Tag Archives: IoT

Is Your Home Listening to You?

When I was a teenager, science fiction books envisioned a future where people talked to their home to take care of mundane tasks. For somebody willing to spend the money on new appliances and devices that future is here today.

Just consider the Amazon Alexa voice assistant, which is installed in the largest number of devices. GE has built Alexa into its new stoves, refrigerators, wall ovens, dishwashers, washers and dryers, and air conditioners. Samsung has built Alexa into refrigerators, washers, dryers, air conditioners, and vacuums. Alexa is built into smart light bulbs, smart wall plugs, televisions, thermostats, smart door locks, security cameras, speakers, and numerous other devices. The chips and/or software to add Alexa to devices are getting cheap and it shouldn’t be long until the app is built into most electronics you might buy.

The convenience of talking to home devices is not without a cost, and companies like Amazon, Apple, and Google are listening to you through the devices. Like other voice assistants, Alexa listens all of the time waiting for a ‘wake word’ that activates the app. There are major privacy and security concerns related to the constant listening. We have to trust the company controlling the device not to listen to us all of the time because there is nothing stopping them from doing so.

Amazon swears they don’t listen or record except for a short period of time after the wake word is spoken. They also swear that they only preserve those recordings in an effort to improve Alexa’s responses to questions. If you are going to use Alexa in your home, you are trusting that Amazon is telling the truth. Back in 2017 Samsung got a huge black eye when they were unable to make that promise concerning their smart TVs.

The other big concern is hacking. There is zero chance that all of the companies making devices that include a voice assistant have iron-clad security. While Amazon really might not be listening to you, a hacker will surely be willing to do so.

To make matters even more uncomfortable, a lot of lawyers and privacy experts believe that if a person knowingly installs a device that listens and transmits information to a third party, that person has waived their Fourth Amendment privacy rights and any rights granted by the Electronic Communications Privacy Act. The concept has not yet been challenged in a court, but if it’s true, then people have no recourse against Amazon or anybody else using the information gathered from a voice assistant device.

My house has four Amazon Echos that we bought when the devices first hit the market. They are convenient and I use them to listen to music, check the weather or news, check the hours at stores or restaurants, and to make the occasional reminder in the middle of the night. My family has gotten uncomfortable with being listened to all of the time and we now unplug the devices when we aren’t using them. This kills all of the spontaneous uses of the devices, but for now, that feels safer than being listened to.

I’m going to be leery about buying any new household appliance that can listen to me. If I can’t disable the listening function, I’m not going to buy the device. It’s impossible to feel secure with these devices right now. It’s impossible to take the word of big company that such devices are safe. You only have to look at the current experiences with the hacking of Ring cameras to know that smart home devices are currently anything but safe.

Small ISPs have never worried much about the devices that people hang off their networks. ISPs provide the bandwidth pipe, and how people use data has not been a concern for the ISP. However, that is slowly changing. I have a lot of clients that are now offering smart thermostats, smart security systems, and other smart devices as a way to boost revenue. ISPs need to be careful of any claims they make to customers. Somebody advertising safety for a smart security system might have liability if that system is hacked and the customer exploited.

Maybe I’m being overly cautious, but the idea of somebody I don’t know being able to listen to everything said in my house makes me uncomfortable. As an industry person who has been following the history of IoT devices, I’m even more uncomfortable since it’s now obvious that most smart home devices have lousy security. If you don’t think Amazon is listening to you, I challenge you to activate Alexa and say something vile about Jeff Bezos, then see how much longer it takes to get your next Amazon shipment. Go ahead, I dare you!

We Need Public 5G Spectrum

Last October the FCC issued a Notice for Proposed Rulemaking that proposed expanding WiFi into the 6 GHz band of spectrum (5.925 to 7.125 GHz). WiFi has been a huge economic boon to the country and the FCC recognizes that providing more free public spectrum is a vital piece of the spectrum puzzle. Entrepreneurs have found a myriad of inventive ways to use WiFi that go far beyond what carriers have provided with licensed spectrum.

In much of the country the 6 GHz spectrum is likely to be limited to indoor usage due to possible outdoor interference with Broadcast Auxiliary Service, where remote crews transmit news feeds to radio and TV stations, and Cable Television Relay Service, which cable companies used to transmit data within a cable company. The biggest future needs for WiFi are going to be indoors, so restricting this spectrum to indoor use doesn’t feel like an unreasonable limitation.

