SAN JOSE, Calif. — New LTE standards for cellular IoT are off to a slow start with some carriers just now turning on relatively expensive services. Nevertheless, competition in silicon making wide-area IoT links is strong, and the 3GPP's road map is expected to drive a wave of chip upgrades for cellular IoT.

Long term, the Narrowband-IoT (NB-IoT) version of LTE and its unlicensed rival LoRa are expected to dominate wide-area wireless deployments in the Internet of Things. But getting there may take time.

“The volumes are not taking off anywhere but China and even China isn’t growing at the pace it was predicting. Their initial projections of 600 million units by 2020 won’t happen,” said Christian Kim, a senior analyst for IHS Markit, which plans to update its forecast in December.

“Markets are still below what we expected a year or two ago, primarily due to the immaturity of the networks, especially in Europe where there is not wide coverage for NB-IoT. We are now on the ramp we expected would have come six to nine months ago,” said Vieri Vanghi, a 20-year Qualcomm veteran who launched and manages its LTE IoT business.

China has had the most success so far getting NB-IoT module prices down to the needs of volume markets. Government subsidies slashed nearly half the cost of initial $12 modules for a year.

Now the subsidies are over but commercial prices are falling in line. A recent China Unicom bid for 3 million modules attracted five China module makers willing to stay under its $6 maximum bid, said Kim.

Five LTE module makers in China were willing to submit bids on a China Unicom deal requiring a low price. (Chart: IHS Markit)
Five LTE module makers in China were willing to submit bids on a China Unicom deal requiring a low price. (Chart: IHS Markit)

In the U.S, modules are advertised as low as $8.50 without a carrier’s service subsidy and $6.50 with one. U.S. carriers want to get down to $5 modules soon, while China’s providers are pushing for parity with the $3.50 price of legacy 2G modules, said Vanghi.

Modules also supporting the faster Cat-M1 LTE standard for Mbit data rates may command a small premium. However uneven deployment of the two standards has fractured the market with the U.S., for example, starting with M1 then migrating to NB-IoT and China taking the opposite path.

Some carriers are over-pricing the new IoT services, further slowing the market. China Telecom claims it charges just $3/year for NB-IoT services, but elsewhere often unpublished prices are several times higher.

“In my opinion, there’s no point in a $5 module with a $15-20/year data plan,” said Vanghi.

Qualcomm’s current chip set supports the both M1 and NB-IoT, although some rivals are making NB-IoT-only chips to lower costs. “In our case its financially a no-brainer [to support both] because single- versus dual-mode is only a few cents reduction,” Vanghi said.

Many IoT software platforms also are fragmenting the market. Developers are starting to standardize on device management standards from the Open Mobile Alliance, but carriers and third parties are still spawning their own proprietary software stacks, Vanghi said.

Qualcomm supports OMA and APIs and frameworks from top players. It is also trying to get into the act with its own wireless services platform, so far still limited to use with China Mobile as an initial customer.

To drive the market forward, the 3GPP defined an upgrade for NB-IoT in its Release 14. The new NB2 mode supports 127 Kbits/second downlinks and 158 Kbits/s uplinks. That’s a big step from the 25 Kbit/s down and 65 Kbits/s up rates of Release 13 that some said would not support some key IoT apps, including over-the-air security updates.

About 48 hours before an embargo was scheduled to lift, Qualcomm decided to postpone news about its roadmap.

It’s a highly competitive time for the sector. The potential for cellular IoT has attracted at least a half dozen chip rivals including Altair, HiSilicon, Mediatek, RDA and Sequans. Some expect a shakeout will eventually winnow out some competitors.

Qualcomm claims its current chip set has won 80 licensees using it in 110 devices. The company hopes to emerge as one of the winners whenever the LTE IoT standards go mainstream.

LPWA module shipments in thousands
NB-IoT and LoRa are expected to be the biggest winners in wide-area wireless IoT, according to a January forecast.(Source: IHS Markit)

— Rick Merritt, Silicon Valley Bureau Chief, EE Times