Unlocking Telcos Iot Potential How Telecom Operators Should Strategically Navigate the Complex Landscape of Iot Lpwan Technologies

UNLOCKING TELCOS IOT POTENTIAL HOW TELECOM OPERATORS SHOULD STRATEGICALLY NAVIGATE THE COMPLEX LANDSCAPE OF IOT LPWAN TECHNOLOGIES

By Thibault Werlé, Rachid ElAmeri, Rüdiger Schicht, and Rodolphe Frugès

he Internet of Things (IoT) allows ting-edge use cases require telecom opera- Tcomputing devices and machines to tors to adapt. share data directly without human input. It boosts productivity – via speed, accuracy, This paper offers an overview of the LP- and system integration – across a wide WAN space, major cellular and non-cellular range of applications, and is already technologies and their corresponding use transforming consumer, commercial, cases, the key focus of telecom operators to- industrial, and infrastructural activities. day, and the key strategic levers for telecom players to stay relevant in the future. Low-power wide-area network (LPWAN) technologies can support diverse large- scale use cases across all sectors and are at- LPWAN technologies are critical tractive in terms of range, power consump- enablers of today’s large scale tion, and cost. LPWAN runs on both IoT use cases licensed (cellular) or unlicensed (non-cellu- LPWAN stands for a group of network tech- lar) frequencies and includes proprietary nologies that connect low-bandwidth, bat- or open standard options. With their tery-powered devices with low bit rates pre-existing LTE infrastructure, telecom op- over long ranges. A fit-for-purpose balance erators have focused on cellular IoT, with between battery life, cost, and bandwidth more than 100 operators already deploying have made LPWAN technologies a critical Narrowband IoT (NB-IoT) and Long Term enabler for massive IoT deployments such Evolution for Machines (LTE-M). as smart cities.

However, the IoT space is evolving quickly LPWAN can be deployed on a licensed with implications for all stakeholders. De- spectrum using LTE-M and NB-IoT cellular velopments from the emergence of cut- IoT technologies. It can also run via proprietary technologies in the unlicensed spec- These technologies are ideal for sensitive trum, mainly through Sigfox and LoRa. use cases – in urban settings that require more data throughput, high speeds, and cy- Cellular and non-cellular bersecurity requirements. Typical examples technologies bring distinct include: strengths and limitations Differences in performance mean that • Remote healthcare: requires real-time technology well-suited to one use case may data communication with very low be less appropriate for another. Think of it latency in terms of priorities and trade-offs, and not a single ‘best’ technology. • Fleet management: relies heavily on mobility features Speed. Short (i.e. faster) latency and high max- imum data output make cellular IoT technol- • Water and gas metering: sensitive data ogy critical for sensitive use cases requiring with nationwide deployment and high important information to be sent quickly, for complexity example in national fleet management. • Smart home: personal and sensitive data Mobility. High scalability and seamless han- (e.g. access control) requiring low latency dover help cellular technology LTE-M support smart use cases, involving travel or However, NB-IoT and LTE-M differ in some otherwise mobile elements. Examples in- respects. LTE-M performs better when it clude vehicle telematics and autonomous comes to data, usually enabling lower la- guided vehicles. tency, higher data rates, and bi-directional communication. It provides a seamless Security. All IoT applications present cyber- handover between base stations, therefore security threats, with no single technology more suitable for moving devices. mitigating all the risks. Stronger IoT cybersecurity features typically come with a NB-IoT’s handover on the other hand is higher price and more processing power re- limited. Although it supports higher data quirements which is possible with cellular rates than non-cellular IoT, it is slower than IoT as they leverage the existing encryp- LTE-M. But it offers a longer range, better tion and cybersecurity and Quality of ser- battery performance, and lower costs than vice (QoS) capabilities of LTE. LTE-M.

