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22 November 2019

Helium takes a novel approach to LPWAN with cryptocurrency model

Low power WAN provider Helium has fired up its LongFi offering in 425 US cities, using “over 1,000” of its ad hoc hotspots to provide what could be a pretty compelling spanner in the works for LPWAN rivals. Its Unlicensed-LPWAN proposition, powered by gateways sold to its customers, could mop up a tidy chunk of the market in urban environments, and it is something that many network providers need to worry about.

The business model is compelling. Customers that buy a $500 gateway are promised pay-outs in the form of the namesake Helium cryptocurrency, which is mined by the hotspots and denoted by the activity of the local network. Somewhat equivalent to a LoRa base station, or perhaps a WiFi access point on steroids, the Helium hotspot promises a way to claw back the investment, or perhaps even turn a profit – though for many who just want to ensure that their devices have network connectivity, a crypto payout is a very negligible concern.

Currently, some 45 of the 50 US states have coverage, and the total footprint area stands at 100,000 square miles, which is only about 2.6% of the country’s total geography.

Still, there are more devices where there are people, and 425 cities now have the potential to host Helium-powered ecosystems. Notably, the Helium website says that its initial hotspot order is 99% sold, meaning that it is shortly going to run out of stock.

However, earlier discussions with Helium focused on how an entire city could be covered with around 50 to 100 devices, meaning that the 425 cities claimed are somewhat misleading. The 1,000 units would provide 10-20 completely covered cities, on the initial metric, which is rather a long way from the 425 mentioned in this update.

Early use cases emerge for Helium hotspots:

In its latest announcement, Helium quotes Scott Kaplan, a Florida entrepreneur who has installed 19 hotspots and says: “Helium’s model provides a strong incentive for me to own multiple devices because I can provide coverage to a huge part of the densest areas of Miami and boost the utility of the network. The more useful the network, the more devices can use it, which increases the cryptocurrency rewards that I receive as a network owner.”

His example illustrates how a person or company that needs an IoT-focused network could help lower some of the upfront barriers. Of course, there are many in the LoRa camp that will be shouting that the likes of Kaplan could just as easily do this with LoRaWAN and a bit of knowhow, but Helium has always stressed the convenience of its technology as a major selling point.

A few products have already made it to market, based on Helium. There’s CleanWater AI’s pollution monitor, InvisiLeash’s dog tracking collar, and a bike and scooter tracker used by Lime. Nestle is also using Helium in its ReadyRefresh replenishment service; Agulus is using it in an automated agricultural irrigation system; and Stay Alfred wants to use it as the basis of an in-building sensing system for upscale holiday apartments.

In terms of the current network, Helium lists 1,234 hotspots. There is one near Portsmouth, UK, and one in Beijing, China. There are four in Hawaii, two in Alaska, and the rest are scattered across the US mainland. California is most covered, but New England and Texas are not far off the pace.

As for the model, those that are running hotspots will be earning a portion of the total Helium tokens, for forming the network. For anyone that wants to send messages on the network, they will need to purchase Data Credits using US dollars. Helium likens these to prepaid cellphone minutes. Helium tokens can be converted into Data Credits, meaning that those who have purchased hotspots might eventually pay for the cost of the gateway via the cost of buying credits for all the messages sent.

In its pricing argument, Helium compares itself with AT&T, Verizon, and T-Mobile, but notably not an Unlicensed-LPWAN alternative like LoRa. It does stress that its approach avoids having to manage SIM cards and data caps, and says that a user can pool data across as many devices as they like. Also prominent in the proposition is a claimed range of over 10 miles.

Nonetheless, we are interested in the success of Helium. The business model is intriguing, and combining blockchain with LPWAN definitely ticks a few boxes. However, there are still roadblocks ahead, chief of which might be the wider cryptocurrency market and its bumpy fortunes. As the LPWAN marketplace in the USA is far from settled, Helium can carve itself a nice slice of the action, and it has other global markets to expand into, in time. The white paper is worth digging into, the founders have relevant experience, and the investors include some familiar names.