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Operators eye the IoT market, but hurdles remain

NB-IoT is hitting the mainstream, but the path must first be cleared.

By Joseph Waring, Mobile World Live
Sep 2015


The Internet of Things (IoT) market is expanding so rapidly that making sensible forecasts is a huge challenge. Gartner said that it expects 6.4 billion connected devices to be in use next year, up 30 percent from this year, with the number reaching 20.8 billion by 2020.

Gartner predicts that IoT services spending will grow 22 percent to US$235 billion in 2016. It says services will be dominated by the professional category, with businesses using external providers to design, install, and operate IoT systems, but connectivity services through communications service providers and consumer services will grow at a faster pace.

With growth accelerating, Huawei Rotating CEO Ken Hu said last week at the company’s Mobile Broadband Forum in Hong Kong that mobile operators need to take immediate steps to capture a share of the IoT market, which is attracting competition from vertical industries.

While operators have a unique advantage in terms of accessibility, he said, many other technologies like Zigbee, Bluetooth and in-building Wi-Fi are developing rapidly and will generate competition in the IoT market.

Hu insisted that the industry has to quickly develop unified IoT standards to drive cross-industry development.

Luke Ibbetson, Vodafone’s group R&D director, agreed, pointing out that 80 percent to 90 percent of IoT devices are now connected by low-power indoor systems, with cellular handling the remainder.

He warned that, going forward, mobile networks are in danger of serving no more than 10 percent to 15 percent of that market. He sees the emergence of a middle ground that combines the best aspects of the very low-cost, short-range technologies with the ability to cover an entire country.

Ibbetson was referring to the low-power wide-area (LPWA) space, which is an opportunity that many feel is purpose-fit for mobile operators. “Yet today we are under tremendous pressure because right now we don’t have a solution that is the right shape to serve customers,” he said.

He stressed that this isn’t some future looking prediction. “This is happening today, and Vodafone has to turn away profitable customers because it can’t deliver the right solutions. This is a real call to arms.”

The move to NB-IoT

A consensus is building among operators around narrowband Internet of Things (NB-IoT), the emerging technology for deployment of LPWA networks using licensed operator spectrum, in-band, guard band, and stand-alone deployments. The technology is designed to provide coverage in hard-to-reach places, supporting a massive number of low throughput, ultra-low cost devices, with low device power consumption.

More than a dozen telecom firms recently held a preparatory event, chaired by Vodafone, to lay the foundations for a new industry forum aimed at accelerating the ecosystem around NB-IoT. The members are China Mobile, China Unicom, Ericsson, Etisalat, GSMA, GTI, Huawei, Intel, LG Uplus, Nokia, Qualcomm, Telecom Italia, Telefonica, and Vodafone.

The six operator members also announced their support to set up six NB-IoT open labs worldwide, which will focus on new service innovation, industry development, interoperability tests, and product compliance certification for NB-IoT.

Customer pilots using pre-NB-IoT technology are already underway. In Europe, Deutsche Telekom and Vodafone, for example, have already taken action and set up pre-NB-IoT trials using existing base stations. Pre-commercial deployment is expected during the second half of 2016, with commercial rollout beginning in early 2017.

Vodafone’s Ibbetson said he is confident in the convergence of 3GPP standards, but believes the process to be slow and frustrating. “It’s essential NB-IoT emerges as a single standard by March. And we need to make quick decisions on which bands to use.”

Huawei hopes the standards are confirmed soon so the industry can start large-scale IoT deployment. “Huawei feels the technical aspects are ready, so we can’t wait any longer to embrace the opportunities in this field,” Hu said.

NB-IoT addresses the four main challenges of LPWA: long battery life (more than ten years), low cost (less than US$5 per module), highly scalable (up to 100,000 per cell) and an extended range (including underground).

“If we don’t enable the ecosystem with something that has the ability to scale down to US$3 or US$2, with the right volume, then we will fail to address the market,” Ibbetson said. “It requires some holistic thinking in how the component parts are uses. They have to be able to be embedded in the device at a very low cost.”

The focus needs to remain on low bit rates for applications like low-cost sensors, actuators, and location tracking, and not on high bit rate use cases such as 4K video. “We’re looking for a solution that fits the market at the right cost. We need to keep it simple. It’s easy to get carried away with the technology,” he said.

Huawei’s Hu also believes the cost has to be less than US$5 for a communication module to stimulate large-scale development. “But if it falls below US$1, it will lead to explosive growth.”

Beyond the hype

Most analysts agree that IoT has moved out of its infancy into the rapid development phase, because all the core technologies – connectively, cloud-based services, big data analytics and low-cost sensors – are now in place.

Each CIO must have an IoT strategy or they’ll find themselves behind the competition, said David Sovie, Accenture’s high-tech and electronics lead for Asia Pacific. Wei Sun, IoT global strategic initiative leader at IBM Research, noted that every one of its major customers across all sectors is exploring IoT products and services.

More and more industries are jumping on board to improve efficiency, cater to customers better, and trim operating costs. For example, Bosch, a maker of everything from auto parts and household appliances to security systems, has quietly connected much of its product line and is benefiting directly from the rise in mobile connectivity, particularly in the connected car sector.

In the healthcare segment, Philips has developed e-care applications, including a patch for patients with chronic illnesses, that use sensors to collect and send data in real time to a cloud-based platform where it can be monitored and acted upon by medical professions.

Alberto Prado, VP and head of digital accelerator at Philips, noted that interoperability between devices and systems will be key to the rise of data driven healthcare. “As the industry moves to a more collaborative care model, the future of healthcare is one that is integrated and proactive.”

To prepare for this huge IoT opportunity, Huawei’s Hu said, the industry needs to push not only technical innovation, but also business model innovation and cross-industry collaboration. The IoT market will be more fragmented than the mobile market because of the large number of use cases, applications, and business models.

“It will rely on collaboration across the whole ecosystem from different stakeholders. In the IoT era operators need to expand their focus from managing technology to managing the whole ecosystem,” he said.

“The industry is standing at a critical juncture and needs to act now to open this new blue ocean opportunity.”