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15 January 2015

Carriers talk of Cat-10, but Sequans seeks gold in Cat-1 LTE

LTE is becoming a numbers game – the Consumer Electronics Show (CES) was full of handsets supporting Cat-6 and Cat-7 LTE, and operators like EE and SK Telecom are trialling networks with Cat-9 speeds (450Mbps) and looking ahead to Cat-10. But the low numbers are important too, and CES also saw the launch of the world’s first commercial Cat-1 LTE chipset. This came from Sequans, one of the LTE-only modem suppliers which sees new opportunities in the internet of things (IoT).

Cat-1 is actually part of Release 9, and supports up to 10Mbps downlink speeds – insignificant for mobile broadband of course, but more than adequate for many internet of things applications, especially as it runs at very low power. These days it can target some of the products which gained most attention at CES, such as wearables. Arguably the humble industrial applications, upgrading traditional M2M systems such as asset tracking to broadband and the cloud, may generate large real volumes in the short term, but either way, Sequans will be ready with its Calliope LTE Platform.

Modules based on this should be available from various manufacturers from the second quarter, said the French company, which has spent some painful years adapting its original WiMAX platform and business to the more competitive world of LTE. Rather than the suicidal approach of taking on Qualcomm, the firm looked for niches which did not require 2G/3G integration, and which might be off the giant chipmakers’ radars.

There are several such categories. At the high end are 4G/WiFi tablets for operators which are starting to switch off older networks, or for users which only need 3G for voice and mobile coverage (and will use a phone for that). Verizon already has LTE-only non-handset devices, and in lower cost markets, some OEMs will take a module-based approach. However, there should be far greater volume growth – even if margins are slim – in the IoT.

The dilemma is that, if any of the categories achieves significant volume, they will also attract the big vendors, but there is an advantage in being a first mover, and it is notable that some LTE-only firms, like Sequans and Altair, have survived the storms of the modem business where larger companies, which braved Qualcomm in the 3G/4G handset arena have not (Broadcom and Nvidia, for instance).

Sequans is driving home its first mover advantage in various markets with Cat-1 Calliope, and will no doubt be closely watching the 3GPP’s moves to define a Cat-0 LTe specification for even lower-power, lower-cost IoT modules in future (with 1Mbps downlink). That strand is likely to be included in Release 12 of the standard, due next year, and will be an important opportunity for companies which are building expertise in the power restrictions and economics of the M2M world. Both the engineering and the pricing/margins will be very different from those of the handset world, even at its lowest end (while Cat-1 chips are similar in price to 3G, around $15, Cat-0 should halve that while promising several weeks of battery life).

Among the large players, those best adjusted will not be the 3GPP specialists but those with a strong focus on M2M and WPAN connectivity, such as STMicro. But those firms often have limited LTE expertise, which is where a company like Sequans, boasting both M2M and 4G credentials, could find its role.

One area where these strengths would seem entirely irrelevant is voice, which remains firmly associated with handsets and, despite the emergence of VoWiFi and VoLTE, with 2G/3G. However, Sequans has identified one of the more unlikely niches for LTE-only – voice and messaging for the IoT.

At CES it announced an alliance with Ecrio, which makes real time LTE communications client software, to bring VoLTE to the Calliope chipsets. CEO Georges Karam says there is strong interest from operators like Verizon in devices, such as home security systems, being able to communicate with home gateways or smartphone holders using voice and SMS, and consumers may also want, in future, to talk directly to their smartwatches, without the need for an associated handset. The Ecrio deal makes VoLTE available as a software upgrade to any Sequans LTE chip.