AT&T and Vodafone Business Demonstrate Their Industry Leadership Role by Offering the First Inter-Carrier NB-IoT Network Roaming

On October 23, 2019, AT&T and Vodafone jointly announced the first inter-carrier roaming for Narrowband Internet of Things (NB-IoT). Enterprise customers of AT&T and Vodafone will be able to seamlessly roam on their respective NB-IoT networks in the United States, Spain, Germany, Italy, the United Kingdom, and the Netherlands by the end of 2019. The NB-IoT roaming announcement follows up on AT&T’s earlier announcement about LTE-M roaming service in North America (including Mexico) and parts of Europe through its partnership with KPN, Orange, Vodafone, and Swisscom and Canadian operators Bell, Rogers Communications, and Telus. It is also worth noting that, on August 21, 2019, Deutsche Telekom also announced roaming on the NB-IoT networks, but this was limited to its own national subsidiaries in Austria, the Netherlands, Hungary, Slovakia, the Czech Republic, and Greece.

There have been both technical and commercial challenges in regard to Mobile Network Operators (MNOs) offering inter-carrier roaming on their NB-IoT networks. The technical challenges mostly came from interoperability issues from multi-vendor network hardware that were eventually resolved. Technically, NB-IoT roaming has been possible since June 2018, when Vodafone and DT jointly announced that they had successfully tested NB-IoT roaming on their respective networks. However, one of the biggest complexities has related to the commercial and financial terms of agreement to offer inter-carrier NB-IoT roaming for devices that are typically low-cost battery-powered sensor devices that infrequently send small packets of data and, as a result, accrue low average revenue per IoT connection. In the absence of a standardized commercial framework for inter-carrier roaming for cellular LPWAN, AT&T and Vodafone have demonstrated their leadership role by offering the telco industry a commercially viable framework that others can emulate. On the other hand, this also highlights the failure or the lack of progress from industry bodies such as the GSMA that has failed to build consensus in the industry to develop a commercial roaming framework for cellular LPWA networks.

Initially, enterprise IoT customers of AT&T and Vodafone will benefit from the cellular Low Power Wide Area Network (LPWAN) roaming agreement the most. Firstly, this benefits Original Equipment Manufacturers (OEMs) that want to expand their IoT products and services into new regions with faster Time to Market (TTM). Enterprise customers can also quickly expand their IoT offerings to new markets by leveraging their existing relationships with their connectivity service providers without having to negotiate new contracts with local carriers or integrating another connectivity management platform. Roaming on cellular LPWA networks has been particularly important for OEMs that want to benefit from the economies of scale from developing products and services that can work across multiple regions. Secondly, this benefits OEMs and solution providers that want to connect mobile assets that need seamless connectivity across regions. With cellular LPWAN technologies, MNOs initially focused on connecting fixed assets in their domestic markets and, as the technology market matures, are also beginning to offer connectivity solutions for mobile assets. The IoT market for connecting mobile assets will witness early adoption in the following industry verticals:

• Logistics: Courier delivery service providers such as FedEx, DHL, and Lufthansa Cargo have been offering Sensor-Based Logistics (SBL) solutions, which use short-range wireless connectivity technologies such as Radio Frequency Identification (RFID), Near Field Communication (NFC), and Bluetooth for package-level tracking and monitoring, but have predominantly depended on wide area network connectivity technologies such as 2G and 3G for data backhaul. Enterprise customers using Third-Party Logistics (3PL) services are increasingly demanding real-time or near-real-time visibility of cargo to ensure the integrity and security of assets. 3PL service providers are also required to undertake stringent measures to secure their cargo from theft. According to the Transported Asset Protection Association (TAPA), Europe has witnessed increasing cases of cargo theft over the years and, between January 2018 and June 2019, there were over 3,600 cases of cargo theft recorded in key European countries. In 2018, the median cargo theft value in the United States and Europe reached US$58,500 and US$59,866 respectively.
• Pharmaceutical and Healthcare: In 2018, trade between the United States and Europe in pharmaceutical and healthcare products accounted for over US$150 Billion. It is noteworthy that many of the 3PL service providers introduced SBL solutions primarily to cater to the industries' requirements to adhere to strict regulation and mitigate supply chain risks and disruption to business from the theft or improper handling of an asset. According to a 2018 report from TT Club, the median theft loss is highest in pharmaceutical cargo, at US$100,000 and the United Kingdom and the United States were the top countries followed by Mexico and Italy. The adoption of IoT in this industry has been driven by the requirement to ensure asset integrity and security within the supply chain.
• Manufacturing: Losses of high value products, such as those in the electronics, tobacco, pharmaceutical industries, due to cargo theft are in the billions each year—in Germany alone, this figure was estimated to be EUR€2.2 billion in 2016. In manufacturing, supply chain risks due to theft, counterfeits, or improper handling of assets can lead to significant loses for a business. There is increasing market demand to improve End-to-End (E2E) supply chain visibility from industry, end consumers, and regional regulatory bodies. For example, on May 20, 2019, the European Commission introduced the Tobacco Products Directive (2014/40/EU), which establishes an E.U.-wide track and trace system to secure the supply chain of tobacco products to counter the growing illicit trade of counterfeits and theft. Over the years, AT&T and Vodafone have been strategic partners offering connectivity services to the automotive sector and its connected car offerings. This roaming agreement significantly simplifies the way MNOs provide seamless and consistent quality of service on their NB-IoT and LTE-M networks, regardless of whether the automotive OEM’s telematics solution is embedded, provisioned, and subsequently used in America or Europe.

