Huge potential for IoT, ubiquitous connections — but how to foot the bill?

Before the world can reap the true benefits of the internet of things — a collection of billions of connected devices which could contribute tens of trillions to the global economy by 2030 — there’s an awful lot of expensive heavy lifting to be done, both on the device side and in  network infrastructure.

Cyberposium 2013 panel on future of mobility.
Cyberposium 2013 panel on future of mobility.

When that mission will be accomplished depends largely on ubiquitous and affordable wireless connectivity. The problem is that wireless connectivity doesn’t come cheap even for the millions of smart phones in use now and that cost issue needs to be resolved before the broader IoT can take off, said speakers at the Harvard Business School’s Cyberposium 2013 Saturday morning.  

Wireless connectivity “costs billions of dollars. It’s not just about laying fiber. Frequency does not grow on trees — it is a precious resource,” said Susie Kim Riley, founder and CEO of Aquto, a mobile internet startup.

To fund it, the industry needs new business models, said speakers talking about the future of mobile technology. It’s a chicken-and-egg thing. Until more subscribers sign on for cellular data plans such plans will be too expensive for the masses. But until prices come down, subscriber count won’t reach critical mass.

Right now, if you’re a mobile worker, you probably have Wi-Fi at home and at work that handles the bulk of your data traffic. But you rely on a carrier’s cell network to do all the stuff in between. And for that, “you pay dearly,” said Steve Papa, who founded Endeca(s orcl), and who now invests in tech startups. It is in that in-between area that many of the hurdles to IoT lie.

In developing countries, a mobile data access plan can cost $2000 for two years. That means many people there might have to choose between payinf for the phone or for electricity, said Bob Davis, general partner with Highland Capital Partners and the founder of Lycos.

Rajesh Mishra, founder and CEO of Parallel Wireless said not even the giant carriers can afford all the frequencies required to feed all these devices currently. “We need this to be more like Wi-Fi so the cost of equipment will fall and then there will be more data plans.”

There are ways to mitigate cost as smartphones and networks get smarter. “Maybe content can get pushed to the device in off-peak hours when there is capacity for consumption later on. That enables more efficiency on the network and carriers an lower their costs to give you more for your money,” said Riley.

Providers in some geographies make bite-sized chunks of mobile connectivity available to get around such hurdles, said Purnima Kochikar, director of Google Play, Apps & Games for Google(s goog)

“In Thailand or Indonesia, you can pay for an hour of data access, just as you pay for an hour of wifi service in a hotel here,” she said, citing the Facebook 0 as an example. That program lets Facebook app subscribers access that app (and only that app) for free — with Facebook paying the freight for connectivity.

Mishra said the need for more connectivity might be met with the use of more of the ZigBee-type connections now used to connect home devices or unlicensed “white space spectrum” where end users can connect to the internet not necessarily controlled by the traditional operator.

The importance of white space

White space spectrum comprises the unused airwaves between TV channels that could be used for wireless and even mobile broadband connections. That is incredibly valuable commodity — a game-changer, said Papas.

“Unlicensed spectrum … has an incredibly disruptive potential. There are huge battles going on to determine the future of mobile networks and they all depend on how we regulate that spectrum,” he said.

So there are options to solving the too-pricey-connectivity problem and it’s unclear how they will shake out. One thing is clear though: As more devices– from sensors to smartphones come online, they will generate more data, and that means we need more backend infrastructure to handle that payload.