Feb/Mar 2015

LTE continues to gain a stronger foothold in automotive, healthcare, wearables, energy, and the list goes on. As companies continue to prepare for the next big wave and the leading carriers look to sunset their legacy 2G and 3G networks for a more robust global standard, single-mode chipmakers and M2M/IoT providers are tapping into their devices.

One of the things that is so appealing about Altair Semiconductor is it clearly wants to make its voice heard and its vision known by offering a single-mode LTE-only solution. Altair offers M2M/IoT (Internet of Things) companies looking to upgrade their 2G/3G networks a cost-effective 4G/LTE-only chipset solution.

While Altair Semiconductor might have set a pretty lofty goal for itself by competing against the largest chipmaker in the world, the ambitious company says it is more than up for the challenge. Altair Semiconductor’s Eran Eshed, cofounder and vice president of marketing and business development, recently sat down with Peggy Smedley, editorial director, Connected World magazine to talk openly about the company’s plans for growth and how customers will benefit as LTE chip prices drop and they consume less power.

SMEDLEY: How is Altair creating disruption in the 4G/LTE market?

ESHED: Altair was the first chip company to introduce the concept of LTE-only, i.e. without the baggage of older 2G and 3G technologies. A few years back, many people raised an eyebrow since LTE coverage was spotty and the notion of not having a fallback option to 3G seemed unrealistic–but we knew that the point in which LTE coverage is good enough will come and it did in some key markets.

That’s when disruption becomes possible. We and our device/module partners began offering LTE connectivity solutions for a price tag which was less than half of its 3G+LTE equivalent from the established players. This triggered a paradigm shift in the US for example, where single mode LTE tablets such as the Verizon Wireless Ellipsis 7 and various Chromebooks launched at price points which were unheard of at the time. LTE become overnight an affordable commodity rather than a premium feature one could find only on high end devices.

Needless to say that the cost benefit did not come at the expense of quality, and our solutions have since been shipped in millions of devices around the world in the US, Japan, China, Europe, and Latin America.

Now we are in the process of creating another disruption, this time in the M2M/ IoT markets. We are yet to announce specific products–this will happen soon, but we can say at this point that such products will turn the perception of the ecosystem about LTE upside down–from a high cost, high-power broadband overkill to a mean and lean, low throughput, low power and very low cost technology which is very suitable for a variety of existing and future IoT use cases and applications.

SMEDLEY: Talk about 2G vs. 3G. Are you suggesting that companies are wasting time and money making a move to 3G because everyone will be eventually standardizing on LTE? Are there carriers, MVNOs (mobile virtual network operators) that are encouraging companies to make an unnecessary investment in 3G?

ESHED: I think we have to look at the market and at the specific segment that we’re dealing with because my answer would vary between different market segments.

Let’s take utilities—smart metering, for example. If all you want is to read meters, 2G is good enough. It’s probably even good enough if you need to serve hundreds or thousands of meters. GPRS (general packet radio service) would probably work if you design a network in an efficient way, you make sure signaling is spread out across the day, and you don’t get any signaling storms. In most cases, you will probably be okay (with GPRS). Many ask me, why should smart-meter companies or system integrators dealing with these kinds of deployments invest in 4G, when 2G seems to be working just fine for them? The issue is that MNOs [mobile network operators] that serve these customers will not offer these networks much longer. I think one of the best examples to look at is smart-metering deployment in the U.K., connectivity decisions were made more than a year ago, and the MNO that won two-thirds of all smart-meter deployments, and we’re talking some 53 million devices in the next five years is Telefonica. Telefonica decided it would offer this service over 3G. I’m assuming the reason is because, at that point in time, it had to commit to its customers that this service will be up and running for the next 15 years or so, and knowing that 2G is not going to be economically viable for that long–they decided to go with the only alternative at the time, 3G. So if an upgrade were to take place, (in order to) migrate to these different generations of technologies, replace meters, replace modules etc.,’ the cost would be incurred by the carrier. So, if that decision was made today or next year, I would expect a very lively debate on which option to go with 3G or 4G. I don’t believe 2G would have been considered again.

When you look at other M2M market segments, in some cases–including M2M applications that require transmitting high quality video–you really do need more bandwidth; 2G is not even relevant.

The main driver for LTE adoption however in my opinion, is the first one – network migration and spectrum re-farming. LTE is counter-intuitive for some IoT companies. People often say ‘I don’t need LTE, it’s overkill.’ Even if you offer an IoT-optimized solution that supports a mere one megabit per second, the response might be ‘but I just need 10 kilobytes per second, twice a day. Why do I need this?’

