Competition Heats Up Among LPWA Technologies

3GPP, the telecommunication standards development organization, recently announced that it finalized the standardization of the NB-IoT as part of Release-13. The announcement mentioned that, while the specification for NB-IoT is frozen, there will possibly be corrections in the coming months that will address backward compatibility with previous cellular standards. Release-13 will include a portfolio of new cellular standards, such as NB-IoT, eMTC, and EC-GSM-IoT, to target different applications in the IoT market. Following this, Vodafone announced its roll-out of NB-IoT to existing network infrastructure through a software update. The company will conduct its first commercial trial by November 2016.

Cellular LPWA standards will have great impact and drive significant competition in the LPWA connectivity market by addressing a number of vertical M2M applications. The cellular technologies will compete with non-cellular, or non-3GPP based, LPWA technologies that include SIGFOX, LoRa, INGENU and FlexNet. The technologies gained popularity in the last few years’ time after pitching themselves as public IoT or M2M communication networks.

Non-3GPP based LPWA networks are witnessing nationwide roll-outs at a frantic pace in a number of countries across the world. On July 1, Dutch telco KPN announced completion of its roll-out of the LoRa network for IoT in the Netherlands. Similarly, Samsung and SK telecom announced plans to build a nationwide network in South Korea and encouraged module vendors to supply LoRa IoT modules for under $5/unit. SIGFOX, on the other hand, is currently building its network in more than 18 countries and has nationwide network coverage in six European countries that include France, Ireland, Luxembourg, the Netherlands, Portugal, and Spain. Non-3GPP based LPWA technologies used in developing public and private networks developed a substantially strong ecosystem of OEMs and service providers that are driving technology adoption.

In the near-term, vertical applications like metering, street lighting, home automation, and tracking applications will drive connection growth and account for 85% of the connections. Non-3GPP based LPWA connection growth will indirectly benefit from the competition from cellular technologies, which is expected to further drive the market. As non-3GPP based LPWA networks become available throughout a region, applications such as connected agriculture, livestock tracking, wearables, and commercial building automation are likely to accelerate connection growth.

Non-3GPP based LPWA technologies, such as SIGOFX and LoRa, made significant progress building networks in the last two years, especially with the recent shift from private networks to application agnostic public LPWA networks. LPWA network technologies witnessed adoption in the past as private networks that cater to niche M2M vertical applications like anti-theft vehicle tracking, smart metering, smart grid applications, and street lighting. And this continues to grow. LPWA network technology advocates strongly believe that the next wave of connection growth will predominantly come from public network infrastructure.

However, a closed vendor ecosystem is seen as critical bottleneck for the technology to grow and effectively compete with cellular standards. This is also seen as an impediment for non-3GPP technologies to compete with cellular LPWA standards that have a robust and open vendor ecosystem.

With LoRa, Semtech Corporation owns the IP on the protocol stack used in the technology. Although it opened the technology to other chipset vendors through license partnerships, Semtech can still only procure the LoRa chipsets used in base stations or gateways. With SIGFOX, although the technology protocol stack is open to chipset vendors and developed an ecosystem of multiple chipset and module vendors, SIGFOX is the sole vendor for its base station and cloud infrastructure. And INGENU, the third competitor in this public non-3GPP based LPWA space, is the sole hardware vendor. As the LPWA technology market is set to witness fierce competition from cellular standards, the lack of a fully open vendor ecosystem among non-3GPP based LPWA technologies will severely constrict growth over the long term.