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Structural Issues Facing LPWA in the Utility Sector

Danny Dicks
Heavy Lifting Analyst Notes
Danny Dicks
8/2/2017
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On the face of it, there's a great fit between low-power, wide-area (LPWA) networks and utility communication requirements. But one of the intriguing and complicating factors is the variety of utility market structures seen in different countries -- and the variations between electricity, gas and water markets. There are many country-specific subtleties, but it is possible to identify at least three models of market structure:

  • Fully vertically integrated players (producer, distribution network owner and retailer) -- possibly with national or regional monopolies -- more typical of local or regional water utilities. Most countries have no national transmission infrastructure for water; in some countries water consumption is not metered.

  • Monopoly local providers of electricity or gas at distribution network and retail layers, with a separate monopoly national producer and transmission infrastructure company. This is more typical of countries where municipalities have strong control over many local services.

  • More fully deregulated competitive markets where consumers have a wide choice of retail suppliers and where dynamic wholesale markets exist. This is more common in electricity, but can also apply in gas and water sectors.

On top of this needs to be added the variety of approaches taken in different countries to the provision of communications services for mandated smart metering programs -- from single national communications infrastructure providers to local utility-controlled networks.

What strikes me is the contrast of this complexity and structural fragmentation with the simplicity and global homogeneity promised by the Internet of Things (IoT) platform and network services (in the interest of driving up volumes and driving down costs). It's easy to see that the go-to-market strategies of LPWA communications service providers and equipment vendors need careful thought.

There is a second architectural issue to consider, too – and that's related to the communications requirements of utility applications. LPWA networks are essentially based on star, or star-of-stars, topologies. The benefits are that infrastructure costs are kept low because a few basestation sites can handle a very wide area and a very large number of connected devices. But that's not traditionally how utility communications networks are built: the layers of home area networks (HANs), neighborhood area networks (NANs) and field area networks (FANs), including those using mesh architectures, make significant use of data concentrators and gateways, allowing for appropriate communications technologies to be used based on best performance in different locations, and ensuring the reliability of connectivity that utilities put very high on their list of requirements.

LPWA technologies are used in electricity, gas and water networks, and there are several big trials underway; however, there is still work to be done by their advocates to demonstrate that the way they are delivered, and their performance, fully meet the needs of utilities.

The Heavy Reading report "LPWA for Utility Applications: Smart Metering and More" examines the applications for LPWA in the utility sector; compares the leading LPWA technologies that have gained traction in the utility space (and the major competing communications approaches); looks at the supply side of the market and identifies leading vendors of communications infrastructure, components, devices and platforms relevant to utility markets; and gives examples of the use of LPWA networks in electricity, gas and water industries.

— Danny Dicks, Contributing Analyst, Heavy Reading

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