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All that matters at the end of the day is ROI

February 10, 2021 - Teppo Hemiä

HERO Teppo IoT blog

What a cliché!  

Let us discuss ROI with clear terms. What does it mean when you need to connect thousands or tens of thousands of devices cost-efficiently? In other words, what does it mean for massive machine type of communications?  That’s a term we use in IoT and it has an acronym: mMTC. Sorry, some jargon is unavoidable. 

Connectivity is full of technical vocabulary and acronyms. It makes the job of choosing the best connectivity challenging. Or does it? Is it easy when you are told what you need with numerous key words backed by mounting marketing budgets?  

I have recently had discussions with leading network equipment providers. They said most enterprise customer meetings are built around 5G. Their customers talk about how to enter the 5G and digital era for real. When the discussion goes to practical needs and use cases, the connectivity is forgotten (as it should, by the way). In the end, in 80%-90% of the cases, the customer buys something else than 5G, such as current mainstream 4G. The reason is simple: when the use case is selected and the business plan is updated with real numbers, the latest and greatest is not automatically chosen. As it is not always the most affordable option for the use case.

Wait a minute, there the most important word is affordable! Have you seen it in the 5G marketing so far? 

Today we can go to gigabits and we are ready to build tons of redundancy, dense infrastructure and even wires, to get reliability. But, at the end of the day, it is about affordability for the use case. And affordability drives ROI. There is no simple answer to how much connectivity can cost. In IoT many say it cannot cost more than a single digit % of the value of the connected device, over the lifetime. In mobile phones it is quite different. Twenty bucks a month for three years is $720 which is 100% of a high-end phone cost. That’s the market cellular was originally design for and it is amazingly good for that purpose. 

Affordability is driven by many parameters. It boils down to deployment and operating costs. In fact, wired solutions have very good operating costs but very bad deployment costs. Cost of wiring per meter is high, especially in developed markets (and yeah, you lack a bit of mobility…). On the other hand, cellular has the biggest upfront infrastructure cost, both base stations and spectrum. That has then led to high fees to build a sustainable return for the mobile operators who have invested in the infrastructure. In the case of smart phones those fees are well justified; consumers are getting a good return for services like multimedia at tens of dollars per month. But it is far too much to make most of the IoT cases profitable. For the mMTC, both wired and cellular are simply out of the game. 

The new non-cellular mMTC 5G standard addresses that affordable scaling need. It means virtually unlimited scale and density for low to mid bandwidth applications, at the level of cost which gives you a healthy ROI. DECT-2020 NR’s (pls forgive, it is still a working group name) principle is to offer very low upfront investment and deployment cost, with the lowest possible operating cost. It is not one or the other but both. In addition, things like SW updates in the field (done over the air in DECT-2020 NR compared to by foot in SigFox and LoRa) need to be effective and economical.  

Total cost of ownership optimization opportunities
Total cost of ownership optimization opportunities

Courtesy of ETSI DECT-2020 NR Webinar material 

IMT-2020 i.e. 5G requirements in ITU-R are driven with a cellular dogma: building coverage from outdoors to indoors or focusing on requirements derived from base station-based infrastructure thinking. The 5G requirements of density, reliability, coverage and others are not driven by market needs. They are driven by what the cellular architecture could deliver. In other words, they are not at all ambitious when we talk about massive machine type of communication. Yet, cellular has not brought anything important for mMTC with 5G. Kudos to cellular for the high bandwidth requirements where the cost is less of an issue. But in mMTC cellular is lagging. It is very expensive with mediocre performance. And it wastes the scarce spectrum.

This is the reason why the recently introduced DECT-2020 NR is so superior vs. cellular. It does not take the cellular architecture as a starting point (unlike SigFox and LoRa also). Instead, it is based on a de-centralized approach. Through the cellular glasses this is very disruptive. But, I claim every good research would end up with a decentralized approach if they took a clean slate design objective for the mMTC requirements. Simply, why would every radio device not be an access point? Why not being able to deploy any scale wireless connectivity with one single device to device design? Why not giving the network optimization, including spectrum, to the radio device itself when it has by far the best understanding of its local environment? And as the device densities increase further, the device-centric operation also scales.

The submission of DECT-2020 NR as a part of IMT-2020 to 5G as well as the recently published independent valuation group results prove DECT-2020 NR to be significantly better than cellular for the mMTC job. It can be used by anybody anywhere, getting coverage virtually everywhere you might need it! And most importantly, you have a full control of the system. No one else comes and “optimizes” the network for his or her business over yours.  

We have a new way to do wireless! The de-centralized approach that is already common in many other areas needing scale has finally come to wireless. Affordability is not only important to make the existing use cases more profitable. The better the affordability, the bigger the addressable market. The demand grows exponentially with cost reductions. For example, the lower the cost of acquiring your shipment’s location and condition data, the smaller the value of assets that can be connected with a positive ROI. Increased visibility and efficiency convert to massive savings.  

Affordability drives addressable market logistics example
Affordability drives addressable market logistics example

For us, this is not a new thing. We are already commercial with de-centralized networks. We have broken many records with them and built profitable use cases with hundreds of customers. With the 5G contribution we bring these benefits to the mainstream and make a standard out of it.  

The standard also has a dedicated free to operate global frequency of 1.9GHz. Value of that alone is up to 10B$ when parameters of the latest CBRS spectrum auctions are used. The de-centralized spectrum management gives virtually unlimited device density per user in IoT use. All free for the end users. No need to be in a crowded ISM band nor negotiate spectrum for your local needs. That complexity is not a value for the end user. 

DECT-2020 NR is now proven to be superior in cost, density, reliability, bandwidth and power consumption for mMTC. It has interest and strong industrial support. A great choice in the near future. We however already have even a lower cost option available with the lowest-cost commodity Bluetooth chips. So, when you want to go to the extreme in cost, for example in Smart Tracking tags for any scale, the same architecture as DECT-2020 on sub dollar chips is a very compelling option. Migration between the two is simple as the same APIs are applied. 

If you want to learn more about the DECT-2020 NR, a webinar recording by ETSI is available here.

Want to talk to our wireless IoT expert?

IoT Expert Jani Vehkalahti

Jani Vehkalahti