IoT is set to expand at a very rapid pace over next few years. While the majority of IoT connections in the United States of America are based on Wi-Fi and other short-range technologies, Cellular (2/3/4G) and LPWA currently account for ~20% of the IoT connections and are expected to grow at a CAGR of 37%between 2018 to 2023. The LPWA segment is set to grow at an astounding 58% CAGR and touch 512 million connections by 2023, while cellular IoT connections will grow at 16% CAGR and rise to 206 million – accounting for less than half of LPWA connections. As operators race to compete with new models to serve LPWA connections, the connectivity revenue per connection will also continue to decline at over 13% CAGR, thanks to the range of options on the table.
Within LPWA category, the licensed technologies are set to grow faster than unlicensed technologies.
Licensed LPWA market is forecasted to grow at 49% CAGR (’18 – ’23) reaching $1,836 Million (based on 306 Million connections) in 2023, while unlicensed LPWA market will grow at a slower pace - 37% CAGR – to capture $718 Million (based on 206 Million connections). Customers will look to deploy LPWA solutions as either Public or Private network depending on use case requirements, addressable market, ecosystem maturity, security, and regulatory considerations. While the unlicensed Private networks will remain favorable for certain enterprise verticals, nearly 80% of the growth will come from licensed public connections once LPWA scales.
To select the right LPWA technology for a given use case, MSOs should evaluate technologies across three key areas: Technology Fit, Operational Impact and Business Relevance.
Based on the above framework, critical applications requiring high QoS and accurate tracking deplete battery life and will need licensed technologies like NB-IoT. Non-critical and delay-tolerant applications will likely prefer non-licensed technologies like LoRaWAN. The middle market applications will accommodate both technologies; however, NB-IoT is considered a favorite. Segments with low operator presence, like agriculture, have initial propensity for unlicensed technologies. Thus, LoRaWAN can carve out a market niche in rural, smart-city, and utility sectors, while the price sensitive middle-market and the premium critical apps market will likely be NB-IoT’s home turf.
Ongoing 3GPP standardization of licensed LPWA technologies – LTE-M, NB-IoT, EC-GSM – will continue to increase the applicability and robustness of these technologies to a wide variety of use cases.
Engineering advances will continue to reduce module prices. With Operator subsidies, module prices for licensed LPWA technologies will likely be at par with unlicensed LPWA technology modules in the next 3 to 5 years. Similarly, improvements in battery technology and form factors will not only drive adoption of existing use cases but also enable new use cases.
Cable operators (MSOs) deploying LoRaWAN have a window of two to three years to monetize it before wireless operators (MNOs) deploy nationwide NB-IoT and/or LTE-M networks with enabled devices/modules. MSOs should consider building a regional NB-IoT network as well as evaluate means to provide nationwide IoT coverage via roaming and / or wholesale agreements.