Potentially one of the most significant developments in the M2M market in recent years has been the emergence of a range of "alternative" (i.e. non-3GPP or 3GPP2 cellular) wide area wireless technologies, such as On-Ramp, Sigfox and Weightless, designed specifically for M2M and with network capabilities to well suit a number of categories of M2M devices. Wide-area wireless networking is always a trade-off between power consumption, traffic speeds and cost. The calling card of these emerging low power wide area (LPWA) technologies is that they typically significantly compromise traffic speed in return for lower costs and longer battery life. However, in many cases in M2M that compromise is perfectly acceptable in light of the characteristics required by the application. Many do not require the low latency and high bandwidth offered by other technologies designed for real-time communications.
Machina Research has analysed the extent to which these emerging technologies might impact the markets for M2M across the 180+ M2M applications that we already forecast. The results suggest that whilst the market opportunity for the 'established' M2M technologies that form the basis of our current forecasts is 18 billion M2M connections by 2022, the total opportunity for LPWA technologies in the same timeframe is 15.5 billion connections. This total opportunity is made up of 8 billion M2M connections for which LPWA technologies are innately suitable as a substitute technology, 2bn connections corresponding to M2M applications that can be adapted to be supported by LPWA technologies, 4 billion potential connections that may be unlocked as LPWA accelerates the adoption of M2M connectivity and a final 1.5 billion connections resulting from an expected increased device count for certain M2M applications. These results are illustrated below:
Total LPWA opportunity, 2022 [Source: Machina Research, 2013]
So the opportunity for this kind of M2M-optimised technology is clear. LPWA technologies have the potential to significantly transform existing M2M markets by variously reducing the price of connectivity and increasing the attractiveness of M2M connected solutions. But who are the main contenders for providing such solutions? Well, the line-up is likely to change, but the players currently at the front of the grid include On-Ramp, Sigfox and Weightless.
On-Ramp Wireless is based in San Diego, Calif., and has been supplying network components designed to support their (trademarked) Random Phase Multiple Access (RPMA) wireless technology for more than five years. To date, the company has typically focused on providing solutions to the utilities industries. Their strategy has been to generate margins from the provision of hardware endpoints, connectivity modules, access points and software to customers that typically implement their own (single tenant) networks. Key reference clients that neatly illustrate this approach are San Diego Gas & Electric (for whom On-Ramp have provided an electricity-network monitoring solution covering 4,100 square miles) and General Electric (who act as a Value Added Reseller of On-Ramp technology with their Grid IQ Advanced Metering Infrastructure solution).
Sigfox is a network operator based in a Southern suburb of Toulouse, France, and is the owner of the eponymous radio wide area networking solution. Sigfox positions itself as an operator and has ambitions to roll out a worldwide network, providing out-of-the-box connectivity through a subscription model. Sigfox believes that to unleash the potential of the Internet of Things, connectivity needs to be out-of-the-box and available anywhere. To achieve the ambition of quickly rolling out a worldwide network, Sigfox has defined a strategy related to local licensed network partners: Sigfox Network Operators (SNOs). SNOs will be separate commercial entities, selling subscriptions for connectivity. Sigfox's priority is to guarantee the provision of network coverage, and then stimulate manufacturers and other providers of M2M connected products and services to develop Sigfox-enabled solutions.
Weightless is an 'open' standard wide area radio networking solution. To date, the main driving force behind Weightless has been a company called Neul, based in Cambridge, UK. Like Sigfox, Neul has recognised the advantages of achieving national rollouts. However, Neul's strategy for achieving this goal is fundamentally different. Neul's aim is to stimulate and catalyse the development of an ecosystem around the Weightless technology, in the expectation (and hope) that, eventually, one or more participants in that ecosystem will step forwards and deploy the solution nationwide. Ultimately, Neul would like to see Weightless achieve global coverage, on the back of multiple national rollouts.
And what's the likely impact of these new technologies? Well, first it must be pointed out that to address the 15.5 billion connection total potential market outlined above, LPWA networks would need to be deployed worldwide, ecosystems would need to gain critical mass and a host of commercial challenges must be overcome. But, if those things happen, then LPWA clearly has the potential to transform existing markets for M2M. And sitting in the hot seat of this transforming environment would be mobile operators, who probably have both the most to lose (to a competing technology) and the most to gain (through potential deployment of a 'low-value' M2M wide-area wireless proposition, leveraging existing tower site and field force assets) from the adoption of LPWA technologies.
Jim Morrish is a director and co-founder of Machina Research, technology research and consulting firm focused on the emerging opportunities associated with new forms of connected device.
Editor's Note Some of the companies mentioned in this column are clients of Machina Research.