France's Sigfox has big ambitions to build a global network dedicated to the Internet of Things (IoT) that runs in parallel to today's GSM/LTE networks.
But that doesn't mean Sigfox is positioning itself as a competitor to mobile operators. Instead it intends to spread its networks beyond its current markets of France, the Netherlands and Spain by developing service partnerships with mobile carriers in other parts of Europe and in Asia, and rolling out networks in cities in the US.
"We are in discussions with major carriers in a number of different countries," says Ludovic Le Moan, CEO of Sigfox.
Sigfox's hope is that operators will use its network, which runs in unlicensed narrowband frequencies in the 915MHz and 868MHz ranges and makes very low power demands on devices, as a low-cost backup or alternative to their existing networks when providing M2M connectivity.
Using existing GSM networks for M2M is not efficient, he notes. "If you're not sending much data, then the power consumption of GSM networks is not adapted." Instead, a network optimized for M2M can be used for much of the time, and when necessary, it's possible "to wake up GSM if there is a need to send large amounts of data, such as a video," says Le Moan.
Sigfox, which launched five years ago, has built its own national network in France and charges enterprises subscription fees for connecting objects. The company estimates it can break even in France once it has connected 3-4 million objects at a cost to customers of approximately €1 or €2 per connection, per year. Contracts with Securitas Direct in Spain and the French insurance giant MAAF mean the company can expect to have connected 400,000 objects by the end of 2014, rising to between 5 and 6 million objects by the end of 2016, according to Le Moan.
However, there is not much future for a technology used in only a smattering of European countries. So it's in Sigfox's interest to beat off potential rivals and bring on board mobile operators and global equipment suppliers as quickly as it can if it's to become one of the major market players.
As a result, Sigfox is working with partners to roll out its network on their existing cell towers and antennas -- a model that "enables us to significantly reduce capex and opex costs," says Le Moan.
Typically, Sigfox seeks 40% of revenues in return for its technology and network design, leaving 60% for the partners that deploy the networks. Sigfox also provides its software protocol free of charge to modem manufacturers and makes its cloud web services APIs available to enterprise customers. Texas Instruments Inc. (NYSE: TXN), Atmel Corp. (Nasdaq: ATML), Silicon Laboratories Inc. and Telit are among the companies that manufacture Sigfox-enabled modems, says Le Moan.
Sigfox has already partnered to build networks in Spain, the Netherlands and the UK, though not with major mobile carriers. In Spain, Sigfox is working with Abertis Telecom SA, which owns tower sites and provides telecoms and audiovisual services to broadcasters and telecom operators. In the UK a similar company, Arqiva , is set to use Sigfox's technology to roll out networks in 10 major cities in 2015. (See Metal Machine Music: Dedicated M2M Networks on Horizon.)
Before the end of 2014, Sigfox expects to sign further agreements in Belgium, Portugal and Ireland, followed in early 2015 by Italy and Germany. "It will be pretty easy to cover most of Europe before mid-2015," believes the CEO, who is also hoping to raise further funds. The company, which has raised €27 million in investment so far, is seeking at least a further €50 million in a new round of funding that is set to close in early 2015.
Tests of Sigfox technology are also underway in a number of Asian countries, including India, Japan, South Korea and Thailand, says Le Moan, who expects to strike agreements in those markets before the end of 2015.
The company is looking at Africa, too, where the CEO sees a potential to use low-power, low-cost IoT networks to provide services such as healthcare. However, "Africa is a big challenge -- it is not so easy to find the right partner," admits the Frenchman.
Heading to the US
Not surprisingly, Sigfox has its eye on another large and challenging geography: the US. Sigfox, which recently received Federal Communications Commission (FCC) approval for its technology, this year built a network in the Bay Area and now plans to spread coverage to the 15 or 20 largest US cities during the coming year, with a focus on technology hubs.
However, it is much harder to cover a country the size of the US than it is the Netherlands or France, and an IoT network needs to be national if it is to provide key services such as the tracking of objects. In the US, "we can't provide everything that we do in France [such as nationwide tracking] from day one," admits Le Moan.
And in the US, operators may have their own ideas about which networks they use to connect objects. AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), for example, already have in place sizeable M2M businesses, points out Keith Robinson, senior strategist and consultant, and head of M2M/IoT at Compass Intelligence. And Sigfox has more than just the major carriers to contend with: IoT managed services provider KORE Wireless is acquiring IoT MVNO RacoWireless to create a major M2M specialist network operator in North America, although unlike Sigfox, Kore uses GSM, CDMA and satellite technologies. (See KORE, RacoWireless Become IoT Powerhouse.)
"We will have to see how we finalize US coverage. Maybe it will be through partnerships and deals with city halls and companies," says Le Moan.
Aside from low power consumption, one of Sigfox's selling points may be the price it charges for M2M access to its network. At approximately $1 per year, Sigfox's connection price per device will be much lower than those of US mobile operators, which "typically charge around $1 per month," says Robinson.
— Joanne Taaffe, special to Light Reading