Orange’s cellular strategy for IoT

Last week Ericsson announced that it was working with Orange Telecom to test three networks. Handset makers working with carriers to optimize coverage is nothing new but the focus of those tests does tell us about the significant challenge (and opportunity) available to the carriers as the number of connected devices grows.

The initial test will take place over the 900MHz spectrum, which is reserved in Europe for 2G and 3G cellular carriers. The goal is to improve coverage, so that harder to reach indoor spaces are connected as well as remote locations. Think everything from the smart home to that drilling rig out in a field.

The other tests related to extending battery life and reducing costs by deploying a single antenna modem that has much lower memory requirements as well as a very small power envelope. The tested modems are being made by Sequans. Sequans is focused on building low cost and low power LTE chipsets for IoT.

These tests tell the story of both ends of the market in IoT. On the one hand, carriers need to figure out a way to reduce LTE power draw as well as hardware costs. On the other end, the carriers have to find a way to extend coverage for low bandwidth applications running on 2G and 3G networks.

The challenges facing the carriers boil down to core questions about how they will provide affordable connectivity at low power and excellent coverage all the while being cognizant of the concerns that there simply may not be enough spectrum to deliver all of the data the market wants delivered. Simple sensors in a field running over 2G or 3G are one thing. Needing multiple streaming video feeds from a remote location is another.

Figuring out the perfect network technology that will keep costs down while delivering reliable, low power connectivity remains a core focus of the carriers.

To this end, Orange has chosen to invest in a new Low Power Wide Area1 (LPWA) network, which uses LoRa (Long Range) technology. LoRa competes against SIGFOX technology, which picked up a healthy 100 million Euros in investment earlier this year from the likes of Telefonica, SK Telekom and others. Orange believes IoT can help it generate 600 million Euros by 2018 for that business unit by itself.

LPWA is a narrow band network that has been designed to consume less energy. Specifically, Orange believes that this type of network is ideal for small connected objects that are not wired and also do not need constant, streaming communication. Rather this type of network is for objects that can emit sporadic, non critical data.

Target markets that spring to mind are sensors in the smart home as well as smart city applications like municipal lighting. Orange has its own smart home products and has joined many other carriers in the belief that the smart home represents an opportunity to leverage its cell networks to sell customers additional services.

What’s interesting for the carriers is that really two markets are emerging and figuring out how to profit in each has different constraints. Yes, bringing down the cost of LTE connectivity and hardware as well as ushering in 5G will be critical to the high bandwidth end of the market. But there’s also the lower bandwidth part of the market for everything from connected parking meters to wearables to soil sensors on a farm.

Figuring out the right mix of network technologies at the right price and the right power envelope is the challenge for the carriers going forward. Because one thing’s for sure: the entire IoT market depends on them being able to do so, and do so at massive scale.