Where Are the $$ Dollars in Iot Networking?

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Mammoth growth forecasts for the IoT have been widely accepted (e.g., IHS projects 30B connected devices by 2020.) This has attracted the hearts, minds and investment dollars of a wide group of industry players, led by the common carriers, device makers and supporting industries.

However, key recent developments in mesh networking (and related P2P – person-to-person -areas) have thrown into sharp focus doubts about just how big a pie there is going to be, especially in the networking segment for the IoT.

The mobile industry interest is exemplified in both the 4G LTE and 5G standards and business approaches for connecting this Internet of Things.

IoT Networking – The 2-Tier Market

Research to date has clearly shown that the overall communications requirements for the Internet of Things, covers a wide range of throughput from very low-speed data communications to very high-speed. Communicating with a light bulb or a door or any simple on-off situation requires at most, a few kilobytes of transmission capacity.

But real-time broadband is required (e.g., low latency of 5 ms or less) for vehicle-to-vehicle communications or high definition visual media monitoring. This range of applications and device specific needs indicates a clear segmentation of the IoT market between low-speed and high throughput data communications.

5G Seeks To Straddle The Vast Divide

Standard bodies efforts such as the 3GPP, IEEE, ETSI, and others have for some time been dealing with different standards, associated protocols and interfaces for these different segments. The 5G global standards strategy and the marketing approach of the global common carrier community are looking to satisfy both the narrow and broadband needs of the IoT universe.

Developments such as Narrowband 5G, and MulteFire are strong examples of the lower end data rate being a target market. Recent studies estimate that up to one-third of the IoT world will be quite adequately served by narrowband communication. Many applications will only require under 100 Kbs transmission.

However, there are reasons for caution with regard to the ascendancy of 5G, based on several strong forces emerging in the marketplace which raise the question as to the degree to which the common carriers’ universal target market perspective may be in error.

Bluetooth Mesh Networking – Major Development

The major impetus for these cautions is exemplified by the development and utilization of existing standards and software for devices which enhance the potential for peer-to-peer, mesh-like networking among groups of devices. Probably the most powerful of these new developments, announced on July 18, 2017, was the completion of the implementation elements for Bluetooth mesh networking.

As stated by the Bluetooth Special Interest Group (SIG), which announced the new capabilities, Bluetooth mesh’s key attributes include:

  • Enables many-to-many (m:m) device communications: and
  • Is optimized for creating large-scale device networks

The SIG announcement states: “It is ideally suited for building automation, sensor networks and other IoT solutions where tens, hundreds, or thousands of devices need to reliably and securely communicate with one another.”

Bluetooth Advantages

Bluetooth is characterized by:

a. An established market of billions of devices. Extremely low-cost probably, on a marginal cost basis, fractions of a dollar per device.

b. Extremely low battery consumption – measured not in hours or days but weeks, months, quarters perhaps longer.

From an economic standpoint the probable killer benefit of why an IoT network user would try this alternative first is that there is no common carrier in the value adding chain for most of their communications needs. Data from the mesh network need only go to the rest of the world in the most distilled and controlled fashion and will only be from select nodes.

Therefore one-time charging or no charges after installation becomes a critical economic consideration, one that is quite at variance with the global common carrier model, but quite in concert with the one-time buy concept of hardware wrapped in software.

The Bluetooth announcement also incorporates a software stack for smart phones raising once again the specter of the edge being managed by a highly intelligent device such as today’s smartphone which could essentially be the master of this mesh network.

Zigbee Also Moving Ahead

With the Bluetooth announcement comes a reminder of the announcement last year by Philips, one of the world’s largest makers of light bulbs, that they were pursuing the Zigbee standard for interconnecting their LEDs. Zigbee, a standard similar to the Bluetooth mesh networking standard, has been around for over a decade and is used in a small percentage of metering and monitoring systems, typically SCADA (Supervisory Control and Data Acquisition) systems.
Zigbee is characterized by low data requirements, high-security requirements, a standard master type node architecture and is well established for reliability and security.

If one-third of the market can vanish from the business case in advance of an actual market being ready, i.e. 5G standards are still being completed, we all understand the need for caution.

Our Take

There may be much more to come in this future of alternative IoT networks, as we look at the growth of Device, i.e. smartphone, capabilities.

The 2014 Apple iPhone (iOS 8) included a mobile peer-to-peer network feature. Utilizing WiFi radio access is part of the key to Apple’s AirPlay product features and was given a significant amount of publicity by the Open Garden, FireChat application.

This app was used extensively by iPhone customers during the 2014 Hong Kong demonstrations, permitting communications completely bypassing the common carrier network. In addition, Android devices have had the Wi-Fi Direct feature for some time. However, the simple user application to facilitate significant person-to-person communications still seems to be missing. These two areas are sleepers.

The mesh phenomenon focuses on device-based networking. The established carriers are also facing challenges in the IoT networking arena from alternative network technologies, primarily LPWAN (low power wide area networks.)

There has been a tendency among many observers to dismiss LPWAN as a collection of rather uninfluential players who will probably go the way of WiMAX as a challenger to traditional cellular. However, the entry of Comcast as a serious LPWAN provider heightens the potential for LPWAN to carve out a significant piece of the IoT networking market. Comcast recently announced that it was expanding its MachineQ IoT platform and services, based on LoRaWAN, to 12 major U.S. cities.

These developments are part of a powerful trend that extends from the Internet itself through the smartphone and now to the IoT. The IT industry has been, for decades, relentlessly intent on “information-izing” every possible aspect of life.

As we get to the point of extracting information from billions of things, it is unclear what the economics of IoT are in most cases. Caught in the middle of this tide are the wireless carriers.

The essence of their business model is that they control the network “core”. They have largely lost control of what happens at the edge, since the advent of the iPhone.

There is irony in the fact that their control is based on the core because the power of their predecessor telcos was the control over the network edge, namely the local loop, the so-called “bottleneck”.