Will New Narrowband Services Drive Most Incremental Revenue Growth?

Truly revolutionary changes do not happen all that often in the communications business. But they do happen. Voice once drove the revenue model and use cases. Then text messaging drove growth, followed now by broadband internet access, mobile and fixed.

Business models once assumed monopoly supply; now we assume competition.

Services were sold mostly to support human-related requirements, though services directly aimed at machines have grown.

In the emerging era, we might find that much or most of the actual growth of use cases and revenue comes from services for machines that only require narrowband connections.

For virtually all of the last 30 years, networking technologists and business leaders in the information and communications industries have rightly assumed that “faster speeds” and therefore higher data throughput rates were virtually directly related to financial outcomes.

In other words, the ability to send data faster increased the value of communication networks, made more use cases viable, and therefore drove revenues for suppliers of networking platforms, service providers.

So it is noteworthy that in the next phase of value creation and industry development, narrowband platforms might drive the next big wave of revenue.

That could well be the case if internet of things use cases develop as widely as expected. Look at the direction of standards extensions of Long Term Evolution, for example. Standards bodies that traditionally have worked to wring more performance out of networks now are working to create networks that feature less bandwidth.

Cat-1 for LTE networks tops out at 10 Mbps in the downlink, 5 Mbps in the uplink. But Cat-M1, the next development, will feature just 1 Mbps peak data rates, upstream or downstream. The Cat-NB1 standard will support just 20 kbps in the downlink and 60 kbps in the uplink.

Those developments are related directly to the expected use cases for sensor reporting, which quite often entails only uploading small amounts of data, but also communications cost and battery life.

The shift to perceived business use of narrowband platforms is a huge shift. All the direction has been towards broadband (faster speeds, more data throughput) in communications, for decades.

So 5G will be the first networking era in quite some time where, despite use cases for higher speeds, the real use case and revenue upside will come from narrowband platforms.

source: Sequans