L'Internet des objets: French firm Sigfox inks deal with Telefonica

World + dog can buy licensed spectrum IoT connectivity

Internet of Things bods Sigfox have struck a global deal with Telefonica to offer their unlicensed spectrum connectivity tech through the telco.

Sigfox’s connectivity tech competes with the Narrowband Internet of Things (NB-IoT) wireless connectivity specification, which is the IoT standard generally favoured by telcos. This is because NB-IoT can be rolled out through software updates to existing LTE base stations, vastly lowering the cost of adoption.

Nonetheless, Telefonica said it will continue offering NB-IoT alongside Sigfox, giving it two strings to its IoT bow. NB-IoT operates in licensed spectrum, unlike Sigfox.

The deal sees Sigfox’s comms tech and its cloud offering being integrated into Telefonica’s IoT products. As the press statement notes, this will allow Telefonica to “develop its own end-to-end IoT solutions” and offer “data collection and management”.

We are promised mass rollouts across Spain, Germany, Mexico, Colombia, Argentina and Brazil this year, along with France and the US.

Ludovic Le Moan, CEO of Sigfox, gushed in a canned statement: “We are honoured to have reached this agreement with Telefónica. It is a true testament to the mass IoT opportunity, which is already a reality today.”

The news will come as a blow to the LoRa Alliance, whose LoRaWAN IoT connectivity tech is a direct unlicensed spectrum competitor of Sigfox’s. It is also, naturally, a shot in the arm for Sigfox, which is still dependent on venture capital funding to keep operating. Last year the firm set itself a $200m funding round target which it missed by $50m. As a result the company pushed back its IPO to 2018, delaying it by a year.

Today’s news also comes hot on the heels of Telefonica selling a 40 per cent stake in its Telxius infrastructure subsidiary to private equity fund KKR Group for 1.275m euros. Telxius owns and operates just under 16,000 masts in five countries.

Financial terms of the deal were not disclosed.

Competing standards bunfight

The Internet of Things connectivity market is, if not quite inundated, definitely awash with standards. These can be boiled down to two broad categories: licensed spectrum and unlicensed spectrum.

Licensed spectrum is expensive but its advantage is exclusivity. Unlicensed spectrum is not expensive – but operating on it exposes you to the risk of interference from other operators. You (and your customers) don’t have the right to tell others on your frequency to bugger off, as you would with licensed spectrum.

NB-IoT and LTE-M are both licensed spectrum technologies, and thus are favoured by telcos who already own spectrum – and who are also seeing their traditional business models begin to topple as consumers settle for current technologies instead of racing for the Next New Thing. Simply put, IoT is the next big growth area for telcos.

NB-IoT offers potentially higher data rates – in the kilobit range, according to some – than other IoT connectivity standards. This may be an accident from telcos used to consumer demands for more bandwidth and higher speeds, or, more likely, it is a deliberate attempt to serve some as yet unidentified IoT market segment by building in capacity for growth.

In contrast, unlicensed technologies offer very low data rates – typically in the sub-kilobit range – which are perfectly adequate for most IoT sensors. Some, such as LoRaWAN, highlight that with their technology the customer owns and controls their IoT network infrastructure rather than paying a third party to do so – which comes with both advantages and disadvantages.

The industry is, very slowly, moving towards maturity as buyouts begin to happen, and as telco confidence grows in the Release 13 spec of NB-IoT. ®