[TRIBUNE by Nick Wood, INSIGHT SIP] As Sigfox, coming out of a number of difficulties, has been taken over by UnaBiz and some operators have scheduled the shutdown of their LoRa-enabled IoT networks, one might wonder about the future of non-cellular long-range, low-power networks (LPWAN). Nick Wood, the vice president of sales and marketing for French company Insight SiP, a specialist in ultra-compact radio communication modules, offers some food for thought here.
About two years ago, I predicted that LoRa would be the winner among competing technologies in the LPWAN sector. By « LPWAN » I mean low-power radio technologies that aim to be a « lightweight » alternative to data transfer technologies across a cellular network. LPWANs typically use unlicensed spectrum, i.e., no user fees. These solutions are intended for Internet of Things (IoT) applications. A classic example of an IoT application is meter reading, where the data traffic demands are small and mostly one-way, from the device to the server.
In my previous analysis, I indicated that the technical differences between the various LPWAN offerings were not very significant, but that LoRa offered the most compelling business model for success.
In recent months, Sigfox, which offers the leading alternative to LoRa, has found itself in a financial turnaround. Meanwhile, the numbers available on Sigfox have been less than encouraging. The company raised $300 million (which is a lot of money, but probably not nearly enough given its stated ambitions). Net losses reached 91 million euros for revenues of 24 million euros, and debts amounted to over 150 million euros.
Since then, Sigfox has come close to financial liquidation. Its assets were bought for about €4 million by UnaBiz, a company founded in 2016 and based in Singapore. What will emerge from this process will probably not be a company or business unit with the same global ambition. Existing customers may hope for the company’s survival, but for some time it’s hard to imagine that many new customers will want to bet on it.
At this point, we don’t know what business model UnaBiz is planning. It is possible that this new entity will follow the same model. In this situation where the Sigfox solution is proprietary and the sole provider for everything, it is hard to imagine that new customers will want to invest in an unproven system with all the potential risks associated with it
Few other alternative market developments
Other competitors in this space have not experienced such dramatic setbacks, but not all have shown strong traction. Ingenu, a U.S.-based company, appears to be following a similar business model to Sigfox, in that it offers a « one-stop shop. » It claims network coverage in a number of U.S. urban areas, but it is far from offering national or even global coverage. So it is likely to remain a niche solution.
That said, it is of course possible that a competing technology will come on the market with superior performance. In this case, we must ask ourselves the question of when this new challenger technology will be able to reach a critical mass to be able to make the necessary investments profitable…
The LoRa protocol, on the other hand, has had a huge advantage in that it arrived on the market during a period when the world of cellular operators had « forgotten » the M2M market. Today, with the very strong growth of the IoT market, this is no longer the case and this makes it difficult for a new technology to arrive. Of course, we can imagine that one or two technologies will be able to establish themselves in specific geographical or application sectors. But it seems difficult for a new technology to take hold quickly and sustainably for all general-purpose and dispersed applications.
So does this mean that everything is in place for LoRa to dominate the future of LPWAN?
Well, yes and no! The assets of LoRa are impressive. Semtech owns the rights to the underlying radio technology while the development of the networking protocols is driven by a multi-vendor industry body, the LoRa Alliance. This means the technology is not tied to the success or failure of a single vendor. In addition, Semtech is a well-established company whose fate is not solely dependent on LoRa. This gives LoRa a resilience that other competitors lack. This is especially true because Semtech has licensed proprietary radio elements, which means that the core transceivers are multi-vendor. This means that customers can purchase devices from a variety of sources. So anyone who wants to prototype or experiment can simply buy what they need and get started without committing to a single company.
The ability to set up private networks at low cost also remains a key asset. This makes it easy to develop and cover remote or hard-to-reach spaces, such as rural areas or underground parking lots.
At present, there is no obvious competitor offering such a combination of benefits. The only obvious weakness, and one that remains unchanged, is the lack of coherent overall public network services and the absence of a plan to develop such networks. Some areas may have good coverage, driven by a private operator, government or local authority. But anyone looking for national coverage is unlikely to be satisfied, let alone someone looking for a global solution. And the downside of LoRa’s diverse and distributed model is that it’s not clear who will ever solve this problem.
Cellular network operators, meanwhile, may pay lip service to this type of LPWAN technology, while promoting the use of their expensively acquired licensed spectrum.
LoRa – a stopgap?
The big question then is whether LoRa will be just a stopgap until next-generation NB-IoT and LTE-M cellular data technologies really take off. On this point it is very difficult to answer.
No one can deny that the cellular world is collectively a formidable player with massive investments in great technologies, with well-funded network operators and with a strong global standards body. There is little doubt that for many organizations looking for IoT data collection solutions, the cellular world will be the natural solution, especially through operators that have national or global infrastructure.
Cellular operators as competitors
However, the diverse needs of IoT applications will not always be suited to this type of solution. Somewhat paradoxically, although cellular operators are strong competitors in principle, it is not clear that the LPWAN business is extremely attractive to them, at least for now. Their primary objective is to serve data-hungry mobile subscribers. A service with a large number of nodes that consumes relatively small amounts of data is not necessarily a service that makes them a lot of money. Therefore, in this area, operators focus primarily on large, relatively data-hungry users.
Meanwhile, a lot of progress is being made every year in the LoRaWAN utility space, while NB-IoT (the « lighter » cellular variant) has made little progress outside of China. As a result, some European operators (notably Orange) have adopted an LTE-M and/or LoRa strategy to meet data flow needs. To manage roaming that is not really managed between LoRaWAN networks, service providers are implementing cooperative solutions. Some are even talking about satellite networks to fill the gaps (usually in rural areas).
There is still a long way to go before LoRaWAN approaches can match the offerings of the cellular world, but every year progress is made.
LoRa well suited for IoT
In my opinion, LoRa is well suited for a specific market segment, that of various IoT applications that require a combination of low-power devices, environments not conducive to cellular coverage, low data rates, and stand-alone solutions. LoRa is aimed at users who want to control their own service and solution on an ongoing basis.
Many small and medium-sized businesses will find LoRa better suited to their needs than a commitment to an operator. Solution providers targeting technical niches are also likely to find LoRa a useful connectivity tool for applications in agriculture, urban solutions, large building management, etc.
Especially in cities, public networks are increasingly fond of LoRaWAN. But the world of technology moves very fast, there is always the possibility that technical advances will make another technology obsolete. At the same time, it should be remembered that LTE-M and NB-IoT technologies have already been around for a few years. And that today their deployment remains very limited.
At this stage it is impossible to predict whether one approach will dominate the market, either free open networks like LoRa or closed cellular networks. It is very possible that both approaches will coexist for a long time.
The future of the LoRa/LoRaWAN ecosystem
The question that remains, then, is whether this space is large enough to support a robust LoRa/LoRaWAN ecosystem in the long term, or whether the cellular network behemoth will eventually sweep everything before it. Outside of these two offerings, there doesn’t seem to be any other competitors still in the running. LoRa’s continued growth and support from a wide range of players suggest answering with a cautious yes. It is very likely that LoRa will become the ultimate survivor as an alternative to cellular solutions.