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At MWC, focus for M2M and IoT was on enabling technologies

Michele Mackenzie Principal Analyst
Tom Rebbeck Research Director – Digital Economy

Of the enabling elements discussed below, only M2M connectivity platforms appear to have reached a level of maturity. For LPWA the recent flurry of announcements has yet to provide much clarity as to which technology (or technologies) will prevail while for application platforms operator agreements to date have been limited.

At MWC the focus of most operators and vendors was still very much on the enabling elements of M2M and the Internet of Things (IoT), rather than on applications. This article explores the main announcements on three enabling aspects of M2M and IoT:

  • LPWA networks
  • connectivity platforms
  • applications platforms.

Figure 1: Three enabling aspects of M2M and IoT discussed at Mobile World Congress 2015 and their position on the value chain [Source: Analysys Mason, 2015]

Figure 1: Three enabling aspects of M2M and IoT discussed at Mobile World Congress 2015 and their position on the value chain [Source: Analysys Mason, 2015]

LPWA networks: LPWA was a recurrent theme at MWC 2015 as operators prepare for the IoT

MWC did not disappoint with regard to LPWA announcements, with news from all four main contender technologies (SIGFOX, LoRa, Neul, LTE-M).

  • SIGFOX is deploying its network in two new markets: Following its recent funding round, SIGFOX announced network roll-out in Belgium (commencing April 2014) and South Korea. GDF Suez, a large energy supplier in Belgium, and SK Telecom both invested in the recent funding round.
  • LoRa Alliance formally launched: The LoRa Alliance was formally launched at MWC. 19 operators are either deploying or testing the technology.· Huawei's Neul and Etisalat form partnership: Etisalat signed a joint research and development framework with Huawei to explore the role of M2M and IoT solutions in industry. Neul's technology will be deployed in licensed spectrum to conduct tests and trials for LPWA services. This follows Vodafone's pre-MWC announcement that it was also working with Neul.
  • Nokia Networks and Korea Telecom trial LTE-M: Nokia Networks inked a memorandum of understanding with KT on LTE-M. The companies showcased LTE-M for automotive, wearables and smart grid use cases. This is the first major announcement of LTE-M trials, another technology currently under evaluation by the 3GPP's RAN Technical Specification Group as part of Release 13 (Rel-13) of LTE, which is expected to be commercially deployed in early 2018.

Although some operators have declared their near term LPWA intentions, most are keeping their options open. In particular some of the largest operators like AT&T and China Mobile have yet to make any commitments. Important questions regarding LPWA still remain.

  • Which LPWA network technology will emerge as dominant?
  • To what extent licensed spectrum will be used to accommodate the IoT?
  • Will 3GPP standards approval mean anything if a de facto standard emerges in the interim?

A more fundamental question looms large in the background of discussions about LPWA: How will players make profits with LPWA networks?

LPWA networks need to clear two hurdles.

  • Firstly, the hardware is still expensive for many of LPWA CSPs' customers to adopt the technology en mass: Driving down the price of the modules and other components is critical to increase take up across different tiers of industrial and later consumer devices. Operators have confirmed that the module price has not yet reached the sub-USD5 level and other key components (sensors, location etc) can make the cost prohibitive for some target applications.
  • Secondly, most CSPs will want to provide more than just LPWA connectivity: Most LPWA connections will generate only minimal connectivity revenue, probably in the order of USD1 per year per device. Some service providers, while providing a full portfolio of connectivity solutions, will want to increase their revenue by providing end-to-end and support solutions in order to maintain their relevance in the value chain.

News from MWC moved the debate forward on LPWA but we are still some way off answering key questions around LPWA.

Connectivity platforms: Jasper and Ericsson further consolidate their position as the main M2M connectivity platforms

Ahead of MWC Ericsson was involved in two significant announcements relating to its Device Connectivity Platform.

The GMA, an alliance of six operators (DT, Orange, TeliaSonera, TIM, Bell Canada and SoftBank), will offer a 'Multi-Domestic Service', where the embedded SIM (eSIM) acts like a local SIM in each member market. Ericsson is providing the connectivity platform to the GMA, and Gemalto the subscription management platform.

The Bridge Alliance, an alliance of 36 mostly Asia–Pacific operators, agreed that its members would use Ericsson's platform, again combined with multi-domestic eSIM capabilities. Four Bridge Alliance members already use Jasper for domestic connections. With relatively low integration costs, and agreements based on a revenue share, operators are using both Jasper and Ericsson (as, for example Telecom Italia and Telenor Connexion already have done) to manage M2M connections.

This multi-domestic eSIM approach, which is also offered by Jasper, is a challenge to the permanent roaming SIM approach used by the likes of AT&T and Vodafone, which can face problems in territories where permanent roaming is either not legal or where the legal framework is unclear.

Ericsson also unveiled Ooredoo as its latest operator client, and Jasper announced China Unicom, further limiting opportunities for new entrant connectivity platforms.

Application platforms: Operator deals with application platforms are a matter of time

Applications platforms were a hot topic for many operators and while at MWC no significant operator deals were signed, many are under discussion. We believe that at least 20 operators are talking to application platform providers. HP, with its IoT Platform, and Oracle, working with Tata Consulting Services, added to the list of potential application platform solutions.

Announcements when they do come will tell us much about where operators see IoT opportunities. Each of the application platforms has a distinct set of strengths and is targeting a slightly different market. For example, a platform such as ThingWorx is well suited to support stand-alone applications, while for others, such as Cumulocity, the emphasis is more on using its platform to integrate data from devices into existing business analytics systems. Where partnerships are struck will indicate where operators see opportunities in the market.

Of the three topics explored above, only one, M2M connectivity platforms appears to have reached a level of maturity. For LPWA the recent flurry of announcements has yet to provide much clarity as to which technology (or technologies) will prevail while for application platforms operator agreements to date have been limited. By MWC 2016, we expect to have much greater clarity on which are the successful LPWA technologies and application platforms.