Verizon's Aggressive IoT Push with Cellular LPWA Roll-Out

During the first week of September, Verizon made a string of partnership announcements following its plans for the roll-out of the LTE-M or CAT-M1 cellular LPWA network in the US. On September 14, Verizon announced it would acquire smart street lighting solution start-up Sensity Systems. In partnership with Sequans, U-Blox, Telit, Sierra Wireless, Gemalto, Nokia, Ericsson, Qualcomm, and others, Verizon wants to create an open-source, robust environment that could leverage its ThingSpace IoT platform as a service solution which it pre-integrates within Qualcomm technologies LTE-M chipsets.

Verizon has been building a comprehensive suite of smart city end-to-end solutions that can be built on top of its ThingSpace platform. The partnership with Neptune Technology Group is another opportunity for Verizon to leverage the roll-out of the LTE-M and highlight the technologies viability to water utilities. Water utilities are typically not as cash rich as energy utilities and hence are more conservative when it comes to spending their budgets on new technology. That said, as energy companies in the US highlight the benefits of smart meter roll-out in the form of accurate billing, lower operational costs, demand management, voltage optimization, and distributed energy resource integration, water utilities have started to warm-up to the idea of upgrading their distribution infrastructure. Verizon addressable market is over 130 million water metering points in the US.

Through its acquisition of Sensity Systems, Verizon wants to tap into street light markets growing shift towards LED technology, further offering technology vendors an opportunity to upgrade the infrastructure with sensor-rich smart street lights. Street lighting infrastructure can be valuable real-estate for telcos, wherein along with lighting the platform can leverage sensors for use cases such as monitor environmental pollution, vehicle tracking, parking, energy consumption, security, motion, and sound detection. According to ABI Research analysis, the install base of the smart streetlight market globally is projected to grow from 5.2 million in 2016 to 62.4 million in 2021.

Verizon and other telcos in the region have a strong advantage while addressing the IoT market with its platform as a service offering. Telcos have an upper hand over its competitors such as OEMs, platform vendors and system integrators with its proven expertise in delivering managed services and the necessary regional infrastructure including trained workforce that maintain and manage the service. Verizon has a strong value proposition through its partnership with OEMs and platform solution that covers connectivity, data storage, analytics, security, device monitoring, and control.

In the case of smart meters, the market has steadily moved from a single vendor solution to a more modular approach based solution from multiple vendors. Although in the short-term an end-to-end smart water meter solution might be appealing to some water utilities in its early stages it competes with smart meter OEMs and platform giants such as Landis+Gyr, Itron, Honeywell, Kamstrup, IBM and GE. Verizon’s ThingSpace platform also competes with smart street light platform solution vendors such as Cisco, Philips, Current by GE, and Telensa, which offer similar solutions.

It is not clear if operators could make any money on a Cat M1 or NB-IoT connection if they try to match the proprietary LPWA connection costs that operate on unlicensed spectrum. That said, operators have to play in this market as LTE-M and NB-IoT connections could and likely will lead to more profitable and higher revenue opportunities in IoT. With connectivity costs decreasing over time, tapping into potential revenues from application platform services, analytics, and professional services to drive adoption.