connections globally is currently well under 50 million and most of the predicted demand is for applications that either don’t exist or exist only on a small scale.
To return to our premortem, if LPWA has failed by 2021, what would have caused it to fail, and what could be done to prevent it today?
The cost of LPWA could be too high
LPWA may not reach the volumes or technology development may be too slow for costs to fall significantly. Modules and connectivity costs for LPWA networks are lower than 2G connections, but not by orders of magnitude. Prices may be still too high to open up a market of 3 billion connections. For developers of the technology, the effort may need to be on reducing costs further by reducing complexity, rather than adding new features. For companies trying to sell LPWA solutions, the focus may need to be on ramping up volumes quickly, even at very low or no margin.
Technology fragmentation may halt take off
Any organization that is considering an LPWA solution faces multiple technology options. Even for NB-IoT, which has the most support from large established players globally, interoperability issues are unresolved. Fixing them is a high priority. Buyers may defer their technology decision until one solution has primacy. If this takes too long, they may look for other connectivity options.
Other types of connectivity may win much of the market
Rather than use an LPWA connection for connectivity, devices could use a local area connection (e.g. Bluetooth, WiFi, ZigBee, Thread) to connect to a local hub or a smartphone. Again, cost is likely to be the challenge here, with most local area modules costing significantly less than LPWA.
Awareness of LPWA may be too low
Few outside of the telecoms industry (and only some in it) know what LPWA technologies are and what they can do. It needs to be in the hands of companies and developers who can play with the technology and create new services and applications. Raising awareness will be a key activity for all LPWA solutions in 2017.
Expected applications may not materialise
The business case for investment in LPWA networks is often dependent on anchor clients, such as for water and gas meters. However, these contracts may not generate the volumes hoped for. Ideas we have not even considered may be the real drivers of low-power, wide-area networks – the industry needs to think of how to discover these new applications.
New business models for connectivity may be needed
The standard model of paying an ongoing fee for network access may not suit certain applications. However, as connectivity requirements will be predictable, the costs are also predictable. The upfront price for a device could include LPWA access. The Tile App may be a model here – you pay £20 ($25) for a small tracking device that includes service for as long as the battery lasts.
New routes to market may be needed
Sigfox recently announced that electronics firm Kyocera was building a network in Japan. This is intriguing as it could give Sigfox entirely new route to market. For example, Kyocera office printers could have Sigfox connectivity embedded. Other LPWA technologies should be thinking along similar lines.
The financial consequences of failure are limited, but failure would reduce the role telecoms operators can play in IoT.
Overall the financial impact of LPWA failing would be relatively small. Investments would be written off – probably not much more than $1 billion in total, which is small in the context of a $800 billion a year revenue mobile industry.
The broader impact on telecoms operators may be more wide reaching. The failure of low-power, wide-area networks would reduce the role of telecoms operators (and some of their suppliers) to higher power, higher cost wide area solutions – a blow for any operator that had bigger, broader ambitions for its role in IoT.
If LPWA does fail, there are likely to be multiple causes but if we use the opportunity to think now what those causes could be, we have a better chance of avoiding failure.
