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NB-IoT? Not at Those Prices, Say DT Customers

Iain Morris
5/26/2017
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Deutsche Telekom has still not seen any big tenders for NB-IoT because module costs are far too high for its business customers, says Jens Olejak, the senior product manager at the German operator's M2M unit.

Module prices need to fall closer to the industry's ultimate target of $5 per unit to make projects more feasible, according to Olejak, and they are still way above that level.

"To be honest there are still no big tenders yet for NB-IoT," said Olejak during this week's LPWA World conference in London. "The module cost is still between €10 [$11.22] and €15 [$16.83] rather than the $5 we are looking at and so no customer is doing a serious commercial tender." (The $5 goal is one the 3GPP standards body is said to be aiming for.)

NB-IoT is one of several technologies addressing demand for so-called low-power, wide-area (LPWA) connectivity -- the kind needed for devices like smart meters and gadgetry that monitors the status of industrial equipment.

A cellular standard that forms a part of the 3GPP's Release 13 standards update, it appears to have been developed in response to LPWA technologies born outside the cellular community and based on unlicensed spectrum.

Sigfox and LoRa, the most high profile of these unlicensed-spectrum technologies, will greet any news of NB-IoT cost challenges as an opportunity to make further commercial headway.

Sigfox has previously boasted a huge advantage over NB-IoT on equipment costs and seems likely to maintain that advantage even if NB-IoT can hit the $5 target.

In June last year, Thomas Nicholls, Sigfox's executive vice president of communications, told Light Reading that he expected the cost of a Sigfox module to fall from about $2 then to as little as $0.50 over the subsequent five years. (See Sigfox Said to Face Customer Backlash.)

"The difference between that and $5 is a gigantic amount of business cases," said Nicholls at the time.

High module prices may be a problem for mainstream cellular operators in other ways, too.

Currently, many operators support M2M services on GPRS, an ageing 2G network technology. If they cannot move customers onto 4G-based alternatives, like NB-IoT, they will have either to ditch those contracts or to continue investing in increasingly outdated systems.

At the same time, the industry practice of jumping from one generation of cellular technology to another is fueling concern about the long-term commitment to NB-IoT -- especially as some operators in North America and Asia have either switched off or announced plans for the "sunsetting" of their 2G networks.

Olejak was at pains to address any such anxiety. "When customers speak to us about NB-IoT they expect us to maintain the network for ten to 15 years and I think we can commit to that," he said.


Want to know more about the Internet of Things? Check out our dedicated IoT content channel here on Light Reading.


But operators that expected NB-IoT to swiftly "crush" Sigfox and LoRa now seem likely to be disappointed. (See Vodafone to 'Crush' LoRa, Sigfox With NB-IoT.)

The technology has taken knocks already this year, with Vodafone Group plc (NYSE: VOD), one of its biggest supporters in the service provider community, missing NB-IoT rollout targets in some of its European markets.

There have also been suggestions that LTE-M, another cellular technology aimed at the LPWA opportunity, could supplant NB-IoT as the default standard. (See Could LTE-M Torpedo NB-IoT?)

Although LTE-M supports much higher-bandwidth connections, operators such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) in North America, and Orange (NYSE: FTE) in France, appear to have backed it as an alternative to NB-IoT.

Above all, there is a growing perception that NB-IoT equipment from Ericsson AB (Nasdaq: ERIC) is incompatible with that from Huawei Technologies Co. Ltd. -- even though both vendors are pleading ignorance about any such problems. (See Ericsson, Huawei Incompatibility Threatens NB-IoT – Sources.)

Incompatibility would clearly hinder NB-IoT's emergence as a global standard, and without sufficient economies of scale module pricing could remain stubbornly high.

Despite the various teething troubles, there is skepticism that proprietary and unlicensed-spectrum technologies will ultimately be able to withstand the cellular onslaught.

A founding director of Neul, a UK-based IoT startup that was acquired by Huawei in 2014, William Webb doubts that any proprietary technology can make a lasting impact in the wireless sector and says that LoRa -- despite appearing to be more "open" than Sigfox -- is still controlled by Californian chipmaker Semtech Corp. (Nasdaq: SMTC) (See Weightless Aims to Exert Gravitational IoT Pull.)

