Can LoRa Withstand the Cellular Stampede?
The LoRa sweet spot
Spectrum considerations certainly appear to have given a spur to LoRa in India, where telecom operator Tata Communications Ltd. is also investing in the technology. "India's government prefers unlicensed to licensed because of low costs," says Hosseini. "Some of the tenders we've seen with smart water metering and smart street lights have stated the need for unlicensed spectrum technology in their RFPs [requests for proposal]."
Its proponents also insist that building a LoRa network is far less costly than putting up a cellular one. SenRa is investing about $500,000 annually in what Hosseini calls an "aggressive" deployment. With 30 cities covered in 2018, the company aims to reach 60 this year and 100 in 2020. "Big telcos like SK Telecom [in South Korea] deployed a full-country network in three months," he says. "It is a tenth the cost of a traditional telco cellular network." (See SK Telecom Completes Nationwide LoRa Network Rollout for IoT.)
The unlicensed-spectrum technologies have continued to boast a cost advantage over cellular in other areas, too. Back in 2016, Sigfox reckoned the silicon cost of adding its technology to an end point was around $2, and that it would fall to just $0.50 by 2021. Chip costs for a LoRaWAN network can be as low as $3, according to Hosseini. Since standardization, the cellular industry's goal has been to reduce such costs to about $5 per chip. Whether it is near that target, or has even now achieved it, currently remains unclear. (See Sigfox Said to Face Customer Backlash.)
Unlicensed still appears to beat cellular on connectivity costs, as well. SenRa's prices start at 35 Indian rupees ($0.50) per device per month, says Hosseini. Sigfox has previously claimed to offer services for as little as $1 per device annually. For mobile operators geared up to serve the lucrative smartphone market, those rates are hard to match. With its array of cellular and other telco technologies, Vodafone made about €11 ($12.50) per IoT connection during the fiscal year ending in March 2018. (See Sigfox Plans Global IoT Network.)
LoRa might struggle to maintain these various cost advantages as cellular takes off. Prices are already falling, and the growing volume of business will only drive them down further, as Vodafone's Beal had anticipated in 2016.
Moore remains sanguine, though. In her view, cellular cannot hit LoRaWAN's sweet spot of "low data rates, long battery life and long distance." Where there is a need for greater performance, as in emergency services or CCTV cameras, cellular is likely to win, she concedes. But these opportunities will represent only about a quarter of the total IoT market, she says. "The other 75% of use cases are low data services, and that's LoRaWAN."
The strategies a few telcos have pursued lend some weight to that argument. France's Orange (NYSE: FTE) has notably developed an IoT plan based around the use of LTE-M and LoRa. This means it can take advantage of both licensed and unlicensed spectrum, for one thing. But LTE-M, with its fatter bandwidth channels, is also seen as a more appropriate technology where there is some performance requirement -- as in connected car services, for instance. LoRa remains the preferred choice for smart metering and other such low-data-rate applications. South Korea's SK Telecom (Nasdaq: SKM) is following a similar approach. (See SK Telecom Sees LTE-M, LoRa as Its 'Two Main IoT Pillars' and Orange Hails LoRa Breakthrough as Bouygues Ups IoT Game.)
Next page: Not just a stopgap