View that ‘proprietary’ low cost wide area IoT solutions are cheaper than 2G cellular is wrong according to Vodafone Group IoT Director Erik Brenneis; latest Vodafone research shows 76% of companies believe IoT is critical to future success
The general perception that the new breed of low power wide area network (LPWAN) IoT standards operating in unlicensed spectrum are cheaper than current 2G IoT solutions is wrong, Vodafone Group IoT Director Erik Brenneis (pictured), said this week.
Introducing Vodafone’s fourth annual IoT Barometer 2016 (see below for more information) at a preview in London yesterday (13 July 2016), Brenneis said: ‘Solutions like SIGFOX are not cheaper than 2G today.
‘A SIGFOX module is more expensive than a 2G module – ask Telit (the M2M/IoT module manufacturer) – they produce both. So, on the hardware cost it is more expensive and the pricing for the data is more or less the same as our electricity metering pricing, for example.’
Brenneis was emphatic that Vodafone will not invest in any of the non-cellular LPWAN technologies such as SIGFOX, LoRa or Ingenu, as some of its peers have done. KPN has rolled out a LoRa network in The Netherlands and Orange is investing in a LoRa network in France, for example.
Instead, Vodafone has put its weight firmly behind the 3GPP specified Narrowband Internet of Things (NB-IoT) LPWAN solution, which uses licensed 4G cellular spectrum. Vodafone will introduce its NB-IoT offering towards the end of this year.
‘NB-IoT is the one for us,’ said Brenneis. ‘Otherwise you don’t utilise the full technology and we strongly believe NB-IoT is better in terms of reliability and cost. My view is that after discussions with utilities a lot of these customers are waiting for a licensed narrowband options.’
He added: ‘The beautiful thing about NB-IoT is that we can switch it on immediately; it is just a software upgrade in our existing base stations. The problem with a SIGFOX network is that you have to build a network first.’
He added that the pricing structure for NB-IoT will be the same as 2G today, but it will have added benefits, as NB-IoT provides wider coverage than existing cellular networks and is better at penetrating buildings and cellars, making it particularly suitable for smart metering type applications.
Turkey, Ireland, Netherlands and Australia will be the first countries to get Vodafone’s NB-IoT in Q1 2017. ‘They will immediately have better coverage than any other narrowband network,’ said Brennais.
However, end devices will need to be swapped out or have a dedicated NB-IoT module added to them to work, as it is technically impossible to migrate 2G devices to NB-IoT.
For that reason, Vodafone has said 2G will not disappear – 70% of its M2M/IoT connections are currently running on 2G technology. The operator is guaranteeing continued 2G coverage for its European customers until 2025, because there is a big installed base that needs to be maintained.
The idea is that by 2025, the 2G IoT devices in that installed base will have exceeded their expected lifetimes and the customers will have got the full return on their investment and be ready to switch over to another solution.
IoT Barometer 2016
Turning to the findings of Vodafone’s latest IoT Barometer (now in its fourth year), Brenneis said: ‘Last year I said it was the first time the market had moved from being a niche industry to a mainstream one and I’m happy to say this prediction proved to be true. This year, the big message is that IoT is thepriority for many industrial organisations and they say it will be critical for their future success.’
The IoT Barometer Report is a global survey of business sentiment regarding innovation and investment in the Internet of Things. The survey was conducted by Circle Research in April and May 2016 and involved more than 1,096 companies across Australia, Brazil, Canada, China, Germany, India, Ireland, Italy, Japan, The Netherlands, South Africa, South Korea, Spain, Turkey, the UAE, the UK and the USA.
The 2016 Vodafone IoT Barometer Report found that:
• 89% of companies investing in IoT have increased their budgets over the last 12 months
• 76% of all companies interviewed believe that taking advantage of IoT technologies will be critical for the future success of any organisation
• 63% of IoT adopters are seeing “significant” returns on investment, up from 59% in last year’s Report
• IoT investment now accounts for 24% of the average IT budget, on a par with cloud computing or data analytics.
IoT enters the mainstream
The Report also found that IoT technologies play a key role in mainstream business activities in an increasing number of companies. Highlights included:
• 48% of companies interviewed are using IoT technologies to support large-scale business transformation, rising to 61% in the Asia-Pacific region
• 52% of consumer electronics companies interviewed are using IoT technologies as the basis for a new generation of applications for connected homes
• 46% of all companies interviewed said they intend to develop new IoT-based products and services over the next two years.
Brenneis said: “Three-quarters of the companies we interviewed now recognise that the Internet of Things is a new industrial revolution that will change how people work and live forever, and almost half the companies surveyed across multiple countries and sectors told us they’re already planning to bring connected network intelligence to millions of devices and processes over the next two years. 2016 is the year the Internet of Things entered the mainstream.”
He added that the IoT market is going strongly and Vodafone believes that growth will continue for another couple of years. He noted that adopters are allocating 24% of their budget on IoT, which is on a par with mobile, cloud and analytics – indicating that IoT is now seen as being as central as core IT investments.
Bigger the commitment to IoT the better
The report also revealed that ‘a bigger commitment produces better results’ with those organisations that allocate more budget and run more IoT projects seeing a stronger RoI. Backing at board level is also critical for successful implementations.
A further change to emerge this year is that IoT is no longer the preserve of big companies. Up until recently smaller firms have found that IoT projects needed too much up front investment. But as hardware prices have dropped and there are more ready-made, standardised end-to-end solutions available (particularly for device monitoring and management) smaller companies now feel they can afford to adopt IoT.
IoT aids business transformation
Another key finding is that IoT supports business transformation. It is more than something that just supports costs savings, it can change business processes and be revenue generating. Successful companies also measure IoT within their business processes, treating IoT as a business project, rather than an IT purchase.
IoT is also enhancing the user experience, as Brenneis explained: ‘Luxury automotive brands such as BMW, Daimler and Jaguar all have connected cars. They have measured how many people base their decision on what to buy according to what the digital experience within the car is – for 25% of buyers it was important. What that means is that if IoT differentiates their products, they will invest more.’
IT integration essential
The report also found that IT integration is key to using IoT data effectively. IoT is all about data, but 81% of business said that IoT can only deliver real value if effective use is made of the data generated. Of particular importance is integrating data back into core systems, such as Enterprise Resource Planning, and enabling employees to access IoT data. Two thirds of businesses were also relaxed about sharing data with other organisations as it enhanced the overall ecosystem.
End-to-end security a must
The final key finding is that security needs end-to-end attention, but while security has been a major barrier to adoption in the past, this year’s survey found businesses now regarded it as just one more aspect to be managed. ‘It is a sign of a market maturing and demystifying that we are now seeing a more rational approach using normal mechanisms,’ said Brenneis.
The 2016 Vodafone IoT Barometer Report can be found here.
Courtesy of www.wireless-mag.com