However, WiFi has some inherent limitations. The biggest problem with the WiFi standard is that a WiFi network will pause to allow any user to use the bandwidth. In a crowded environment with a lot of devices the constant pausing adds latency and delay in the system, and in heavy-use environments like a business hotel the constant pauses can nearly shut down a WiFi network. Most of us don’t feel that interference today inside our homes, but as we add more and more devices over time, we will recognize the inherent WiFi interference into our network. The place where WiFi interference is already a big concern is in heavy wireless environments like hospitals, factories, airports, business hotels, and convention centers.

Many of our future computing needs are going to require low latency. For instance, creating home holograms from multiple transmitters is going to require timely delivery of packets to each transmitter. Using augmented reality to assist in surgery will require deliver of images in real time. WiFi promises to get better with the introduction of WiFi 6 using the 802.11ax standard, but that new standard does not eliminate the innate limitations of WiFi.

The good news is that we already have a new wireless standard that can create a low-latency dedicated signal paths to users. Fully implemented 5G with frequency slicing can be used to satisfy those situations where WiFi doesn’t meet the need. It’s not hard to picture a future indoor network where a single router can satisfy some user needs using the WiFi standard with other uses satisfied using 5G – the router will choose the best standard to use for a given need.

To some degrees the cellular carriers have this same vision. They talk of 5G being used to take over IoT needs instead of WiFi. They talk about using 5G for low latency uses like augmented reality. But when comparing the history of the cellular networks and WiFi it’s clear that WiFi has been used far more creatively. There are thousands of vendors working in today’s limited WiFi spectrum that have developed a wide array of wireless services. Comparatively, the cellular carriers have been quite vanilla in their use of cellular networks to deliver voice and data.

I have no doubt that AT&T and Verizon have plans to offer million-dollar 5G solutions for smart factories, hospitals, airports and other busy wireless environments. But in doing so they will tap only a tiny fraction of the capability of 5G. If we want 5G to actually meet the high expectations that the industry has established, we ought to create a public swath of spectrum that can use 5G. The FCC could easily empower the use of the 6 GHz spectrum for both WiFi and 5G, and in doing so would unleash wireless entrepreneurs to come up with technologies that haven’t even been imagined.

The current vision of the cellular carriers is to somehow charge everybody a monthly subscription to use 5G – and there will be enough devices using the spectrum that most people will eventually give in and buy the subscription. However, the big carriers are not going to be particularly creative, and instead are likely to be very restrictive on how we use 5G.

The alternate vision is to set aside a decent slice of public spectrum for indoor use of 5G. The public will gain use of the spectrum by buying a 5G router, with no monthly subscription fee – because it’s using public spectrum. After all, 5G is a just standard, developed worldwide and is not the proprietary property of the big cellular companies. Entrepreneurs will jump on the opportunity to develop great uses for the spectrum and the 5G standard. Rather than being held captive by the limited vision of AT&T and Verizon we’d see huge number of devices using 5G creatively. This could truly unleash things like augmented reality and virtual presence. Specialty vendors would develop applications that make great strides in hospital health care. We’d finally see smart shopping holograms in stores.

The public probably doesn’t understand that the FCC has complete authority over how each swath of spectrum is used. Only the FCC can determine which spectrum can or cannot be used for WiFi, 5G and other standards. The choice ought to be an easy one. The FCC can let a handful of cellular companies decide how society will use 5G or they can unleash the creativity of thousands of developers to come up with a myriad of 5G applications. We know that creating public spectrum creates immense societal and economic good. If the FCC hadn’t set aside public spectrum for WiFi we’d all still have wires to all our home broadband devices and many of the things we now take for granted would never have come to pass.

5G and Home IoT

I’ve been asked a lot recently about the potential future of 5G – everybody in the industry wants to understand the potential threat from 5G. One of the biggest proposed uses for 5G is to connect IoT devices to the cloud. Today I’m going to look at what that might mean.

It’s clear that 5G cellular will be the choice for connecting to outdoor IoT sensors. Sensors for farm equipment in rural areas or for outdoor weather and traffic sensors in urban areas are going to most easily handled by 5G cellular since the technology will eventually be everywhere. 5G is particularly suited for serving IoT devices due to frequency slicing where just the right amount of bandwidth, large or small, can be allocated to each small outdoor sensor. 5G has another interesting feature that will allow it to poll sensors on a pre-set schedule rather than have the sensor constantly trying to constantly connect – which will reduce power consumption at the sensor.

