Is Vodafone's Strategy of Backing Narrowband Internet of Things against Long Term Evolution (4G), Category M1 Failing?

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4Q 2017 | IN-4844

Vodafone in 2017 made some announcements launching narrowband Internet of things (NB-IoT) deployments across its global footprint, starting with Spain in the beginning of this year, with coverage in eight cities. In Q3 2017, Vodafone upgraded its existing 4G basestations to provide nationwide coverage of NB-IoT networks in the Republic of Ireland and the Netherlands. In Q4, Vodafone launched NB-IoT citywide networks in Australia and South Africa, with plans to ramp up quickly to provide nationwide coverage. Furthermore, Vodafone claims to be on track to launch NB-IoT in 10 markets by the end of 2018, with city coverage in most countries.

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Narrowband Internet of Things Network Rollouts

NEWS


Vodafone in 2017 made some announcements launching narrowband Internet of things (NB-IoT) deployments across its global footprint, starting with Spain in the beginning of this year, with coverage in eight cities. In Q3 2017, Vodafone upgraded its existing 4G basestations to providenationwide coverage of NB-IoT networks in the Republic of Ireland and the Netherlands. In Q4, Vodafone launched NB-IoT citywide networks in Australia and South Africa, with plans to ramp up quickly to provide nationwide coverage. Furthermore, Vodafone claims to be on track to launch NB-IoT in 10 markets by the end of 2018, with city coverage in most countries. 

Delays in Network Rollout

IMPACT


Vodafone operates its networks in 26 countries. In 2017 it deployed NB-IoT in Germany, Spain, Australia, the Netherlands, South Africa, with nationwide coverage in three countries (Ireland, Italy, and the Czech Republic). This slow pace of network rollout is contrary to the initial assumption that NB-IoT rollout would require a simple software upgrade to existing 4G infrastructure of the operator. The NB-IoT standard was ratified in June 2016 by 3GPP in the Release 13 (LTE Advanced Pro) specifications along with long term evolution (4G), category M1 (LTE-M) and extended coverage global system for mobile communication IoT (EC-GSM-IoT).

Since the ratification of NB-IoT, the network rollout has witnessed some issues with the standard; much of this has been due to the fast-tracking of the standard at 3GPP. In June, network infrastructure interoperability issues caused further delays in the rollout of NB-IoT. Although much of these interoperability issues among network hardware infrastructure are claimed to have been fixed in 3GPP’s plenary meeting held in March 2017, the changes are expected to take effect only by Q4 2017.

Vodafone has been one of most vocal advocates of NB-IoT and has set-up four NB-IoT labs in the U.K., Spain, South Africa, and Germany, attracting over 200 companies to its development centers to trial various IoT use cases. The operator claims to have been successful with up to 70% conversion rates from proof of concept to commercial rollout. The NB-IoT rollout will initially be deployed in cities, followed by a phased rollout nationwide. The phased rollout imposes limitations on the location tracking IoT applications that could benefit from more extensive geographical network coverage. 

European Telco Strategy on Cellular Low-Power, Wide-Area in Disarray

COMMENTARY


European operators’ rollout of low-power, wide-area (LPWA) network technologies, both cellular (NB-IoT and LTE-M) and noncellular LPWA (LoRa and Sigfox), has been perhaps the most fragmented in the world. For example, Vodafone, DT, and EE have supported NB-IoT. Other telcos such as Orange and KPN have backed both LTE-M and low-power wide-area network (LoRaWAN), Telefonica has backed LTE-M and Sigfox. Swisscom is perhaps an exception with plans to deploy both LTE-M and NB-IoT, while already deploying LoRaWAN. This gives a snapshot of how fragmented the operator's strategy has been in its adoption of LPWA technologies.

With the delays in NB-IoT, many of the European telcos initially backed noncellular LPWA technologies, either LoRaWAN or Sigfox, to address growing opportunities in IoT, later announcing plans to deploy either or both LTE-M and NB-IoT. While there is increasing support for LTE-M from American and European operators, NB-IoT is backed by Deutsche Telekom, Vodafone in Europe, and three big operators in China. NB-IoT, plagued with uncertainty, has lacked the support LTE-M currently enjoys within the ecosystem. While Vodafone has deployed its NB-IoT network, it is slow in fostering an ecosystem of NB-IoT embedded end devices. The market demand for NB-IoT embedded devices has so far been in China, where three big telcos—China Telecom, China Mobile, and China Unicom have backed NB-IoT and have started piloting some smart city projects. So, unless the Chinese market produces sufficient demand domestically to tip the economies of scale in favor of NB-IoT, LTE-M is expected to drive most connection growth in Europe.

So is Vodafone’s backing of NB-IoT rather than LTE-M the wrong the choice? First, delays in network rollouts is causing enterprises to also test applications on LTE-M technology and this choice is further facilitated with LTE-M/NB-IoT dual-mode modules offered by multiple module suppliers. Second, NB-IoT does not have a significant price advantage with NB-IoT modules at US$9 and CAT-M modules at US$10. Third, another significant variable is the use case benefits, particularly when enterprises have network choices such as Sigfox, Ingenu, LTE-M, and others. The bottom line is that the question may not necessarily be NB-IoT versus CAT-M, but rather global deployment of a single technology versus a country by country deployment of multiple LPWA technologies.

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