Sigfox, the French company building a low-power wireless network for the internet of things, has now covered 20 percent of the U.S. population with its proprietary network. It celebrated the news this week when it said it had achieved its 2016 goal of offering coverage in 100 cities. While some of those cities are large (New York, Chicago) others are tiny (Hazelton, Pennsylvania).
Meanwhile, Senet, the maker of chips that are used to build LoRa networks, released its own coverage data in the form of a map this week, showing where it has networks. San Francisco has significant coverage as does a variety of areas where national parks exist, but it’s still sparse.
I bring this up because 2016 is probably the last year the startups pursuing low power wide area networks won’t have a rival low-power option provided by a cellular operator to compete with. Both Verizon and AT&T are rolling out narrowband IoT options that will offer battery-saving, wide area coverage. In many cases, they can add this coverage quickly to their existing network with software updates at the core. Their biggest challenge will be selling and pricing the modules that go into sensors.
With more than $150 million in financing and a vision to build a public network, Sigfox has the most to lose as carriers add low power wide area network capabilities. Allen Proithis, president of Sigfox North America, says there is plenty of opportunity to go around for all, and says pricing will be Sigfox’s advantage. Customers can buy wireless modules for their sensors for as low as $3 in the U.S. (it’s $2 in Europe) and the data costs will range from $1 to $10 for an entire year. Basically, a sensor could come with a connectivity cost of up to $13 per year.
That’s cheap. In contrast, Verizon’s modules for low-power LTE cost about $8 and could go down to $6 given enough demand. As for annual costs, it’s anyone’s guess. Verizon has tossed out the idea of flat-rate pricing. Combine this with the availability of LTE networks, the market recognition and trust that the carriers already have, and options like Sigfox and competitor Ingenu may become a hard sell.
Zach Supalla, the CEO of Particle, a company that makes development boards for connected devices, is always evaluating what type of connectivity his audience wants on their boards. For now, he’s betting on the carriers because they have the brands, the dedicated, licensed spectrum for their networks, and the ability to offer a faster roll out than expected. Plus, there’s the pricing power they have.
“Carriers like living in an oligopoly, and their pricing strategies reflect that,” he wrote in an email. “Sigfox and LoRa have had a very good impact on the market (from a customer’s perspective) – they’ve forced carriers to respond, which means developing their own LPWAN solution and offering it at a reasonable price. But their response will be to crush Sigfox and LoRa in the same way that other monopolies/oligopolies tend to respond to new entrants: lower your prices to drive them out of the market, and when they’re gone, raise prices again (if you can).”
That’s not to say that Supalla has no faith in some of the alternatives. He thinks that LoRa might have a role to play in campus-wide deployments. LoRa networks are already being used that way in warehouses and offices.
And Sigfox might have a similar role. Proithis at Sigfox explains that many of the smaller cities are covered because a specific customer wanted to use Sigfox to connect devices in a factory. Since rolling out coverage consists of placing a few lunchbox-sized boxes on a rooftop with a broadband connection back to the public internet, it’s not crazy to envision Sigfox used for such locally constrained options either, especially in areas where the carriers don’t have good coverage.
Sigfox also transmits underground, which is why the city of San Francisco is using it to connect sensors dropped into the sewer to measure water flow and height. The sensors also track the salinity of the water to make sure that salt water doesn’t overpower the water treatment plant. The question for Sigfox and Ingenu (and public networks using the LoRa standard) is whether these somewhat niche applications can generate the revenue needed to support their network operations and keep chipmakers interested in building cheap modules.