Range. The high rural range makes unli- These differences enable us to further seg- censed spectrum technologies such as ment cellular use cases. (See Exhibit 1.) LoRa and Sigfox a better choice for IoT agriculture use cases like crop management. Non-cellular technologies, SigFox and LoRa also feature distinct Cost. Cellular technology will cost owners strengths and uses more than non-cellular options. In contrast with cellular-technologies, Sig- fox offers low data throughput and high la- Despite similarities among tency but to the benefit of a high capacity, cellular technologies of NB-IoT extended coverage and resistance to jam- and LTE-M, they favor different ming. LoRa offers characteristics similar to use cases NB-IoT, solving for the hand-over limitation Cellular LPWAN solutions NB-IoT and but being prone to interferences that limits LTE-M, both developed by 3GPP, offer low QoS and scalability. lag time, high data throughput, excellent QoS, and cybersecurity features. They also Non-cellular IoT technologies suit massive compromise range and come at a higher cost. use cases requiring cost-efficiency, in rural

Boston Consulting Group | Unlocking Telcos IoT Potential 2 Exhibit 1 | non-exhaustive LPWAN use case examples

settings, with low data throughput, and In the last five years, three limited speed and cybersecurity require- strategic choices drove telecom ments. When data is not critical, security operators’ LPWAN deployment can be de-emphasized for the sake of lower costs. Ideal uses include: Telecom operators focused on cellular networks to build on • Smart farming: requires a low-cost and their LTE infrastructure. longer battery life, as many rural areas Both cellular IoT technologies are defined lack LTE coverage by 3GPP as standards evolving from existing LTE. With their preexisting LTE net- • Environmental monitoring: usually in works and 4G infrastructure, telecom oper- remote areas, with data exchanged in ators have typically focused on cellular IoT batches rather than the unlicensed spectrum.

• Pallet tracking: moving objects requir- Building on these investments, telecom op- ing limited data erators will want to leverage their strength in NB-IoT and LTE-M. They must take into • Livestock management: high cost-effi- consideration available spectrum and fre- ciency is needed quency compatibility, as well as the future emergence of 5G New Radio (NR) and its As with cellular technologies, Sigfox and implications on LTE. LoRa also present technical differences that favor or eliminate specific use cases. NB-IoT deployment is more than While Sigfox is the optimal solution when double that of LTE-M around the it comes to range, cost efficiency, and jam- world ming immunity, LoRa supports higher data Telecom players globally are deploying NB- rates and allows some limited bi-direction- IoT and LTE-M, but currently NB-IoT de- al communication. Sigfox has the edge in ployment is more than double that of use cases that require very limited data, LTE-M. (See Exhibit 2.) 3GPP has defined while LoRA better supports long ranges re- dedicated frequency bands for these tech- quiring more data. These nuances allow us nologies, and Mobile Network Operators to further define each technology’s ideal (MNO) around the world have already de- use cases. (See Exhibit 1.) ployed cellular IoT on more than 60 percent

Boston Consulting Group | Unlocking Telcos IoT Potential 3 Exhibit 2 | Mobile IoT Deployment

Source: GSMA, December 2020

of defined frequencies. As of October 2019, IoT to cover uses cases such as weather mon- 97 telecom operators in 51 countries offer itoring, plant growth, and livestock tracking. cellular LPWAN service on different bands.