It’s clear that the cellular carriers also have their eye on indoor IoT devices. It’s harder to say that 5G will win this battle because today almost all indoor devices are connected using WiFi.

There are a couple of different 5G applications that might work in the indoor environment. The cellular carriers are going to make a pitch to be the technology of choice to connect small inside devices. In my home I can get a good cellular signal everywhere except in the old underground basement. There is no question that cellular signal from outside the home could be used to connect to many of the smaller bandwidth applications within the home. I can’t see any technical reason that devices like my Amazon Echo or smart appliances couldn’t connect to 5G instead of WiFi.

But 5G cellular has a number of hurdles issues to overcome to break into this market. I’m always going to have a wired broadband connection to my home, and as long as that connection comes from somebody other than one of the big cellular carriers I’m not going to want to use 5G if that means paying for another monthly subscription to a cellular provider. I’d much rather have my inside devices connected to the current broadband connection. I also want all of my devices on the same network for easy management. I want to use one hub to control smart light switches or other devices and want everything on the same wireless network. That means I don’t want some devices on WiFi and others on cellular.

One of the sales pitches for 5G is that it will be able to easily accommodate large numbers of IoT connections. Looking into the future there might come a time when there are a hundred or more smart devices in the house. It’s not that hard to picture the Jetson’s house where window shades change automatically to collect or block sunlight, where music plays automatically when I enter a room, where my coffee is automatically ready for me when I get out of bed in the morning. These things can be done today with a lot of effort, but with enough smart devices in a home these functions will probably eventually become mainstream.

One of the limitations of WiFi today is that it degrades in a busy environment. A WiFi network pauses each time it gets a new request for a connection, which is the primary reason it’s so hard to keep a good connection in a busy hotel or convention center.

However, the next generation with WiFi 6 is already anticipating these needs in the home. WiFi can adopt the same frequency slicing used by 5G so that only a small portion of a channel can be used to connect to a given device. Events can be scheduled on WiFi so that the network only polls certain sensors only periodically. The WiFi network might only interact with the smart coffee pot or the smart window shades when something needs to be done, rather than maintaining a constantly open channel. It’s likely that the next iterations of WiFi will become nearly as good as 5G for these functions within a closed home environment.

There is an even better solution that is also being discussed. There’s no reason that indoor routers can’t be built that use both WiFi and 5G frequencies. While the cellular companies are gobbling up millimeter wave spectrum, as long as there is an unlicensed slice of spectrum set aside for public use it will be possible to deploy both WiFi on mid-range frequencies and 5G on millimeter wave frequencies at the same time. This would blend the benefits of both technologies. It might mean using WiFi to control the smart coffee pot and indoor 5G to connect to the smart TV.

Unfortunately for the cellular carriers, these duel-function routers won’t need them. The same companies that make WiFi routers today can make combination 5G / WiFi routers that work with the full range of unlicensed spectrum – meaning no revenue opportunity for the cellular carriers. When I look at all of the issues I have a hard time seeing 5G cellular becoming a preferred technology within the home.

 

The Fourth Industrial Revolution

There is a lot of talk around the world among academics and futurists that we have now entered into the beginnings of the fourth industrial revolution. The term industrial revolution is defined as a rapid change in the economy due to technology.

The first industrial revolution came from steam power that drove the creation of the first large factories to create textiles and other goods. The second industrial revolution is called the age of science and mass production and was powered by the simultaneous development of electricity and oil-powered combustion engines. The third industrial revolution was fairly recent and was the rise of digital technology and computers.

There are differing ideas of what the fourth industrial revolution means, but every prediction involves using big data and emerging technologies to transform manufacturing and the workplace. The fourth industrial revolution means mastering and integrating an array of new technologies including artificial intelligence, machine learning, robotics, IoT, nanotechnology, biotechnology, and quantum computing. Some technologists are already predicting that the shorthand description for this will be the age of robotics.

Each of these new technologies is in their infancy but all are progressing rapidly. Take the most esoteric technology on the list – quantum computing. As recently as three or four years ago this was mostly an academic concept and we now have first generation quantum computers. I can’t recall where I read it, but I remember a quote that said that if we think of the fourth industrial revolution in terms of a 1,000-day process that we are now only on day three.

