China running away with it, as analysts get hyped for cellular IoT growth

Cellular IoT, the catchall term for 2G, 3G, and 4G IoT connections, is the subject of a trio of reports from analyst houses, and by their accounts, China is running away with the competition. With strong government support for IoT projects, as part of its ongoing industrial transformations, as well as its response to environmental challenges, China seems to be driving NB-IoT growth in a major way.

We came across the figures in a Seeking Alpha article discussing the sort of multiple that an IoT leader should net. It noted that China Mobile expects to add 100m IoT devices in 2017, and had hit 150m total by mid-year – although the Chinese MNO doesn’t breakdown the ‘smart connections’ by application or connection protocol. However, it dwarfs second-place Vodafone, holding 32% of global connections, compared to Vodafone’s 11%.

According to the figures, from Counterpoint Research, China Unicom took third place (9%), with AT&T in fourth on 6%. China Telecom scored fifth, with 5% – meaning that the Chinese market holds 46% of the global market for cellular IoT connections.

In terms of regions, Asia held 57.2% of the global market, in Q4 2017, and China’s number of connections grew the fastest – 75% year-on-year. The US market accounted for 19.6% of the global total, and the global market grew some 41% year-on-year. The LTE connections led the cellular IoT increase, achieving 84% year-on-year growth.

China serves as a model, where Chinese operators such as China Mobile and China Telecom are ramping up the roll-out and deployments at a rapid pace. This is also having a knock-on impact of lowering the overall module, device and service costs,” said Peter Richardson, Research Director at Counterpoint.

In a separate report regarding Cellular IoT, Berg Insight says that the number of global subscribers grew 56% in 2017, reaching 647.5m – and is expected to reach 1bn by the end of 2018, and then 2.7bn in 2022.

Like Counterpoint, Berg says that China is taking the lead. “The Chinese government has set a goal to connect 600 million devices to NB-IoT networks by 2020. NB-IoT will essentially replace 2G technology, which accounted for the bulk of the 150 million new cellular IoT connections added in the country in 2017. In the process, the cost of 4G-based cellular IoT chipsets and modules will fall dramatically, paving the way for a similar transition worldwide,” said Berg’s Tobias Ryberg.

Riot Research broadly agrees with the trends suggest by Berg Insight, but has set more cautionary expectations for the LPWAN market over the next few years. Riot has also seen significant deals cut in China for NB-IoT in 2017, the largest of which between China Mobile and MediaTek for 20m NB-IoT connectivity modules, to be delivered and connected over the next few years.

China is also the site of a new deal for Sigfox, a rival of the Cellular-IoT approach, which announced an agreement with Chengdu High-Tech Industrial Development Zone to use Sigfox’s LPWAN tech to power a senior healthcare service – based on Senioradom’s platform. Chengdu has committed nearly €300M to the investment, which will begin following a 1,500-person trial this year. The current deal would cover China’s biggest cities.

It would be a huge win for Sigfox, but it is not clear if there is any immediate payment for its services in that trial. We have yet to hear back from the company, but there has not been a mention of a local Sigfox Network Operator – meaning that Chengdu HTIDZ might run the network, or Sigfox itself could be rolling it out. Sigfox, as you may have heard, has not been having a good week of press coverage.

Another group, Mobile Experts, says that NB-IoT will account for over 57% of all cellular IoT shipments by 2022, but argues that 5G IoT will remain a niche. “The hype surrounding 5G IoT devices isn’t really justified. Our forecast includes healthy adoption rates for 5G NR in specific industrial applications, but that means that 5G shipments will reach only about 1 million units per year over the next few years,” remarked Chief Analyst Joe Madden.

It comes as US carrier T-Mobile announced NB-IoT device plans from just $6 per year, in an aggressive launch that claimed it would be ten-times cheaper than an LTE-M option from Verizon. Take note, that this $6 figure is a limited promotional rate, with a 12MB data cap – plenty for small sensors, but not an option for many more data-hungry applications in the IoT. A limit of 10 single-packet transactions per hour is in place, at speeds capped at 64Kbps. The full fee is due upfront too (potentially a large barrier for smaller companies), and there is no roaming option.

T-Mobile also plans on launching LTE-M coverage soon, and expects to have achieved nationwide NB-IoT coverage by mid-2018 – following its industry-first launch in the US last October. The announcement says LTE-M will be available shortly after NB-IoT is available. T-Mobile has a history of undercutting its biggest rivals, AT&T and Verizon, forcing them forcing them to cut their pricing. It’s ‘Un-Carrier’ marketing schtick has embraced this image, and it seems likely that its two biggest rivals will respond in kind.