With NB-IoT, MNOs can support a broad spectrum of massive IoT applications that typically require simple, low-cost sensor devices, the transmission of small data packets, and enhanced deep indoor coverage. As of June 2019, there are 128 cellular LPWA networks, of which there are 94 NB-IoT networks and 34 LTE-M networks launched in 53 countries that are in various stages of commercial deployment. As of May 2019, Vodafone has announced the launch of NB-IoT networks in 17 countries which includes network rollouts in 12 European countries, 3 countries in Asia-Pacific (APAC) and 2 countries in the Middle East and Africa (MEA) and plans to support NB-IoT in all 4G networks by the end of 2020. Today, NB-IoT has broader support from MNOs with the most geographical coverage worldwide. Although several MNO’s have commercially launched NB-IoT networks in the last 18 months and have quickly expanded NB-IoT’s geographical footprint, AT&T and Vodafone are first to offer inter-carrier roaming service for NB-IoT networks.

Inter-carrier roaming on NB-IoT networks has been a much-awaited feature, especially for enterprise customers that want to deploy and scale their IoT solutions across multiple regions with seamless cellular connectivity. This market development is particularly significant as U.S. MNOs sunset their 2G/3G networks; AT&T already sunset its 2G network in January 2017 and has ended 3G activations as of June 26, 2019. Similarly, European MNOs such as Swisscom, Sunrise Communications, and T-Mobile (Netherlands) have also announced plans to sunset their 2G and 3G networks in the next few years, while Vodafone will continue to operate its 2G network until 2025. MNOs need to provide their existing IoT and M2M customers a clear roadmap to transition to 4G and 5G networks. ABI Research estimates there will be zero 2G-enabled IoT end points in the United States by the end of 2023.  As MNOs turn off their 2G and 3G networks, enterprise customers will also need to develop their own product strategies with a clear roadmap to migrate their existing cellular products to 4G, NB-IoT, LTE-M, and eventually 5G network connectivity with minimal disruption to business and end user experience.

Furthermore, MNOs also face increasing competition in IoT connectivity from other emerging service providers offering Sigfox, LoRaWAN, or other proprietary LPWAN connectivity solutions. Currently, Sigfox is the only LPWAN technology that can support multi-region roaming through its Monarch service and has increasingly gained significant traction with early adoption from enterprises such as Airbus, Michelin, Deutsche Post DHL, Total SA, and PSA Group implementing asset tracking solutions, as outlined in the ABI Insight Sigfox Breaks Cost Barriers to Gain Early Foothold in Enterprise Track and Trace Solution Market (IN-5556). MNOs also face competition from the fast-growing ecosystem of Low Earth Orbiting (LEO) satellite operators offering Low-Power Sensors to Satellite (LP-S2S) connectivity. The LP-S2S connectivity service providers such as Eutelsat (ELO), Lacuna, Swarm, Myriota, Totum Labs, and Hiber are few examples of LP-S2S service providers that have announced ambitious goals to launch a full constellation of satellites by 2021 to provide global low-power IoT connectivity for massive IoT applications. As the IoT connectivity market evolves, the emergence of new connectivity technologies has resulted in a fiercely competitive landscape, capable of addressing a broad and diverse array of vertical IoT applications. However, the telco’s biggest technology and market advantage has been its ability to bring together a well-oiled ecosystem that supports a standards-based solution that just works anywhere in the world. For the telco industry to succeed in the IoT market, MNOs will need to quickly come together to offer simple and seamless global IoT connectivity or risk losing out to their competitors.