Helium’s investment and 5G plans explained

Earlier this month, Andreessen Horowitz announced it was part of a $111 million investment in Helium. But the facts of the deal were a bit murky. The money from Andreessen was an investment in Helium Network Tokens (HNTs), not an investment in the company. However, Helium did wrap a small, undisclosed bit of outside funding from other investors into that news.

Frank Mong, the COO of Helium, told me the funding that went to the company was “insignificant,” and was raised in an earlier deal. However, he was quick to point out that the Andreessen investment in the Helium tokens was a big validation for the style of decentralized peer-to-peer network that Helium is building.

In my conversation with Mong, we spent a lot of time discussing Helium’s plans for a 5G network, which follows a similar model as its existing LoRa Wide-Area Network. Helium has turned the construction of a physical network for the IoT on its head. Instead of deploying its own gear across the country and managing the network, it has built a peer-to-peer network that rewards people who run their own hotspots with HNTs.

People install a Helium-certified hotspot that uses their home’s Wi-Fi network as backhaul to the internet. The hotspot provides the LoRa coverage and also generates HNTs whenever the hotspot supplies proof that it’s still part of the network, as well as when a Helium customer transfers data on the network. The beauty of the system is that the rise in the value of HNTs offers an incentive for people to use their broadband to provide backhaul and their home as the equivalent of a LoRa “tower.”

I run a Helium miner in my home and have made about $15,000 selling the tokens generated over a year of mining. As the network expanded, I found my earnings diminished thanks to a neighbor setting up their own Helium hotspot within a quarter-mile radius of me. Such close proximity means that instead of earning 1x of any transaction my miner participates in, I only earn .21x of any transaction.

It’s a bummer, but it is a great incentive to try to space my hotspot more advantageously to generate better network coverage.

(I should note that I do have to pay taxes on my earnings, both when the tokens are generated and again when I sell them. For those wondering, I’m using a tool provided by FairSpot.host to track the value of the tokens as they generate. It’s a bit limited in that it only goes back to the middle of last year for tracking the value of the tokens.)

So far, the model is working. When I set up my Helium hotspot last year, there were about 20,000 hotspots on the network. Now there are almost 133,000 hotspots around the world. The growth in hotspots is limited primarily by the chip shortage. Kevin ordered a miner on March 18 and is still waiting for it to arrive.

But Helium now has a new story to tell. This one focuses on providing 5G coverage for areas that are underserved by telcos. In April, Helium said it was working with FreedomFi to build a 5G hotspot that would use the unlicensed CBRS spectrum (it’s in the 3.5 GHz band) to provide peer-to-peer 5G coverage. Mong told me the goal is to provide coverage for phones, and said that in early tests people using a modern iPhone could walk about one-and-half to two blocks and get coverage from a single FreedomFi/Helium box.

Mong said the test speeds were enough for “some texts, tweets, and YouTube views,” but that’s a pretty vague response. Texts and tweets require little bandwidth and a low-quality YouTube stream might only need 1.5 Mbps speeds.

He also said the FreedomFi team should be announcing the availability of new gear for providing this 5G network in the fall, maybe as soon as September. By branching out into a new network type, Helium is proving out a point I made back in 2018 about its technology: The innovation here isn’t around networking; it’s around certification, and providing proof that the network exists for devices to roam onto. I call it proof of certification.

It’s also proving out a new model for network builds that helps reduce the costs associated with providing wide-area coverage. We’re even seeing existing LoRaWAN providers like Senet and The Things Network embrace some of this shared network approach by letting their clients share their networks with others.

Amazon has also adopted the peer-to-peer LoRa network plan with its Sidewalk Network, which uses radios embedded in Amazon gear and piggybacks on a consumers’ Wi-Fi network. Unlike Helium, Amazon’s network doesn’t provide any sort of incentive for a consumer to share their Wi-Fi network (other than helping to make cheap IoT networks a reality). I asked Amazon what percentage of users opted in to providing Amazon Sidewalk coverage and received the following non-answer:

“We’re currently seeing strong Sidewalk coverage in the top 25 metro areas in the U.S. Since Sidewalk first became available on eligible Echo devices in June, the number of Sidewalk Bridge devices has increased significantly, contributing to stronger Sidewalk coverage nationwide.”

Either way, we’re seeing a bonanza of fairly cheap, low data rate networks expand connectivity options for IoT device makers. If we soon see better 5G coverage because of these network models, I’m excited for that, too.