A lack of compelling 5G-based business models for IoT services is giving rise to a fragmented market of various networks and technologies aimed at connecting a wide variety of devices, according to a new report from Analysys Mason.
But the worldwide wireless industry is likely to coalesce behind a single standard over the next two years, the repot suggested.
Some major operators including Verizon and AT&T are backing LTE-M, the London-based market research firm noted, arguing that the technology can provide speeds of up to 1 Mbps and carry voice, but are only slightly more expensive and less energy-efficient than NB-IoT units.
Other operators, including Deutsche Telekom and Vodafone, among others, support NB-IoT (narrowband IoT) networks, claiming they are better suited for the specific needs of M2M and other IoT scenarios.
The competing networks and technologies threaten to shackle the growth of the IoT as it begins to grow out of its infancy. Indeed, a panel of industry experts discussed the competing IoT technologies two weeks ago at a FierceWireless event at Mobile World Congress in Barcelona.
“This fragmentation is likely to create uncertainty,” Michele Mackenzie and Tom Rebbeck of Analysys Mason wrote this week. “A firm that wanted to add connectivity to its device would struggle to choose a technology. It could simply add both—Qualcomm and others have modules that offer NB-IoT and LTE-M connectivity—but this adds complexity and cost; exactly what the industry wants to avoid with solutions for IoT.”
Part of the problem, the analysts observed, is that few examples of 5G-based IoT use cases have emerged that appear to be potentially lucrative. Carriers have been hesitant to spend heavily on next-generation IoT technologies for fear that they may not recoup their investments through relatively low-margin services such as industrial M2M connectivity.
“For operators, this means that almost all the use cases for IoT that can be thought up can use a variant of 4G (or even something simpler) without needing major network investment,” Mackenzie and Rebbeck wrote. “However, it also means that any business case for 5G investment cannot rely on IoT. 5G-based IoT applications may emerge, but they are not in evidence yet.”
Fragmentation concerns are likely to be addressed over the next year or two, however, as one technology or another begins to gain critical mass. And while competition among networks may be a drag on the growth of the IoT in the short term, it likely won’t be a major concern in the long run.
“The final investment decisions of the Chinese operators may be key here,” the analysts wrote. “However, whatever happens we are not looking at a GSM-vs.-CDMA type split. Both NB-IoT and LTE-M are (relatively simple) software upgrades to an existing LTE network; an operator could conceivably offer both simultaneously.”