The real power of the fourth industrial revolution will come from integrating the technologies. The technology that is the most advanced today is robotics, but robotics will change drastically when robots can process huge amounts of data quickly and can use AI and machine learning to learn and cope with the environment in real time. Robotics will be further enhanced in a factory or farm setting by integrating a wide array of sensors to provide feedback from the surrounding environment.

I’m writing about this because all of these technologies will require the real-time transfer of huge amounts of data. Futurists and academics who talk about the fourth industrial revolution seem to assume that the needed telecon technologies already exist – but they don’t exist today and need to be developed in conjunction with the other new technologies.

The first missing element to enable the other technologies are computer chips that can process huge amounts of data in real time. Current chip technology has a built-in choke point where data is queued and fed into and out of a chip for processing. Scientists are exploring a number of ways to move data faster. For example, light-based computing has the promise to move data at speeds up to 50 Gbps. But even that’s not fast enough and there is research being done using lasers to beam data directly into the chip processor – a process that might increase processing speeds 1,000 times over current chips.

The next missing communications element is a broadband technology that can move data fast enough to keep up with the faster chips. While fiber can be blazingly fast, a fiber is far too large to use at the chip level, and so data has to be converted at some point from fiber to some other transmission path.

The amount of data that will have to be passed in some future applications is immense. I’ve already seen academics bemoaning that millimeter wave radios are not fast enough, so 5G will not provide the solution. Earlier this year the first worldwide meeting was held to officially start collaborating on 6G technology using terabit wave spectrum. Transmissions at those super-high frequencies only stay coherent for a few feet, but these frequencies can carry huge amounts of data. It’s likely that 6G will play a big role in providing the bandwidth to the robots and other big data needs of the fourth industrial revolution. From the standpoint of the telecom industry, we’re no longer talking about last-mile and we are starting to address the last-foot!

An IoT Bill of Rights

Parks Associates recently released a report saying that the average broadband home now has 10 connected IoT devices. This includes desktops, laptops, tablets, and smartphones but also today includes a wide arrange of other devices such as smart TVs, smart speakers and a wide range of smart home devices.

I remember back in 2013 when IoT was first being discussed that there was a lot of talk about creating an IoT Bill of Rights that would define the ethics that ought to be required for any smart device placed into people’s homes. The discussion then was that the benefits of smart devices could be outweighed by the harm that could come from IoT manufacturers secretly spying on us and collecting and selling personal data. There was also a lot of concern that IoT devices could provide entry points for hackers into home networks. That discussion largely died, and here we are six years later introducing IoT devices into our homes without any policies or standards defining the rights of smart device users or the obligations of manufacturers to protect privacy.

There were numerous concerns voiced in 2013 that are still valid concerns today, and unfortunately, are issues that most buyers of smart devices don’t think about:

Software Updates. We are used to routinely getting security patches and other software updates for our laptops and smartphone to keep us safe. However, few smart devices come with any mechanism for updates and over time become more vulnerable to hacking. You’ve probably heard the story of the casino that got hacked through a connection into a smart water pump in a fish tank. Hackers used that unprotected connection to gain access to the casino network. There ought to be a requirement that IoT software and firmware is somehow updated, and that would include figuring out how to deal with cases where a device manufacturer goes out of business for some reason. Unfortunately, most of our smart devices are never updated after we buy them.

Full Disclosure. There have been well-publicized cases where the public found out that IoT devices were listening in without their knowledge. There were big headlines when it was revealed that Samsung TVs could both listen and see into the living room. Parents panicked when it was revealed that Cayla dolls were listening to kids and sending conversations to unspecified data center. It’s nearly impossible today to know if a smart device includes a hidden microphone or camera since those devices are so small. Sellers of IoT devices should be required to clearly disclose when devices can watch or listen to buyers. There also should be required to provide clear instructions on how to disable unwanted surveillance.

The Sharing and Sale of IoT Data. Sellers of IoT devices ought to be required before purchase to provide full disclosure on what they do with data they collect from users. And these disclosures should be prominent and not buried in a fine print legalese terms of service document.  I read late last year that as many as 1,500 data points are now gathered on the average connected adult every day. A lot of these comes from location data on our smartphones, but much of it also comes from IoT devices in the home. Manufacturers that violate privacy promises given to customers should be fined heavily.

