100+ Companies Tell the US Government How to Foster IoT Growth
IoT is one of the most anticipated and discussed telco market segments. Ericsson calculates that the IoT market will grow at CAGR 23% between 2015 and 2021, making up close to 16 billion of all 28 billion connected devices in the world by that time. But significant regulatory restrictions and hurdles have to be overcome in order for IoT to reach its potential given that the government has control and input over IoT will be implemented in smart cities, automotive, and other segments.
With many industry watchers holding the view that the US is falling behind other countries such as Germany and China in fostering IoT, the US Commerce Department’s National Telecommunications and Information Administration circulated an open request for comment on the benefits, challenges, and potential roles for government in promoting the advancement of the Internet of Things. The NTIA also announced its intention to review the comments and publish a green paper that identifies the key issues that impact the deployment of IoT and the government’s role in promoting it in partnership with the private sector.
A broad array of industry players and influencers have responded, including carriers such as AT&T, T-Mobile, Verizon and Vodafone, vendors including Nokia, Ericsson, Huawei and Samsung, and industry trade groups like the Wi-Fi Alliance, Wireless Infrastructure Association, the Open Connectivity Foundation and the GSMA.
Verizon argued that a robust and secure communications network are foundational to the development of IoT, specifying that commercial spectrum and securing the core underlying infrastructure must undergird and support the network in view of the impending explosion of IoT devices:
“To enable sufficient spectrum to power this new wave of connected innovation, private and public sectors must continue to cooperate, not only to develop more ways to effectively share spectrum, but also to provide federal users incentives to free up spectrum for commercial licensed and unlicensed use.
As potentially billions of new IoT devices are deployed, they will drive data growth that – combined with the parallel growth in overall data usage by consumer devices – will require new commercial spectrum allocations to accommodate the unprecedented demands for more bandwidth. This includes spectrum necessary to support 5G, since 5G’s super-fast speeds and low latency will help facilitate new IoT use cases.”
Ericsson’s contribution emphasized the importance of 5G in unleashing the potential of the Internet of Things, which would necessitate releasing more commercial spectrum:
“Through network slicing, 5G technology will allow a single infrastructure to meet the very different needs of Massive and Critical IoT devices – it will enable networks to handle the incredible increase in data from the billions of low energy, low data devices, while also providing very high reliability, availability and security for critical uses. We also encourage the government to support global standards and best practices and to allow industry to continue to innovate and coalesce around the most favorable IoT solutions.”
Worldwide SDN Market Slated to Reach $133 Billion By 2022
Allied Market Research, an analyst group, has recently published a report predicting that the global SDN market will reach a hefty $133 billion by 2022. The SDN market is growing at a lively pace as communications providers increasingly adopt SDN for agile and robust solutions, easing network congestion, power and cost efficiency, flexibility in network infrastructure, task automation, and rapid innovation. With regard to the underlying factors that are driving communications providers to adopt SDN, the report notes that “complex network traffic patterns, increasing cloud computing services, need for mobility services and efficient infrastructure, and big data analytics are the major factors that drive the market growth.”
Software-defined networking operates by separating the control logic plane from off-device computer resources, thereby providing centralized, intelligence-based network control. SDN is often implemented in concert with an NFV based solution. This bright outlook is tempered by the fact that there are certain obstacles that are likely to hinder adoption: “On the other hand, lack of standardization and awareness among enterprises is likely to limit its growth. The increasing adoption of cloud computing services and need for technological advancement are expected to create numerous growth opportunities for the market.”
Enterprise users comprised 43% of SDN revenues last year, making up the largest revenue base followed by telcos. The information technology industry comprised 22% of total SDN users worldwide, constituting the largest user base. Whereas the North American market was the highest revenue-generating region for SDN last year, the Asia-Pacific region is expected to be the fastest growing market segment going forward due to high rates of network architecture upgrades and continuous growth in the mobile market.
According to the report, cloud-based service providers are predicted to have the highest compound aggregate growth rate between 2016 and 2022, as cloud computing becomes a popular component in the growth of many organizations.
SDN has also enjoyed increasing adoption and utilization in the wireless service provider industry, with major players such as AT&T and CenturyLink shifting implementation of SDN solutions to encompass not only traditional network architecture but also more customer-facing applications and services.
Is Sprint Set to Defy Expectations with Its Small Cell Plan
FBR Capital Markets has shone a rare positive light on Sprint’s outlook, reiterating its ‘outperform’ rating of the floundering telco’s stock. While analysts have questioned Sprint’s ambitious move to transition to a heavy network densification strategy relying on small cell networks, analyst David Dixon of FBR Capital Markets felt differently. Sprint’s CFO Tarek Robbiati recently disclaimed that the telco intended to rely on small cells- which are easily deployable on lamp posts and other urban areas as opposed to traditional tower sites- as a means of densifying and improving coverage and capacity:
“There’s not enough towers in the country to do what we intend to do to densify the Sprint network, period. So, you’ve got to think differently. And really, there is great benefit around this, because the cost of deployment of cell sites is a fraction of the cost of the deployment of a tower site. So, whatever number you pick up for a tower site, it’s probably $200,000, thereabout, including all-in costs, labor and equipment. Small cell sites are a fraction of that, 60%, 70% lower.”
Dixon acknowledged that the company was in difficult financial straits but reasoned that the carrier would benefit shortly from network technology advances that would occur as operators looked to increase data traffic and support new coverage scenarios that would arise as new services were offered.
Specifically, Dixon averred that Sprint would leverage next-generation technology and cloud advances to lower capital costs in deployment scenarios in order to generate profits: “If SoftBank can create low-cost pico and [customer premise equipment]solutions using 2.5 GHz spectrum to densify its network, Sprint will have the potential to become the lowest-cost and fastest data network among the national carriers that are migrating to a greater dependency on low-cost Wi-Fi spectrum ahead of a migration to low-cost, shared LTE spectrum in the 3.5 GHz band and beyond,” Dixon noted.
Sprint’s stocked experienced a nearly 2% uptick following Dixon’s report. The telco made waves among financial analysts when it announced that its 2016 fiscal year capital expenses would only amount to $3 billion, depending on the success of its small cell deployment. This is typically around half of what the telco has normally spent in prior years.
CFO Robbiati also reaffirmed Sprint’s commitment to relying on traditional macro towers as the linchpin of the small cell networks that it is currently building: “We’re building a 5G-ready network for the future, which will involve very different types of technologies. The sites will have to be different. We will not rely solely on towers. We’re building around towers. Towers will become very important, because they’re the hook to all the smaller cell sites that we will be building.”