Sigfox Said to Face Customer Backlash
The LPWAN threats
Sigfox has clearly faced a challenge from other LPWAN technologies and "configurations" that have entered the market in the last few years, according to Light Reading's second source. Competitors include LoRa and Ingenu 's RPMA (for random phase multiple access), which, like Sigfox, rely on unlicensed spectrum to provide connectivity.
Both Ingenu and the LoRa Alliance , an association set up to promote LoRa technology, have been especially critical of Sigfox. Indeed, while rivals are often dismissive of one another, the attacks on Sigfox have been unusually unrestrained.
Last month, Ingenu CEO John Horn said that Sigfox's inability to transmit much data on the downlink connection (from the network to the device sensors) left it "dead in the water." A spokesperson for the LoRa Alliance has also slammed Sigfox for its downlink inferiority, arguing this gives LoRa a much bigger addressable market. (See Ingenu Revs Up IoT Rhetoric.)
Nicholls hits back by arguing that neither Ingenu nor LoRa currently provides nationwide coverage anywhere. "Ingenu says it is in 100 cities but putting up one basestation does not create a large addressable market for people that want to connect devices," he says. "LoRa was built to do point-to-point and local connectivity and is great for that, but we do not see it as a competitor."
All of these LPWAN technologies, however, now face a threat from standards being developed by the cellular communications industry. The most high-profile of these is NB-IoT, which mobile giant Vodafone Group plc (NYSE: VOD) expects to begin rolling out commercially as soon as next year. (See Vodafone Ups IoT Stakes With 2017 Plan for NB-IoT.)
Many mobile operators are likely to prefer standards developed by the 3GPP and based on licensed spectrum to the LPWAN alternatives. That is partly due to concern about interference and congestion on networks using unlicensed frequencies. Upgrading cellular networks to support NB-IoT should also be more straightforward than deploying Sigfox, LoRa or Ingenu from scratch. And service providers want to avoid being "locked in" to one company's proprietary technology.
Because it makes its intellectual property freely available to chipmakers, Sigfox does claim to be "open." Yet companies that want to use Sigfox technology have no choice but to partner and share service revenues with Sigfox. In 2014, following an interview with Sigfox CEO Ludovic Le Moan, Light Reading reported that Sigfox's typical take was as much as 40% of service-based sales. (See Sigfox Plans Global IoT Network.)
All of this could explain why Sigfox has failed to attract many large traditional service providers as partners. Mobile operators that have announced tie-ups with Sigfox include Altice , which owns telecom networks in France, Portugal and the US, and Middle Eastern operator Oman Telecommunications Co. (Omantel) . Neither has shared many details of its plans, although Nicholls says Altice views Sigfox as a "tool in the [IoT] toolbox" and has already been awarded a metering contract in Portugal that will use Sigfox technology. (See Altice, Sigfox Join Forces in French IoT Battle.)
Sigfox does count a number of cellular heavyweights as investors, including Spain's Telefónica , Japan's NTT DoCoMo Inc. (NYSE: DCM) and South Korea's SK Telecom (Nasdaq: SKM). None of these players, however, has embarked on anything approaching a widespread deployment of Sigfox technology. By contrast, SK Telecom has made far bigger rollout commitments to LoRa, as have India's Tata Communications Ltd. , KPN Telecom NV (NYSE: KPN) of the Netherlands and French operators Bouygues Telecom and Orange (NYSE: FTE). (See SK Telecom, Telkom Indonesia Unite on IoT and Tata Comms to Deploy IoT Network Using LoRa.)
Besides boasting technological advantages over Sigfox, LoRa's backers have also been vigorously defending their LPWAN variant as one that, unlike Sigfox, is truly "open." Yet while the LoRa ecosystem might feature more players, Californian chipmaker Semtech Corp. (Nasdaq: SMTC) controls all of the intellectual property behind the technology. Ingenu, similarly, holds all of the RPMA cards. (See LoRa Alliance Defends Tech Against Sigfox Slur.)
A few service providers appear to be hedging their bets. Orange, for instance, has suggested that LoRa is merely a stopgap until a 3GPP alternative appears. An executive at SK Telecom recently told Light Reading "the jury is still out" on a whole array of LPWAN technologies, including Sigfox, LoRa and the standards coming out of the 3GPP. (See LoRa May Not Be for Long Haul at Orange.)
Given the uncertainties surrounding IoT, analysts are wary of passing judgment on Sigfox. Robin Duke-Woolley, the CEO of Beecham Research, points out that IoT software company Jasper Wireless Inc. -- which equipment giant Cisco Systems Inc. (Nasdaq: CSCO) bought for $1.4 billion in February -- was being dismissed as a failure back in 2008. Heavy Reading Senior Analyst Steve Bell suggests the urgency around NB-IoT is indicative of the pressure the cellular communications industry is under from LPWAN rivals. (See Cisco Looks to Jasper Acquisition to Transform Enterprises – & Itself.)
As one of the main actors in the unfolding NB-IoT drama, Vodafone has clearly thrown its full weight behind the emerging standard, even going as far as saying it will "crush" Sigfox and LoRa. As revealed by Light Reading last week, AT&T Inc. (NYSE: T) is also firmly in the cellular camp. But Duke-Woolley harbors reservations about the 3GPP technologies being developed in response to the LPWAN challenge. (See Vodafone to 'Crush' LoRa, Sigfox With NB-IoT.)
"These have potential weaknesses," he says. "After all, we are talking about ARPUs [average revenues per user] that are a fraction of traditional M2M [machine-to-machine communications] ARPUs and -- in my view -- the jury is out on these as to whether MNOs [mobile network operators] can actually sell them in the multi millions they need to in order to make them pay."
Sigfox prefers to see NB-IoT as a "complementary" technology rather than one that is targeting exactly the same opportunity. According to Nicholls, the silicon cost of adding NB-IoT to an end point is set to fall from about $40 today to around $5 in the next five years. For Sigfox technology, those costs are likely to drop from $2 to $0.50 over the same period, he predicts. "The difference between that and $5 is a gigantic amount of business cases," he says. "But we see use cases where NB-IoT and Sigfox could be linked."
One example he cites is a more sophisticated vehicle-tracking solution that would use Sigfox to transmit location data at occasional intervals but switch to NB-IoT for real-time updates in the event of a theft.
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