Live deployments of cellular IoT around IoT Deployment in the MENA the world are diverse, relying heavily on region sub-1GHz bands, with B20 (800MHz) ac- counting for the largest share. Approxi- Deployment of cellular IoT in the mately 20 percent of MNOs use a multi- MENA region has remained band deployment on higher bands (e.g. constricted to a few geographies 1800 MHz). As the number of compatible To date, the United Arab Emirates (UAE), frequency bands rises, so too does the price Kingdom of Saudi Arabia (KSA), and Qatar of IoT modules. Telecom operators will are the only ones who have driven cellular want to focus on a limited set of frequen- IoT deployment in the Middle East and cies to ensure technical interoperability North Africa (MENA). The UAE is leading without increasing the cost of deployment. the way in the region, having deployed both NB-IoT and LTE-M. KSA has also fol- Some telecom operators have lowed suit with one confirmed NB-IoT de- complemented their offering with ployed, and more being announced. Qatar non-cellular LPWAN technologies launched the first NB-IoT in October 2019. Several telecom operators have decided to Additionally, Tunisia is the first to test the complement their cellular IoT deployment first NB-IoT network in North Africa. With with non-cellular offerings, to provide more limited participation of MNO’s in the de- options to their clients and prioritize the ployment of a cellular network for IoT, cellular IoT network for critical and sensi- these developments leave the region wide tive use cases. Around the world, 24 mobile open for many new entrants to the space. network operators currently deploy Sigfox or LoRa. Telecom operators involved in the cellular space have not LoRa networks are being actively deployed shown strong interest in the globally, mainly in the Asia-Pacific region deployment of non-cellular IoT and Europe. Swisscom, a major telecommu- In non-cellular LPWAN technologies, the nications provider in Switzerland, deployed a MENA region currently sees a diverse geo- LoRa network on top of both LTE-M and NB- graphical distribution. LoRa enjoys more

Boston Consulting Group | Unlocking Telcos IoT Potential 4 dominance with a presence in Egypt, Leba- fragmented stakeholder ecosystem. Given non, Morocco, Oman, and KSA. Sigfox on the heterogeneity of the current IoT the other hand has only been deployed in ecosystem, IoT solutions from different Oman, UAE, and Tunisia. vendors are rarely interoperable resulting in closed vertical silos. Telecom operators However, most of the non-cellular technol- in the center of massive IoT deployments ogies deployment are done by new players should define and integrate an interopera- (e.g. startups, global IoT players) with little bility approach into their offerings to gain participation from regional MNOs. Non-cel- customers’ trust, break silos, and acceler- lular deployment in the region has been ate the integration of new use cases. used to cover a wide range of applications from waste management, smart meters to 3. Establish roaming agreements smart agriculture. Accelerate the national cellular IoT roaming agreements agenda and coordi- nate with other mobile operators to To stay relevant telecom establish regional roaming agreements. operators should consider five These help telecom operators accelerate key strategic levers the adoption of IoT, especially for use The IoT space is evolving quickly, with the cases involving cross-border mobility. In intensification of LPWAN deployments 2017, Deutsche Telekom started an around the world, the growth and maturity NB-IoT European trial to test internation- of new edge-cutting use cases, and the in- al roaming. Following its success, the crease in fragmentation of the players in company began to partner with European the ecosystem. MNOs to ensure full coverage across Europe. By April 2020, the Deutsche This fast evolution will require telecom op- Telekom NB-IoT roaming agreement erators to think strategically and adapt con- covered 18 European countries. tinuously if they want to ensure a sustain- able and positive impact of their long term 4. Evaluate the strategic relevance of LPWAN deployments and stay relevant in LPWAN alternatives the IoT landscape Although cellular IoT is the top priority for telecoms players, they should also As telecom players attempt to adapt to this assess the strategic relevance of non-cellu- rapidly changing environment, there are lar LPWAN alternatives to support IoT five strategic levers they should consider: adoption. For example, LoRa may be an attractive complementary solution for 1. Build strategic partnerships managed private networks. Or perhaps Build local and regional LPWAN strategic there is value in acquiring the license to partnerships with manufacturers, be a country’s sole Sigfox network integrators, researchers, and end-users to provider and leverage its anti-jamming drive IoT adoption and success. This capability and cost-efficiency. French encourages collaboration within the IoT telecom giant, Orange, has deployed LoRa ecosystem and boosts innovation. since 2016 and is currently covering more Strategic partnerships can help IoT than 30,000 municipalities and 95 percent players develop their skills and build key of the population of Metropolitan France. competencies along the entire value chain. In addition, they can develop 5. Prepare for 5G regional certifications for IoT devices and As 5G deployments continue to grow equipment, supporting cross-regional IoT significantly around the world, Telecom deployments and international roaming. operators should plan the evolution of their existing LPWAN technologies to 2. Manage the complex interoperability ensure continuity of service for the challenge end-users and manage efficiently the Navigate the increasingly complex and cost of transition.