Data Retention. IoT device manufacturers also ought to disclose how long they keep our data. It’s always an eye-opener to do a Google search on yourself and see things from fifteen and twenty years ago. At the early stage of search engines there was talk about having non-headline data purged after six months – that obviously never happened. We are just now seeing large companies figure out how to make sense out of mountains of data. It’s dismaying to think that years of old data about us, that was probably never used, can be sold to create personal profiles on each of us.

User Control of Devices. In a perfect world, the user would have complete control over the IoT devices in the home. We ought to be able to decide what data is and is not shared. We ought to be to disable surveillance. We ought to be able to encrypt and store data locally that we want to use for ourselves.

We’ve come a long way with IoT since 2013. Then there were a handful of IoT devices like the Nest smart thermostat. If you believe the Parks Associates numbers most of us have brought numerous smart devices into our homes. I’m personally going to bet the Parks number of ten devices is low because many of us own devices that are capable of connecting to our WiFi that we don’t even think about.

We’re allowing all of these devices in our homes without full disclosure from the manufacturers, with no mechanism for keeping device security up-to-date, and with no idea what data is collected on us and how it’s being used.

As consumers we ought to be able to trust that the manufactures of IoT devices are protecting our data and privacy. It’s more likely though that many IoT device makers are hoping to monetize our data, and there’s no part of the government that I’m aware of that is working on the side of the consumer for these issues. We need an IoT bill or rights a lot more now than we did in 2013.

Private 5G Networks

One of the emerging uses for 5G is to create private 5G cellular networks for large businesses. The best candidates for 5G technology are businesses that need to connect and control a lot of devices or those that need the low latency promised by the 5G standards. This might include businesses like robotized factories, chemical plants, busy shipping ports and airports.

5G has some advantages over other technologies like WiFi, 4G LTE and Ethernet that makes it ideal for communications rich environments. Cellular network can replace the costly and bulky hard-wired networks needed for Ethernet. It’s not practical to wire an Ethernet network to the hordes of tiny IoT sensors that are needed to operate a modern manufacturing factory. It’s also not practical to have a hard-wired network in a dynamic environment where equipment needs to be moved for various purposes.

5G holds a number of advantages over WiFi and 4G. Frequency slicing means that just the right amount of bandwidth can be delivered to every device in the factory, from the smallest sensor to devices that must upload or download large amounts of data. The 5G standard also allows for setting priorities by device so that mission critical devices always get priority over background devices. The low latency on 5G means that there can be real time coordination and feedback between devices when that’s needed for time-critical manufacturing devices. 5G also offers the ability to communicate simultaneously with a huge number of devices, something that is not practical or possible with WiFi or LTE.

Any discussion of IoT in the past has generally evoked discussion of factories with huge number of tiny sensors that monitor and control every aspect of the manufacturing process. While there have been big strides in developing robotized factories, that concept of a concentrated communications mesh to control the factories has not been possible until the 5G standard.

We are a few years away from having 5G networks that can deliver on all of the promised benefits of the standard. The big telecom manufacturers like Ericsson, Huawei, Qualcomm and Nokia along with numerous smaller companies are working on perfecting the technology and the devices that will support advanced IoT networks.

I read that an Audi plant in Germany is already experimenting with a private cellular network to control the robots that glue car components together. Its robot networks were hard-wired and were not providing fast enough feedback to the robots for the needed precision of the tasks. The company says it’s pleased with the performance so far. However, that test was not yet real 5G and any real use of 5G in factories is still a few years off as manufacturers perfect the wireless technology and perfect the sensor networks.

Probably the biggest challenge in the US will be finding the spectrum to make this work. In the US most of the spectrum that is best suited to operating a 5G factory are sold in huge geographic footprints and the spectrum will be owned by the typical large spectrum holders. Large factory owners might agree to lease spectrum from the large carriers, but they are not going to want those carriers to insert themselves into the design or operation of these complex networks.

In Europe there are already discussions at the various regulatory bodies on possibly setting aside spectrum for factories and other large private users. However, in this country to do so means opening the door to allowing the spectrum to be sold for smaller footprints – something the large wireless carriers would surely challenge. It would be somewhat ironic if the US takes the lead in developing 5G technology but then can’t make it work in factories due to our spectrum allocation policies.

eSim

One of the big goals for 5G is to be able to use the technology to communicate with numerous devices other than cellphones and tablets. In order for that to happen the cellular industry is going to have to adopt eSim technology, which means creating virtual sim cards inside of devices rather than requiring the physical sim card that is used today in cellphones.

