Worldwide trends for internet of things
23 May 2018 | Editorial
Will LPWA or cellular technologies such as 2G, 3G, 4G and 5G drive the internet of things? Analysys Mason has forecast the future of IoT connectivity by network type across the world
NB-IoT will be the dominant network for IoT in 2026
NB-IoT – narrowband internet of things – technologies will dominate IoT, but 3G and 4G cellular technologies, followed by LTE-M, will support large volumes of connections. According to Analysys Mason, the overall number of connections will reach 5.1 billion in 2026.
Of these, 1.6 billion will use 2G, 3G, 4G and 5G cellular connections and 3.5 billion will use low-power wireless access (LPWA) including NB-IoT and LTE-M.
The number of 3G and 4G connections will grow at 24% a year. LTE represents a viable alternative for automotive applications but does not meet the cost and power needs of most IoT applications. These are addressed by LPWA networks.
There is no dominant LPWA technology. LTE-M connections, which are largely complementary to those using NB-IoT, will grow at 131% a year to 9 million. Other LPWA connections that are more direct substitutes for NB-IoT will grow in number to 617 million, driven by new network operators such as Thinxtra as well as traditional players such as Orange.
NB-IoT will have 38% of total connections in 2026, backed by Chinese market
Support from the Chinese government has driven the widespread deployment of NB-IoT by all three Chinese operators, and will benefit other operators using NB-IoT.
In 2017, most of the commercial NB-IoT contracts were in China.
Several operators launched LTE-M in 2017, including AT&T, Telstra and Verizon.
The LTE-M share of the total market was less than 1% but this will grow significantly during the forecast period to reach 19% by 2026.
LTE-M is a substitute for some 2G telematics applications in the automotive and fleet sectors, and has been adopted first by many of those operators that have decommissioned their 2G networks.
According to Analysys Mason, 3G and 4G will capture a 27% market share in 2026. This category, comprising mainly LTE connections, is largely connecting applications in the automotive and fleet sectors that can support the higher cost of 4G devices and may require higher bandwidth.
5G will constitute just over 1% of the total connections in 2026, but this will be the average across all application groups. For automotive and embedded SIMs specifically, 5G will have a 4% share of the total connections.
However, widespread adoption will depend on the replacement cycles of the vehicles as well as the ability to achieve good 5G coverage.
NB-IoT will dominate, but will co-exist with other LPWA technologies
Although NB-IoT will form the largest market in 2026, other LPWA technologies will be important. Several will continue to gain momentum. Many operators are deploying more than one LPWA technology.
They have identified different use cases for each technology, each representing a significant opportunity. LTE-M is better suited to supporting mobility, whereas LoRa or Sigfox better support static applications.
Operators can justify investment in more than one technology because all are relatively inexpensive to deploy.
It is uncertain which technologies will gain traction and which will cease to exist.
There were more LoRa announcements than NB-IoT announcements in 2017, but the latter are more likely to have wide coverage as more will be for national networks.
All three Chinese operators and operators with significant footprints are supporting national NB-IoT deployment, suggesting that the coverage will be greater than that of LoRa.
Analysys Mason expects that NB-IoT will be deployed at scale and will take a greater share of connections over the forecast period; support for LoRa, Sigfox and LTE-M will continue.
China will dominate the market by 2026 with 1.1 billion connections
China will be the biggest market for IoT of all types by 2026, according to Analysys Mason, with North America and Europe in second and third places.
Both Canada and the US are in the process of closing 2G networks, even though 2G connections formed 17% of the total in 2017.
There will be few remaining 2G IoT connections in North America by 2019. Operators that have not decommissioned their 2G network have smaller IoT bases overall but will have deployed more connections on 3G/4G.
The market share for 3G/4G networks – 55% of the total IoT connections in 2017 – will decrease over the forecast period as LPWA networks take over.
LTE-M was deployed by the two largest operators in the region, AT&T and Verizon, in 2017, and Bell Canada and Telus also plan to deploy it. Operators are implementing LTE-M to support a large number of use cases, especially those requiring mobility such as in the aftermarket automotive and asset tracking sectors.
All sources: Analysys Mason. Adapted with permission from an Analysys Mason report, IoT Forecast: Worldwide Technology Trends 2017-2026, written by Michele Mackenzie, principal analyst, Rémy Giraud, research analyst, and William Hare, senior analyst