Market Analysis: NarrowBand IoT

Now that NarrowBand IoT is standardized and first test trials have successfully been implemented, the technology is ready for rollout. But there are other competing Low Power Wide Area networks: Which position will NB-IoT take? How big is the market potential in different segments?

With its characteristics of low energy consumption, low costs for hardware and data transfers and a wide range, NarrowBand IoT (NB-IoT) meets the requirements of a variety of application scenarios and thus fills a lucrative gap between present IoT transmission standards like Ethernet, Cellular, or Wi-Fi. The technology is predestined for comparatively simple use cases like Smart Parking, Smart Metering, Smart Waste, or Smart Lighting, which involve a large number of connected sensors.

At the Mobile IoT Summit 2016 in Tokyo, Ericsson’s Jean-Christophe Laneri said 2017 will be the year of mass rollouts of NB-IoT networks. Huawei CMO Peter Zhou said the infrastructure is ready and that NarrowBand IoT will be deployed in some markets with leading operators.

Use Case Asset Tracking

The potential is big: MarketsAndMarkets for example estimates the global NB-IoT market growing up to more than USD 8 billion in the year 2022. The fastest growing market for smart NB-IoT applications is identified as asset tracking by the researchers. To wirelessly control, monitor and track products requires a day-and-night visibility of the location and asset conditions in real-time and also historical data of status and route. NB-IoT modules can be a low-cost alternative to a GSM tracker, giving the technology a high market potential.

Use Case Smart Metering

As one of the biggest future markets for NarrowBand IoT solutions, MarketsAndMarkets anticipates Smart Metering. Smartly implementing meters for electricity, water, and gas enables a better control of a household’s energy consumption and allows for remote reading. NB-IoT can optimize Smart Metering because of its deep penetration characteristic, enabling a data transmission even from out of a basement – an advantage over GSM. Plus: A battery-powered NB-IoT module needs no power connection and can still work for years unattended.

Regions: Asia-Pacific, Western Europe, North America

With the potential of enabling and optimizing scenarios like Smart Waste, Lighting, Metering, and Parking, NB-IoT is predestined to perfectly apply to Smart Cities, which are forecasted to have the biggest growth in China. Therefore, regarding the regions, NB-IoT has a great potential in the Asian and especially Chinese Market. Pyramid Research expects Asia-Pacific to be the largest market in 2018, accounting for almost every second LPWA connection worldwide in 2020 and overtaking Western Europe and North America.

The market researchers predict that there will be around 860 million LPWA connections for M2M communication in 2020 – more connections than via regular cellular networks – generating USD 5 billion. However, this would be less than 20 percent of the total M2M connections revenues, due to the relatively low ARPS (Average Revenue per Subscriber). But there are also more optimistic predictions: Strategy Analytics expects 5 billion LPWA connections in 2022 generating USD 14 billion. The biggest market is also set to be Asia-Pacific followed by North America and Western Europe.

Two competitors in licensed spectrum

NarrowBand IoT can be deployed in existing LTE networks, meaning a rollout can quickly and inexpensively be implemented with quality, privacy, and security standards guaranteed. The second standardized LPWA technology using licensed LTE spectrum is Long Term Evolution for Machines (LTE-M). It achieves significantly higher transmission speeds than NB-IoT in the down- and uplink, which allows for example video surveillance scenarios, but requires a much higher bandwidth. Thus, the two technologies complement each other in supplying different IoT applications and there should be enough space on the market for both of them.

Aggressive competition from the unlicensed spectrum

It must be taken into account that cellular LPWA network technologies like NB-IoT and LTE-M will face an aggressive competition from already existing LPWA technologies in non-cellular, unlicensed spectrum like LoRaWAN, Sigfox, RPMA, UNB, or Weightless at the beginning. But with large telecommunication vendors recently upgrading their networks, ABI Research expects NB-IoT and LTE-M to witness exponential growth from 2018 on. Deutsche Telekom, for example, already implemented the first standardized NarrowBand IoT network towards the end of 2016 in Germany and the Netherlands, followed by Greece and further markets in 2017.

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