Well, first of all, your data needs may change. And secondly, you need LTE now because 10 years down the road you will still be required to run it. Any decision you make now will impact your business five, 10 maybe even 15 years down the road. The bonus for doing it now is that you get a much better network. You get much better capacity. You pay a lower cost per byte. You actually gain many advantages. But it does require market education on our part, to get people out of their comfort zone.

SMEDLEY: How does a company go about evaluating and selecting a reliable LTE solution and/or partner?

ESHED: Here too the answer varies by industry and by market. Many customers don’t traditionally come from a cellular background but they still need to choose some kind of connectivity solution, which is often also a layered solution. The most basic component of such a system is a wireless module. In most cases, these end customers would approach M2M module makers and ask them ‘what does your portfolio look like? What kind of solutions do you have?’ They would ask about generations of technology, cost, feature set, etc., so, fundamentally, if you want to be able to address the supply side, you have to address the end customer as well as the main cellular and M2M module makers. Then there is the layer of system integrators, as in the case that I mentioned previously with Telefonica.

How will you pay smart metering? You know, Telefonica is some kind of a CSP, communication service provider, or system integrator. Definitions vary, but there’s that layer of people in the middle who know how to build and operate networks. They aggregate demand. They can get good rates from the carriers. They would resell airtime or bytes. They are the ones who have to really understand technology roadmaps, economies of deploying and operating them, what level of service and at what cost, timelines, what’s available, and so forth. They would be the ones that at the end of the day a utility company, for example, would contract to build a solution. Another layer up, there’s MNOs, which are really struggling not to become just pipes. They’re trying to create more value out of that wireless medium that they own and operate, and that is a big challenge. They typically don’t come from a service delivery universe, at least not the kind that future IoT facilitates. They are very good at supporting voice services, and to some extent, data services. M2M and IoT are new paradigms for them, so if the concept is really going to get off the ground, the carriers are the ones who have to realize that offering an LTE solution works to their benefit, and we are finding that most of them do.

There’s a caveat here, in that if a carrier doesn’t have good enough coverage in their market, offering LTE-only service is not a very viable approach. So the kinds of carriers that would consider going that route today are the ones that have either good-enough coverage, or that have a fairly aggressive roadmap and know that they will have their markets covered within a known period of time. That’s a trend that
we are seeing.

SMEDLEY: Realistically, how long do you believe it will take for LTE to become a global standard for the next generation of wireless IoT networks? If it’s not fully there yet, and that’s what you’re telling me, but yet you’re saying everyone needs to invest in it, how long is it really going to take?

ESHED: This is where we get into discussing what does ‘the next generation of LTE’ mean in the context of IoT and M2M. There are quite a few activities in place. Standards bodies–in this case 3GPP–are working to define lower categories of LTE, which are more optimized for coverage, power consumption, cost and size. There’s a category known as zero, or “Cat-0” which is part of release 12 of the standard and supports 1Mbps. There’s a successor category beyond Cat-0 which will be part of release 13 and further enhances these parameters and supports an even lower bitrate. These standard variants are known as LTE-MTC, which stands for ‘machine-type communications,’ as opposed to HTC (human-type communications). There is another higher bitrate version called “Cat-1” which is fully standard today and supports up to 10Mbps, which may fit certain applications. Networks will support these functionalities in less than six months and If you try to translate this into market timing, I expect to see these kinds of very low cost, low power solutions deployed commercially as soon as the first half of 2016, right around the corner in wireless market terms. Deciding to go with LTE for an IoT deployment today is very reasonable timing wise.

SMEDLEY: So is there a single formula for success when we talk about LTE?

ESHED: You know it’s interesting because we keep on talking about the M2M/IoT market, and if you look at the IoT market and you start to dissect it by use-case and application, and then by value chain, ecosystems etc., you find that there are actually so many different sub-segments that need to be addressed, and each of them is completely different. So by definition, there’s not a single formula. The interesting thing is that there’s a single operator, or a single type of operator, that would be attempting to serve all these very different market segments via cellular – MNOs. One of the challenges for these guys will be to really figure out how they balance their formulas for the different market verticals they aim to serve such as wearables, smart-metering, smart home, security and automation and so on. There are so many different markets that I think will require some creativity, maybe not so much in the technical or architectural aspects of the network but more on the business model side of things. The MNOs are facing competition from proprietary, IoT-optimized technologies like Sigfox and <1GHz. You know, Sigfox charge one dollar per endpoint per year–we may debate on whether it’s a competitive figure or not, but what is certain is that no MNO today has come up with such a service plan. So I do believe change is inevitable in this market and a company like Altair is an important enabler. But the story is much bigger than us.

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