IoT is one of those buzzwords that stands for so many different use cases and business verticals that is hard to grasp, at first. But when TowerXchange caught up with Lawrence Latham, Managing Director of Everynet, he was able to decode in very simple terms the real opportunity for operators and towercos to look beyond their traditional business models to explore opportunities in the IoT space. In this interview, Lawrence offers a futuristic and yet simple business case for towercos interested in promoting themselves as integrated digital companies.
TowerXchange: Please introduce yourself and your role within Everynet.
Lawrence Latham, Managing Director, Everynet:
I have been involved in this industry since before it was called IoT. Back in the days, we used to refer to it as the SCADA and then Machine to Machine (M2M) industry. I have been in the sector for about 25 years and I was involved in the creation of a couple of early ventures which were then sold and acquired by larger groups, one of them being Microsoft.
My area of expertise is in the technology commercialization segment, which means I am usually involved in scouting brilliant technologists to help them bring their visions and ideas to a commercial stage. And this is what I did with Everynet, when I met with the masterminds behind it.
TowerXchange: Can you decode IoT to our readers? And where Everynet sits within the IoT ecosystem?
Lawrence Latham, Managing Director, Everynet:
First, it’s important to highlight that IoT is a market of markets, a broad segment that covers various verticals. IoT is about bits, billions, and cents. IoT at scale is about lots of small bits of data from billions of sensors with micro-transactions costing fractions of cents.
There are about 600 million IoT SIM cards in use around the world today. There are already billions of devices connected via short range technologies like Wi-Fi and Bluetooth. At Everynet, we operate in the Low Power Wide Area (LPWA) network space which is long distance and low power requirement connectivity. Lower costs are needed to connect sensors that aren’t economically viable to connect at cellular prices. Many IoT applications need to be truly wireless and run off battery power with no recharging. 2G and 3G are being sunset in many places, orphaning tens of millions of existing low bandwidth IoT devices. The market is now focused on reaching longer distances, long range signals at much lower cost. To date, this is generally achieved via relatively costly cellular and satellite IoT solutions. But LPWA is an alternative solution that is disrupting the market.
In fact, LPWA features similar characteristics as 2G cellular IoT but with much lower power needs. In simple terms, you can compare cellular IoT and LPWA as a device whose battery would last for a couple of weeks versus one that could last seven to ten years.
Think about devices that are utilized in the agriculture sector. Something like soil sensors installed in the field whose batteries last for almost ten years. Completely wireless all the time. This is where LPWA operates and can bring real advantages!
Another key aspect is that LPWA utilizes free spectrum in the ISM (Industrial, Scientific and Medical) radio bands which are reserved internationally for the use of radio frequency energy for industrial and scientific purposes. And this allows considerable cost savings! Free spectrum, no sim required, cheaper silicon, all resulting in much lower costs than cellular solutions... Boom! The acronym LPWA is a bit of a misnomer to me. They should have called it LCWA: Low Cost Wide Area.
TowerXchange: Can you explain how towercos can get involved in LPWA?
Lawrence Latham, Managing Director, Everynet:
LPWA for towercos is one of the core aspects Everynet is working on. In fact, while cellular IoT is naturally controlled by operators, in our model LPWA can be offered to operators by the towercos.
One of the biggest limitations we encounter when offering our services to towercos lies in the price point and mismatch between our financial model and the towercos’ one.
To offer a generic example, U.S. towercos would charge us around US$10,000 as an initial fee to install a LPWA base station and, following the capex investment, it would charge around US$250 per month for rent. So we are talking about a US$3,000 in opex and a US$10,000 in capex per tower, per year! And that does not include the network equipment or anything else related to running the business.
So if I were to enter the U.S. market and looking at deploying LPWA base stations on 18,000 towers, I would look at an initial investment of US$180mn in capex and a US$54mn of opex for the first year.
What infrastructure firms don’t necessarily grasp yet is that the LPWA ARPUs are quite low. In fact, the wholesale cost for a one-year connection is around US$3. So, for every tower, I’d be looking at around 1,000 devices just to breakeven on Opex and 60mn devices to breakeven on a 18,000 site deployment! To give you a comparison, this is the roughly the volume of AT&T, Verizon, and Sprint’s entire IoT base across the U.S. which is obviously out of reach (for now) for IoT businesses! It’s quite a day one barrier to entry.
Our business segment is building rapidly, and we forecast considerable growth in the future but to date, the problem is common to everyone in the industry. And that is that the price point to deploy at a certain scale is just too high. Unless, you own infrastructure.
TowerXchange: What makes Everynet’s business model attractive to towercos?
Lawrence Latham, Managing Director, Everynet:
Everynet has built a wholesale, shared infrastructure model that allows towercos to consider LPWA as a viable business. In fact, we supply all the technology which is in line with the towercos business model and their focus on the real estate component. Therefore, they don’t need to create in-house technology groups as we invest in all the technology required to create, monitor, and manage the network.
These partnerships are usually formed as joint ventures between Everynet and the dominant towerco in a given country. And we just require towercos to look beyond the immediate returns they can achieve via their traditional financial model and assess the potential for future growth, which is just huge!
One of the key aspects of the Everynet LPWA platform is that traditionally, when utilizing ISM spectrum, operators cannot keep their flow of traffic separated. In fact, although encrypted, the data is obtained by all operators active on a given band. This is obviously not acceptable in an operator environment. Everynet has created a unique software defined network approach that allows each operator to share infrastructure and gives them their own carrier-grade core network keeping their traffic securely segregated, guaranteeing a high level of privacy and performance.
Additionally, Everynet supplies the base stations, has a 24 x 365 ISO certified Network Operation Center, and complete solution ecosystem. Together with towercos we can build networks for a fraction of the costs. Operators lease coverage and we take care of all the rest, in partnership with towercos. This is how LPWA will get to billions scale. IoT is not just about technology, it’s about new business models.
TowerXchange: What is the demand for LPWA and which verticals present the best opportunities?
Lawrence Latham, Managing Director, Everynet:
To create a valid business case for IoT, the network isn’t enough. As we all learned from our experience in the early days of the cellular IoT market, there has to be a complete ecosystem of end to end solutions. We have that covered too.
We focus on five key verticals that drive initial subscribers. For comparison the cellular IoT market, even at this point in its maturity, is focused on eight verticals. Everynet focuses on smart utilities, smart cities (which represents a third of the entire LPWA usage today), agriculture, logistics and asset tracking.
Thanks to our LPWA solution and business model, tower companies can achieve additional revenue on their sites while we take care of making IoT networks happen and lease coverage to network operators
Thanks to our LPWA solution and business model, tower companies can achieve additional revenue on their sites while we take care of making IoT networks happen and lease coverage to network operators. This model allows for an easier adoption for operators at higher margins as they can run their own IoT network at a fraction of the normal cost and risk.
The demand for IoT service is growing but LPWA isn’t going to make cellular demand go away. LPWA is appropriate for use cases other than those of cellular networks such as meters, sensors and in general, devices that utilize little data sets and low bandwidth.
I believe that Everynet is bringing forward a compelling proposition to towercos. In fact, our offer is in line with the growing demand for “more” that is pushing towercos to innovate from being pure real estate companies into digital enterprises. Today, companies of all kinds must innovate or risk being disrupted.
That said, it takes a visionary company like our existing partner companies to take a step towards this opportunity. In fact, while the synergies between MNOs and towercos are obvious, players in the industry should look beyond sometimes adversarial positions and collaborate to enable IoT to become a considerable revenue stream for everyone involved.
