The Internet of Things (IoT) continues to make headlines, with enormous numbers of devices poised to go online in the coming years. Huge predictions dominate, for example with Cisco forecasting that by 2020, there will be an estimated 50 billion Internet connected devices worldwide, including computers, smart phones, tablets, as well as the traditional corporate M2M/IoT and SCADA units. This is massive growth from the estimated 12 billion devices in 2013; but, can satellites grab a piece of this ever growing pie?
In its recently released M2M and IoT via Satellite, 5th Edition study, NSR found that by 2023, there are estimated to be 5.8 million satellite M2M and IoT connections globally. This is led by L-band with over 93% of in-service terminals in 2023. Ku-band comes a distant second with 5.2% of units, and C-band and HTS remain, with less than 1% each, in use for niche markets – in very specific applications and regions. L-band dominates primarily due its lower cost terminals, and their smaller physical size. The key question is: will lower cost L-band terminals be enough to drive adoption in the consumer IoT market?
The majority of upcoming consumer IoT applications will be based on terrestrial technologies due to its lower cost – both in terms of airtime and hardware. Nowhere is this more visible than the recent funding for the up and coming terrestrial M2M network Sigfox to the tune of $115 million, which includes funding from satellite operator Eutelsat. Sigfox promises to charge consumers as low as $1/month for airtime on consumer IoT devices. Currently only rolled out in France, Spain and the UK, the company aims to use this funding to expand worldwide in Europe, Asia and the Americas. Sustainable or not long-term, aggressive competition globally is becoming the new norm in this space.
Nevertheless despite plentiful competition, research from NSR finds the satellite consumer IoT market has potential, although it is still finding its place. Currently a lack of communications standards is limiting growth, with most devices using existing communication methods of Wi-Fi and Bluetooth (especially the low energy variant, Bluetooth LE).
With that said, the satellite dominant IoT market is currently found in personal safety devices, such as those currently served by SPOT on the GlobalStar network and DeLorme InReach on the Iridium network. Due to the growth in this sector, NSR expects additional safety and location products to enter the market in the medium-term.
Developing a new product in this category in an already expanding market means that many risks are already mitigated, although companies looking to enter this market will need to mindful of the free competition. Entrants must compete with the not-for-profit Personal Location Beacon (PLB) devices as part of the International Cospas-Sarsat Programme, which has no monthly fee.
What this means is that additional value added services need to be provided such as Duplex messaging, telephone services, and even personal Internet hotspot accessibility. Without these additional value added services as well, ARPUs remain low, so additional add-on options and flexibility will be needed to ensure future growth. One specific opportunity NSR has identified here is for dual-mode solutions, which can connect to both satellite and cellular solutions, when in range. These features have been successfully added to reduce the potential of price shock of satellite access and to reduce costs to the end-customer. Although this may be seen by some as a form of cannibalisation of the satellite services, outcomes for some providers have found the addition of cellular services to be additive to their satellite businesses. Furthermore Eutelsat has demonstrated this by contributing part of the $115 funding to Sigfox, aiming to accelerate the development of the IoT market.
The other side of the business where satellite can grow is in the consumer IoT market are backhaul-type solutions where M2M/IoT data is aggregated via a VSAT network, either in a consumer’s residence, or aggregated regionally. Typically this is established in areas outside of a cellular footprint. However in the long-term when there is expected to be increased dependence on IoT technologies, there is also certainly a role for VSAT networks in acting as a backup for when terrestrial networks fail – especially in developing regions where cellular networks can be significantly less reliable or in mission critical applications such as in healthcare.
The consumer IoT via Satellite market is still finding its place – but upcoming opportunities can be found, with potential new entrants entering the personal safety device market. Whilst the majority of consumer applications will be based on cellular technologies, the vast growth of the number of connected devices will mean that even a small sliver of devices being connected to satellite networks will allow the consumer IoT market to grow well into the future
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