Syed Hossain, the founder and chief technology officer of a US-based M2M specialist called Aeris Communications, reckons Sigfox could enjoy success in the US market, but only if it can achieve nationwide coverage. "Thirty or 100 cities will not be enough," he told attendees at LPWA World during a keynote presentation. "LPWA must achieve full coverage."

Not everyone is writing off the cellular challengers, though, and some of the world's biggest operators -- including Orange and South Korea's SK Telecom (Nasdaq: SKM) -- have made investments in LoRa networks. (See SK Telecom Sees LTE-M, LoRa as Its 'Two Main IoT Pillars'.)

"We are not religious about that," says Bengt Nordström, the CEO of the Northstream market research and consulting group, when asked if Sigfox and LoRa were ultimately doomed. "From an enterprise customer perspective, if Sigfox as a technology can improve my operating margin and market share, then why shouldn't I pursue it now?"

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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iotman
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iotman,
User Rank: Lightning
6/5/2017 | 7:16:11 PM
Interoperability
As I mentioned a few weeks ago......nb-iot IODT is almost completed. Please put to bed these myths around "two versions" of NB-IOT. It is one standard, as it was always intended to be.

 

http://www.silicon.co.uk/networks/vodafone-nb-iot-213835

 

 
SystemEn18668
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SystemEn18668,
User Rank: Lightning
5/28/2017 | 11:30:58 PM
NB-IOT vs SigFox vs LoRA
Delay standardization, price and vendors not being open to each other, Are we heading to evolution of another open standard based deployments similar to Wi-Fi in access? 
Director53355
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Director53355,
User Rank: Lightning
5/28/2017 | 3:08:52 PM
Re: Clarification
Ian, as told before: "If a sales guy will tell me that he cannot sell NB-IoT modules in a price range between USD 5 and USD 10 then I will fire him."
The price level of today is already okay and the price is not all. 
Director53355
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Director53355,
User Rank: Lightning
5/28/2017 | 3:04:30 PM
NB-IoT price and limitations in licence free band
Ian, sorry but I do not agree with your article. The price for NB-IoT modules is already less than USD 10 – since months. I am not the Oracle of Delphi, but I am more than 20 years in GSM and GPS. A combined GSM / Bluetooth module I can offer in the USD 5 USD range to you.  Moreover, it comes with an RTOS and gives you the freedom to run the code on the module. GSM module has a TX power of 33 dBm. For 33 dBm you have to spend an external power amplifier in front of the chip. NB-IoT modules have to support 23 dBm only. The 23 dBm you can generate on the main NB-IoT chipset. Based on that the bill of material of an NB-IoT module is always cheaper than a bill of material of a GSM module. The USD 5 or even less is realistic.

"Thomas Nicholls, Sigfox's executive vice president of communications, told Light Reading that he expected the cost of a Sigfox module to fall from about $2 then to as little as $0.50 over the subsequent five years."

I was in the sales of ISM chipsets and I know what is inside an SIGFOX module. The USD 2 modules are based on a System on Chip with an ISM Transceiver, MCU (license free 8051 derivatives), a crystal and a matching circuit. USD 0.50 minus 15% margin for the manufacturer and distributor means USD 0.36 production costs including upper mentioned parts, PCB, metal can, pic and place, testing and assembling on tape on wheel. What support and service level the IoT developers can expect on 15% margin? We talk about RF development, antenna matching and radio certifications.
Ian, the USD 0.50 are not realistic.

"The difference between that and $5 is a gigantic amount of business cases,"
The cheapest car in Germany was the Trabant. They closed the factory doors in 1990.
https://en.wikipedia.org/wiki/Trabant
Porsche is still selling well. Price is not all. Often you get what you pay for. All these ISM technologies called LoRa or SIGFOX want to make business in a small 600 KHz frequency gap in the unlicensed frequency band. What will happen if two LoRaWAN BTS, one SIGFOX BTS, sensor networks and our garage door openers will start to transmit unsynchronised without listening before talking? My personal opinion is that the cheap dream will end in a collapse in the unlicensed band and some new rules at RED.

>"Sigfox has previously boasted a huge advantage over NB-IoT on equipment costs and seems likely to maintain that advantage even if NB-IoT can hit the $5 target."
Sorry but this is wrong twice. We will undercut the USD 5. What is your dream car? A Trabant or a Porsche? SIGFOX has many technical limitations and based on that they will not meet the needs of many IoT applications.

