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3 May 2019

US L-LPWAN landscape and pricing take shape, as Sprint dips a toe in

Sprint has announced that it is testing LTE Cat-NB in its network, and will deploy the licensed-spectrum LPWAN (L-LPWAN) technology if it sees enough interest from customers. This is not the build-it-and-they-will-come approach used by its rivals, but seems wise for the number-four MNO in the market – especially as it hopes to merge with number-three T-Mobile, which is already a Cat-NB advocate.

After all, why waste the energy if your merger partner has already done the hard work? For now, Sprint says it has an ongoing trial, while T-Mobile (unsurprising given its Deutsche Telekom heritage) says it has a national LTE Cat-NB network already. Earlier in the week, AT&T said it too now had a national Cat-NB network, and Verizon has been deploying Cat-NB since sometime last year. On the sidelines lurks Dish, the satellite TV firm, which has vast spectrum assets and has been making noises about deploying a Cat-NB network that has been rumored to be of great interest to Amazon.

As for LTE Cat-M, AT&T and Verizon are both carrying that LPWAN option, and neither are talking numbers. So for both Cat-NB and Cat-M, there are at least two options for US customers, but there’s little in the way of public demand for the L-LPWAN options. As revenue is still hidden behind contracts and NDAs, we get the distinct impression that the L-LPWAN segment is underdelivering on the IoT hype that these MNOs have been parroting these past few years.

On the pricing front, AT&T has said that it is working with suppliers to get $5 Cat-NB modules, and says that the dual-mode Cat-NB and Cat-M modules are not far behind. It adds that it has pricing plans that can start as low as $5 per year per device – although when you follow that link, you’ll find that you need to add taxes and fees to this figure, and that what is actually advertised is a $30 per year per device plan, which is limited to 64 kbps of throughput.

Click one of the Buy Now buttons though, and things become less clear.  Here, we find that there is an LTE data plan for North America and one for International use, which both start at $3, as well as a North America LTE Cat-M plan, which also starts at $3. There’s no mention of LTE Cat-NB on this page, and the One Rate plan from before is listed at $32, rather than $30.

So, the starting price includes the cost of the SIM ($2) and the first of the monthly recurring charges of $1. This means that an LTE-M package is going to cost you a minimum of $14 per year, for the lowest bucket of monthly data 500 KB. You will also have to be using an approved module.

Going upwards, 1MB costs $1.50 per month ($20 for that first year, $18 per year thereafter), 5MB is $4 per month ($50 per year), 10MB is $6/month, 50MB is $12/month, 500MB is $20/month, 1GB is $22/month, 5GB is $35/month, and the highest tier of 10GB is $60/month. Strangely, there’s no differentiation between International (LTE), North American (LTE), and US (LTE Cat-M) prices, until you get past 50MB per month.

Based on these numbers, the One Rate plan only makes sense once you get above needing 2MB per month, although the wording in the terms is somewhat vague. AT&T says that you can’t have a continuous unattended connection, and that it may proactively reassign the customer to one of the other data plans unless your customer agreement has prohibited that. So good luck to those that think they got a great deal on the $32 One Rate deal but then get punted across to anything higher than the 5MB plan.

We do have some sympathy for AT&T though, when it comes to deciding pricing. Some IoT devices have such small messaging needs that even 500 KB per month is overkill, but similarly, as our saying goes, ‘low cost usually means low value,’ and so unless there’s a mission-critical function at stake, even the lowest ends of AT&T’s pricing schemes make simple sensing functions cost-prohibitive. Once you add in the cost of buying the sensor device, the truck-roll costs for installation, and then the provisioning, the kind of sensor that needs less than 500KB of monthly data has a far higher total cost of ownership than you might first assume based on the data plan.

At the other extreme, if you have a video or image-based application, then the 10GB plan might tickle your fancy – that is, until you figure out that over the course of a planned three-year deployment, you’ll have spent $2,160 on just data packages for just one device. In an application that takes place inside a small geographic footprint, using say ten devices, one wonders if it might be cheaper to go about installing an Ethernet or WiFi alternative, given that you have $22,000 to spend on it, and will have a power supply for each of these devices. This is an issue that scales with the number of devices.

So then, it looks like the L-LPWAN crowd get relegated to focusing on the middle-ground, for actually mobile devices that move around in the world but always need a network connection, where you can’t just roll a fixed-line alternative to counter high data costs.

If Sigfox is really both willing and able to manage $1/year pricing, then the MNOs are not going to want to chase that, and in deployments dense with devices (such as our go-to example of a university campus), the on-going per-device costs are going to push them towards a LoRaWAN network. Smart grid and asset tracking could be the biggest battlegrounds, but as there is such variety between application requirements, we are never going to be able to know with certainty which way a customer will lean. Smart city types should be paying more attention to Wi-SUN though.