Telecom’s Next Battle Will Take Place in the Web’s Slow LaneBy
Vodafone builds cheaper, narrowband network to tackle IoT
Linking devices is less expensive, but will demand be there?
After decades spent developing ever-faster networks that can do everything from stream Beyonce videos to steer driverless cars, the telecom industry has found a new battleground: slower, narrowband systems.
Vodafone Group Plc is building a wireless network that’s cheap and robust enough to link items like garbage cans or garden soil sensors to the internet, so refuse companies will know when to send the truck and the roses get just the right amount of water.
The system, in Madrid, is the vanguard of what will eventually be a global Vodafone narrowband network for the so-called internet-of-things -- millions, perhaps billions, of connected devices designed to save businesses money and time, and free consumers from mundane tasks. The new grid is cheaper to run than than regular mobile and WiFi networks because it uses less power. It’s designed for gadgets like gas meters or traffic-light signals that check in sporadically, rather than driverless cars or heart monitors, which speak continuously to the net.
“People will be able to put devices that cost $10 upfront and $1.99 a month in a kid’s backpack and forget about it,” said Varun Arora, vice president of business development at Greenwave Systems Inc., which designs IoT sensors and equipment for Verizon Communications Inc. and wants to work with Vodafone. “There are going to be so many examples that people can’t even think of now."
To carriers like Vodafone, the networks represent a way to replace income from voice and data bundles that are becoming commoditized. Champions of the narrowband IoT envision homes and neighborhoods teeming with devices, blipping away for a few cents a day on batteries that last for years.
The problem is that carriers still have to figure out pricing. They don’t know how many people actually want the new technology or whether it can gain the scale needed to profit from linking low-cost devices.
While the new network will open up business opportunities the company can’t currently support, “we haven’t agreed yet on how this will work,” said Ludovico Fassati, a Vodafone IoT executive. “The plans could be a fixed fee for five to 10 years of usage. Or there might be a pay-per-message model or a monthly model. Another might use rechargeable prepaid cards.”
Nevertheless, Vodafone is forging ahead. From Spain, the company says it will soon expand to Ireland, the Netherlands and Australia. The carrier wouldn’t discuss its budget for the initiative, which it plans to bring to 30 markets, including its own networks and those of some partners.
Will They Come?
Deutsche Telekom AG, Telefonica SA and NTT Docomo Inc. are also investing in narrowband IoT. But it’s not clear the effort will pay off, said Andrew Brown, executive director of enterprise and IoT research at Strategy Analytics Inc.
"Upgrading these networks isn’t cheap,” Brown said. “Yet there’s a race among large carriers to do this.”
Newbury, England-based Vodafone currently supports some 40 million IoT devices, and is working with Huawei Technologies Co. to add receivers to phone towers. The new grid will complement existing networks taking part of the IoT load and, in some cases, also use satellite capacity from Inmarsat Plc and other providers.
While the seamless international coverage of a common narrowband platform could be an advantage for Vodafone, an alternative technology called LoRa, being used in a trial by Comcast Corp. in the U.S., is looking robust, according to researchers at Analysys Mason.
U.K. rival BT is working on its own narrowband network in Milton Keynes, 45 miles north of London, said Guillaume Sampic, BT’s head of IoT strategy. That network captures data from sensors in roads, parking lots, and street lights to reduce traffic jams in the town. Although these uses make sense, no one knows yet whether such devices will catch on with consumers, a predicament for carriers.
“They are facing a challenge in understanding which applications will make money for them,” said James Ratzer, an analyst with New Street Research.
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