> "Currently, many operators support M2M services on GPRS, an ageing 2G network technology. If they cannot move customers onto 4G-based alternatives, like NB-IoT, they will have either to ditch those contracts or to continue investing in increasingly outdated systems."
The toll system in Germany is based on GSM/GPRS. A lot of metering applications are on GPRS. The European eCall is based on GSM and fall back on incoming calls on smartphones is GSM. GPRS will stay a long time alive. It will be limited in the frequency range, but I will not get a sunset. If you tell Asia, then you tell nothing, because it is a continent and no country.

As I told, I am 20+ years in GSM and GPS. We sold GPRS modules for USD 20+. If a sales guy will tell me that he cannot sell NB-IoT modules in a price range between USD 5 and USD 10 then I will fire him. With NB-IoT we can make a lot of application real, that we cannot do with GPRS or SIGFOX. Frankly spoken I am tired of reading about price as a benefit repeatedly. Porsche, BMW and Daimler sell well without talking about price level.

If you or a reader has a need a for a USD 5 offer, then do not hesitate to drop an email to me harald.naumann (at) lte-modem.com
iainmorris
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iainmorris,
User Rank: Blogger
5/27/2017 | 4:32:29 AM
Re: anti nb-iot articles will look silly in coming months
It is not an "anti-NB-IoT" article, as you say, and does actually point out the challenges surrounding LoRa and Sigfox and that many industry observers expect NB-IoT to succeed in the long run, despite challenges it faces right now. If people make comments at trade shows, that is what we report - because that is what reporters do. And if the interoperabilty issue is a "myth," it is one that a number of experts and industry figures have bought into, and therefore that Ericsson and Huawei have not done enough to dispel. It was even mentioned in a keynote at the LPWA World event this week. People aren't convinced it isn't a problem, basically, and that in itself is a problem. As the author of the story, I would be very happy to be contacted (morris@lightreading.com) if you would like to discuss in more detail - you sound potentially like one of the sources you suggest we should be getter closer to!
iainmorris
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iainmorris,
User Rank: Blogger
5/27/2017 | 4:32:29 AM
Re: anti nb-iot articles will look silly in coming months
It is not an "anti-NB-IoT" article, as you say, and does actually point out the challenges surrounding LoRa and Sigfox and that many industry observers expect NB-IoT to succeed in the long run, despite challenges it faces right now. If people make comments at trade shows, that is what we report - because that is what reporters do. And if the interoperabilty issue is a "myth," it is one that a number of experts and industry figures have bought into, and therefore that Ericsson and Huawei have not done enough to dispel. It was even mentioned in a keynote at the LPWA World event this week. People aren't convinced it isn't a problem, basically, and that in itself is a problem. As the author of the story, I would be very happy to be contacted (morris@lightreading.com) if you would like to discuss in more detail - you sound potentially like one of the sources you suggest we should be getter closer to!
iotman
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iotman,
User Rank: Lightning
5/26/2017 | 4:51:02 PM
anti nb-iot articles will look silly in coming months
We already have commitment for 8USD modules from multiple vendors for MOQ as little as 1000. These are available right now. They are also using latest chipsets with optimization (Release Assistance) that put nb1 power consumption equal to or better than lorawan (for payloads 100 bytes or more). The author here needs to get some better intelligence , as those close to this know how real the networks will be in the coming months. The US carriers are also softening their CAT M stance and are all likely to include nb1 in near future as they realize it's the optimum solution for millions of battery powered devices. I'm constantly amused by these light reading articles! Also, the whole interoperability between the two versions of nb1 is also a complete myth....the vendors have almost completed full testing and all nb1 modules (based on huawei chipset) will be fully interoperable from June 17 (I know as we are already testing these). The author needs to get closer to the technology and closer to the sources to report more accurately. Rag
iainmorris
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iainmorris,
User Rank: Blogger
5/26/2017 | 12:05:25 PM
Clarification
This story has been updated since it was first published to point out that a module cost of $5 is a broad industry objective, and not a Deutsche Telekom goal specifically, and that prices need to fall closer to $5 -- but not be at $5 -- to fuel more interest in NB-IoT. 
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