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Mobile Communications July 2014 Viewpoints

Technology Analyst: Frederick Dopfel

A Network for the Internet of Things

Why is this topic significant?

As mobile-phone subscriptions in developed countries reach a saturation point, mobile-service operators look toward the Internet of Things as an opportunity to continue to grow their business through new subscriptions. Competing connectivity approaches may disrupt this plan before cellular operators have the opportunity to implement it.

Description

French start-up Sigfox is rolling out a low-speed, low-power wireless network specifically for the kinds of low-resource connected devices that constitute much of the emerging Internet of Things (IoT). Sigfox's network uses unlicensed spectrum in the 900 MHz band to deliver extremely low speeds of 100 bits per second at a service charge of about $1 per device per year. Making a device Sigfox compatible adds only $1 to $2 in equipment costs. Sigfox is currently deploying a test network in Silicon Valley and San Francisco, California, in anticipation of a larger US rollout. Sigfox has already deployed its technology in France, the Netherlands, and parts of Russia and Spain and supports a variety of applications, including smoke and motion detectors from insurance company MAAF and a GPS dog-locating collar by start-up Whistle Labs.

Implications

Sigfox's network ostensibly allows manufacturers of connected devices that do not require high-speed connections to add persistent wide-area wireless connectivity inexpensively. Many kinds of IoT devices could benefit from wide-area connectivity, and bundling lifetime connectivity cost into the device purchase price may well make sense for at least a subset of such devices. Especially for devices with a high base cost (such as a car), bundling Sigfox service to enable basic functionality such as remote monitoring may make sense. Even home appliances could benefit from a built-in low-speed internet connection; users would enjoy connectivity "out of the box" without having to go through the setup and troubleshooting process necessary to hook devices up to a home network. Wearable devices such as heart-rate monitors, smartwatches, and digital pedometers may benefit from a low-power, low-speed, inexpensive network and could enable the user to stay connected via text messages even if the user leaves his or her phone behind.

Impacts/Disruptions

Sigfox's network could disrupt incumbent cellular networks' growth plans. Many cellular-service providers see significant growth potential in providing wide-area connectivity for IoT devices, but competition from inexpensive options such as Sigfox could put downward pressure on IoT connectivity revenues generally. Incumbent cellular operators may cooperate with Sigfox (as some are doing now) by leasing space on their towers to the company. Alternatively, cellular operators may choose to compete by creating their own low-power network or perhaps offering inexpensive low-data-rate plans, leveraging their extensive preexisting coverage.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: High

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: Now to 5 Years

Opportunitites in the following industry areas:

Internet of Things, connected devices, sensor networks, smart cities, infrastructure monitoring, agriculture

Relevant to the following Explorer Technology Areas:

Innovations in SMS

Why is this topic significant?

SMS is an incredibly popular form of communicating, but over-the-top messaging services have increasingly displaced conventional SMS. Today, some cellular-service providers are working to incorporate SMS into their own OTT services.

Description

Many mobile subscribers have switched from standard SMS to over-the-top (OTT) messaging solutions for messaging their friends. Although many users switched to these systems in an effort to avoid paying for SMS messages (which are now free on most carriers), OTT messaging systems (such as Google Hangouts or WhatsApp) offer a number of other features that users enjoy. However, the vast majority of OTT messaging systems are "walled gardens" in which all users must be on the same OTT system. Some carriers have experimented with their own OTT systems in the past (such as Orange's Libon) but these systems did not leverage the competitive strengths of the carrier. Verizon Wireless and AT&T in the United States have instead integrated their OTT clients into their SMS systems. Verizon and AT&T can choose to deliver an SMS as an OTT message instead of a standard SMS. Doing so enables users to read and send SMS messages from their phone, tablet, or laptop using a Wi-Fi connection, even if no cell service is available. Messages synchronize between devices automatically, and carriers can easily add new features such as sender-is-typing notifications and Glympse location sharing.

Implications

A number of stakeholders are attempting to create a dominant cross-platform messaging system. Google Voice enables users to text from any phone, tablet, or browser but requires that users either get a new phone number or port their old one. iMessage for iOS8 reads SMS and OTT messages from the user's iPhone and then relays those messages to the user's computer and iPad, but it requires the iPhone to be on and have reception for SMS messages to be relayed. Cellular-service providers are ideally suited for SMS disruption because they control how SMSs route to phones. A service provider can mark an SMS as read on a phone if a user views it via tablet or PC (as Verizon Wireless claims to do). Greater control grants wireless-service providers the potential to create a winning platform. However, in order to do so, messaging applications will need to be interoperable.

Impacts/Disruptions

Interoperability is key to the success of wireless-service providers' OTT-messaging systems. Users can currently send messages to friends on other carriers using SMS, but carriers will have to cooperate to enable more advanced features such as location sharing or typing notifications (already available on most OTT apps). If carriers begin to work together on such a system, users may prefer carrier-operated messaging systems to OTT solutions. Subscribers may even choose their service provider on the basis of the availability of advanced messaging features.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: Now

Opportunitites in the following industry areas:

Carrier-operated messaging systems, messaging services, social-network services

Relevant to the following Explorer Technology Areas: