If you haven’t looked into the topic of M2M for some years, then you’re going to find it complicated when you do. A lot has been going on. And a lot is still happening.
First, there is the new name. It’s not even called M2M anymore – that is so last century. It’s now IoT, or “internet of things”. But to quote the Bard (only fitting as it’s 400 years since his death) “… a rose by any other name would smell as sweet… ” The question though is whether M2M or IoT is any closer to smelling sweet now than it was a decade or so ago when it was over promised as the future of mobile? That was the question on my mind when I went along to the grandly titled “M2M World Congress” in London in early May. Interesting that it was not the “IoT World Congress”, but presumably someone else had an event with that name so perhaps the organisers had to make do with this throwback name? Or perhaps they were proudly refusing to be forced by fashion and public opinion to move away from M2M? Whatever the reason, the organisers had done a good job at assembling speakers covering the full variety of radio network technologies.
This brings me to my second point. A few years ago, the only radio networks that were available for M2M/IoT use were the networks owned by the traditional mobile operators. In that era the MNOs enjoyed a monopoly position and they knew it. Like moths to the flame, they were both attracted by the light that was the billions of potential devices; but were simultaneously frightened of being burnt by the low ARPUs from same devices. In what has become a typical pattern in the mobile industry, the greed and fear of the MNOs both delayed the growth of connected devices whilst spawning a range of new-entrant competitors. The 2016 landscape of “connected devices” therefore looks more like a primordial soup that David Attenborough would recognise with many different wireless solutions fighting for life and vying for supremacy. Indeed it is far from certain whether the MNOs will regain their dominance or whether, as with messaging and VoIP (think Whatsapp, Vyber, Skype etc), the MNOs can do little more than lament what might have been and blame previous generations of mobile executives for “obvious” failures. Time will tell, but metaphors of stable doors and horses bolting came to mind at many points over the 2 days.
My third point concerns the language of obfuscation. Mobile telephony has always loved three-letter-abbreviations, or TLAs. Used well, TLAs offer a shorthand to facilitate the communication of complex ideas between experts. Others, of whom I confess I am one, suspect that the semi-technical abbreviations are little more than a trick to disguise chasms of emptiness by members of secret societies who are dedicated to little more than job preservation by making sure no-one knows what on earth it is they are talking about. I needed to find out what all these new abbreviations were so that I could get to the heart of the technology options. Having learnt to speak the version of rhyming slang currently used by the M2M/IoT industry, what I learnt was interesting.
Whilst the MNOs had slept, secure in the belief (or hope) that their dominance was absolute, at least 3 new groups of challengers emerged. First an aggregator layer climbed out of the soup, led by names such as Jasper. These aggregators took whatever tariffs they could get from MNOs around the globe and did their best to re-package them into offerings that fledgling device businesses could think of using. The laconic MNOs opened one eye and set up bodies like the M2M Alliance in the forlorn hope that they could see off the aggregators, but as Cisco’s recent $1.4bn acquisition of Jasper shows, that was not to be.
Meanwhile, more serious threats were entering the fray. To the MNOs it remained unthinkable that totally new radio networks could be deployed to eat their lunch – but that is what happened. Well, let me re-phrase that: that is what is happening. 2 main challengers exist in this group. In one corner there is Sigfox, and in the other the LoRa Alliances. Each is different to the other, but they share the same raison d’être: which is that the MNOs failure to serve the device connectivity market properly has created an opportunity for a new entrant. They differ in the degree of overt challenge to the MNOs. Sigfox is unquestionably a direct rival of the MNOs; whereas the LoRa Alliance is keeping its options open – perhaps it is a rival or perhaps it is only a temporary solution whilst the MNOs catch-up? In both cases, time is the only thing that will tell. Will Sigfox get its worldwide network sufficiently deployed before the MNOs have lumbered ponderously to their feet? Will LoRa networks really be quietly decommissioned and deprioritised when the MNO solution is available? Tune in next time (about 2 years from now) to find out.
The MNO response to Sigfox and LoRa is of course several different competing solutions instead of a single solution. Again, this is not really a surprise because when has the mobile industry ever agreed on anything early enough to stop the horse from bolting? At the M2M World Congress we learnt about NB-IoT of course. But we also touched on EC-GPRS, LTE-M that used to be known as “Cat M”, and also about Cat 1. We heard where 3GPP is placing its efforts in standardisation in order to counter the threat that is the non-3GPP world. It is all splendidly interesting so can you see now why this strange soup provides such a good hiding place for so many people?
Joking aside, it is great to see so much activity concentrated on the topic of device connectivity. It is long overdue, and all involved are to be congratulated. But I left the M2M World Congress with some major reservations.
Pricing remains a conundrum at the heart of device connectivity for the MNOs. This could not have been better illustrated than by comparing points made by Sigfox on one hand and one of the big MNO groups on the other. Sigfox are preparing for a world in which the volume of devices connected to their network will be so large that a radio module will cost no more than $1 and a year’s worth of connectivity will cost the same. Versus the MNO view which was that a new charging model intriguingly called “value based charging” is needed so that MNOs can charge higher prices for connectivity! “Oh no! When will they ever learn?” I thought. But to my horror, most MNOs that I spoke to later over coffee seemed to think it was a jolly good idea to use “value based charging” in order to increase prices. Sigfox must have been euphoric.
The market for device connectivity urgently needs more robust thinking about marketing, segmentation and targeting. One size never fits all. For example, Sigfox will be perfect for some use cases and awful for others. But is anyone properly thinking this through or are they all just rushing forward in some tragic display of strength like rutting stags, doing nothing more than damaging each other in the forlorn hope that one of them can survive without sustaining too much damage? With better thinking on segmentation, both the Sigfox approach and the MNO “value based pricing” approach can work. A lot of IoT will be low value, low bandwidth, and Sigfox is built for that. Some (a small % perhaps) will be high bandwidth, low latency, high value) which is what the MNOs may choose to go after. But if they invest in and build their networks hoping for the volume of the former with the ARPU of the latter, then it will all come to an awful end.
Where were the device manufacturers? With a very small number of exceptions, everyone at the M2M World Congress seemed to be a network provider who had turned up to meet his (yes, usually it was a male, but not always) mates from the last Congress a year ago (or the other World Congress, a few months ago). These people, speaking with knowledge and using TLAs like antlers to advertise their superiority, were by and large just talking to other connectivity providers. The customers, or connectivity users were hardly represented at all. As it happens, I know a few “connectivity users” and not many of them even thought of coming to this World Congress. Apart from anything else, their nascent businesses cannot spare the time or the cash for their people to go to events like these. They are too busy out there trying to sell; trying to cut device costs; trying to find an edge in the market. Most of all what they want to talk about is not what was being talked about at this Congress. “How soon?” and “what price?” are far more important to them than philosophies and roadmaps articulated with hyperbole on pretty slides.