Analysis

Carriers, costs, and questions about longevity delay the IoT

— Svein-Egil Nielsen, the chief technical officer at Nordic Semiconductor. Image courtesy of Nordic.

— Svein-Egil Nielsen, the chief technical officer at Nordic Semiconductor. Image courtesy of Nordic.

It’s no secret that I love chip companies. I was a chip reporter for more than a decade, and I revel in tying advances in chips to new features and capabilities offered by our gadgets. So I was happy to chat with Svein-Egil Nielsen, the chief technical officer at Nordic Semiconductor. Nordic was founded in 1983, but for the past 15 years it has made Bluetooth-based chips that are placed in fitness trackers and other wearable devices that are probably were designed through a software similar to Upverter.

This year, Nordic branched out from designing Bluetooth (and other 2.4GHz) chips to designing chips for cellular Low-Power Wide-Area Networks (LPWANs). Specifically, it is making chips that combine a microcontroller (the chips’ brains, essentially) with an NB-IoT or LTE Cat1M radio. Nielsen explains that the addition of low-power cellular radios made sense for the company since it has long focused on energy-efficient chips for battery-powered devices.

“We wanted something that could offer us long ranges, and open standards were important to us,” he says. Competing LPWANs such as SigFox have proprietary radio technology, while LoRa chips are made by just one company called Semtech.

I have fundamental doubts about the adoption of NB-IoT and LTE Cat1M. The cost of the modules containing the cellular-capable radios are relatively expensive and it’s still difficult for customers to work with carriers when they want to get connectivity. Nielsen countered my doubts by saying, “I don’t think the $5 module cost is what is going to break the business.”However, he does see carrier behavior as a potential roadblock. Mobile operators have to offer more pricing transparency to customers and plans that are better suited to the needs of IoT devices. He says Deutsche Telekom currently has some of the best pricing at 10 euros (a little under $12) per year for NB-IoT devices, although he’s not sure that will remain sustainable.

But IoT device prices need to be something a user can anticipate, whether it’s an annual fee or something a manufacturer can build into the cost of a device. It’s too difficult to build a business model for a connected device if the data charges fluctuate wildly. More importantly, Nielsen says mobile operators need to be transparent about their pricing and easier to work with. He thinks they’re moving in that direction.

“They are getting there,” he says. “They need to stop saying, ‘Call us for a price and we’ll work it out,’ which everyone just hates.” In the U.S. market, he says he thinks that AT&T and Verizon “understand the old ways of doing business are not going to work in the new era.”

He hopes that by next year, pricing transparency will both help make it easier for customers to avoid getting locked into a specific operator and force carriers to become more user-friendly. Carriers will get something out of this, too. He expects that, under new pricing plans, carriers might limit devices to transmitting data at specific times of day in exchange for lower or capped rates.

Other than carriers and costs for cellular connectivity, the other big roadblock for IoT adoption is the reliability of devices and the support of radios and modules for the long life of some industrial or consumer products. Many of the chip makers who are newcomers to the IoT and embedded market are learning that they need to offer consistent designs for up to 10 years so manufacturers can feel confident that they can design the electronics for a product like a car or a washing machine once a decade as opposed to once every two years.

Nordic apparently doesn’t have that problem. Nielsen says the company still makes devices for customers that have been in the field for 15 years. If a company can’t support a product for at least 10 years, then there’s a problem he says.

Stacey Higginbotham

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Stacey Higginbotham

Tags: NB-IoTNordic Semiconductor

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