Boston Consulting Group | Unlocking Telcos IoT Potential 5 DEUTSCHE TELEKOM Winning as a global IoT orchestrator

By leveraging connectivity as the “right to innovative IoT solutions. It brings together play”, Deutsche Telekom spun its IoT unit all players, including customers, partners, into a separate business unit, Deutsche operators, and developers and ensures the Telekom IoT, on 1 July 2020 to expand complex interoperability challenge is horizontally into the IoT value chain by taken into consideration while discussing focusing on a unique winning approach: with their customers. Being a global IoT orchestrator. 3. Establishing roaming agreements “Not only does Deutsche Telekom IoT In 2017, Deutsche Telekom started an enable vertical solutions by understand- NB-IoT European trial to test internation- ing each sector’s pain-points, developing al roaming, After the success of the bespoke IoT solutions, and speaking the trials, Deutsche Telekom partnered with same language as our customers, but we European MNOs to ensure full European also expand horizontally into the full coverage. As of April 2020, the Deutsche value chain by playing the role of an Telekom NB-IoT roaming agreement orchestrator”, says Ingrid Wistrand, VP covered 18 European countries. GSMA Business Strategy & Execution at estimates that the success of the Deutsche Telekom. Deutsche Telekom initiative will provide guidance to all other operators in how to By making devices and data work together deliver NB-IoT international roaming in perfect harmony, Deutsche Telekom IoT consistently. is bringing together relevant stakeholders across geographies to enable end-to-end 4. Evaluating the strategic relevance solutions across the ecosystem tailored to of LPWAN alternatives their customers’ needs While focusing its connectivity on 3GPP standardized technologies, NB-IoT and 1. Building strategic partnerships LTE-M, Deutsche Telekom is always in The German giant was able to build and communication with their clients to nurture strategic partnerships with key anticipate their potential needs for other IoT players across the value chain. The LPWAN technologies. Their IoT platform, recent launch of the Telekom Open IoT Cloud of Things, is already offering Labs in conjunction with the Fraunhofer add-ons to integrate data from the two Institute for Material Flow and Logistics major non-cellular LPWAN technologies is a clear example of how strategic LoRa and Sigfox. partnerships could drive collaboration to develop and test innovative NB-IoT 5. Preparing for 5G solutions and make them market ready. Today, 5G is used in a few German cities, however, Deutsche Telekom aims to 2. Managing the complex interopera- deliver 5G to 99 percent of the popula- bility challenge tion and to cover 90 percent of the Deutsche Telekom understands the country’s surface area by 2025. As LTE-M importance of interoperability and actively provides higher data rates and swifter launch new initiatives to address it. This reaction time than NB-IoT, it is the year, it introduced the IoT Hub, the world’s technology that will build the bridge to first open IoT platform, connecting 5G for Deutsche Telekom. existing heterogeneous systems with each other to create new possibilities for

Boston Consulting Group | Unlocking Telcos IoT Potential 6 About the Authors Thibault Werlé is a managing director and partner in the firm’s Middle East office. He is a core member of BCG’s Technology, Media & Telecommunications practice. You may contact him by email at [email protected]

Rachid ElAmeri is a principal in the firm’s Middle East office. He is a core member of BCG’s Technology, Media & Telecommunications practice. You may contact him by email at [email protected]

Rüdiger Schicht is a managing director and senior partner in the firm’s Zurich office. He is a core -mem ber of BCG’s Technology, Media & Telecommunications practice, focusing on mobile spectrum auctions and telecommunication networks. You may contact him by email at [email protected]

Rodolphe Frugès is a senior advisor in the firm’s Paris office. You may contact him by email at [email protected]

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Boston Consulting Group | Unlocking Telcos IoT Potential 7