Traditional sim cards don’t play well in the IoT world. Many IoT devices will be tiny sensors that will be low power and that will be too small to hold a sim card. But probably more importantly, for IoT to grow as envisioned by the cellular carriers, customers are going to need an easy way to change wireless carrier without having to change a physical sim.

Picture the future smart home that has numerous smart devices that tie into a cellular network to get to the cloud. It’s likely that most devices you buy will come with a pre-paid subscription to some specific carrier, but that eventually that carrier will want homeowners to pay a monthly fee to continue the monitoring. I picture the nightmare where I might have devices that are monitored by each of the major cellular carriers, and each is going to want me to pay a monitoring fee to keep my devices connected to the cloud.

The only way most homes are going to agree to this vision of the world will be if they can migrate all of their devices to the same cellular network. And that means a homeowner (or farmer or factory owner) is going to want the option of homing all of their devices to the carrier of their choice. That’s where eSim comes in – it’s a virtual sim card that can be redirected at will by the customer without having to deal with physical sim cards. I envision sim manager software that will register and track all of my sim devices and that could move them en masse to a new carrier at my command.

Today’s sim card technology is a dinosaur and I liken it to the analog settop boxes that cable companies forced customers to rent from them. Cellular carriers have been extremely slow in accepting sim card technology because they know that having to physically change a sim card is a barrier that will stop some customers from changing service to another carrier. The big cellular companies say they have been working on eSim technology, but it’s been dragging slowly forward for years.

There are already products using eSim. For example, the Samsung Gear S2 smartwatch was the first commercial device to include eSim in 2016. Samsung used the eSim technology because there wasn’t room for a sim card. However, this is not an eSim card like I described above. A customer can’t change the carrier on smart watch that comes preset by Samsung. However, early eSim devices show that the technology works.

There are carriers in the country that are pushing for eSim. For example, smaller and regional cellular carriers like C-Spire and Ting are pushing for the technology. Some of the big cable companies are pushing for the technology.

What’s needed to make eSim work is a set of universal standards that would allow a customer to aim the eSim at the carrier of their choice. And that is going to take the cooperation of the big cellular companies. There is enough pressure on them that this change is likely to start happening over the next few years. Hopefully the eSim technology will just become part of the expected background technology that makes devices work on cellular networks, and that customers in the future will be able to easily decide their cellular carrier without the hassle of dealing with every cellular device in their home. My guess is that teenagers a decade from now will never have ever heard of a sim card and it will be just another obsolete technology.

I’m Not a Fan of the 5G Hype

I read a lot of articles talking about what a huge deal 5G will be for the economy. The source of the excitement is the huge numbers being thrown around. For example, Qualcomm and IHS Technology issued a report in 2017 that estimated that 5G could enable $12 trillion in economic output around the world by 2035. That same report made the incredibly hyped claim that 5G could be as important to the world as the introduction of electricity. It’s no wonder that financial people are excited about the potential for 5G and why so many companies want to somehow grab a piece of this new market.

But I look around my own part of the world and I have a hard time seeing this kind of impact. I live in a town of 90,000 people. If we are like the average US market then roughly 85% of homes here already have landline broadband. Practically everybody here also has a cellphone, with the majority using smartphones.

People may read my blog and think I am not a fan of 5G – but that’s not true, I’m just not a fan of the hype. I would love for Verizon to offer me another choice of home broadband – I would consider changing to Verizon at the right price, as would many other households. My biggest question is how much value Verizon would create by introducing 5G in my town. Let’s say Verizon was to capture 30% of the broadband market here – that certainly creates an advantage to Verizon and gives them a significant new revenue stream. However, for every customer Verizon gains, Charter or AT&T would lose a customer, and overall that’s a zero-sum game. Further, if you assume that 5G competition would drive down prices a bit (it might not since oligopolies tend to not compete on price), then the overall spending on broadband in the town might actually decrease a bit.

The same thing would happen with cellular 5G. The big four cellular companies will have to spend a lot to upgrade all of the cell sites here to 5G. We’re a hilly and heavily wooded City and it will take a lot of small cell sites just to fill in the existing cellular holes. But unless they can find a way to charge more for 5G cellular broadband, then cellphone broadband is also a zero-sum game. Everybody in town already has a cellphone and a data plan, and the long-term trend is for cellular data prices to drop. I don’t see the new revenue stream from 5G cellular that will pay for the needed upgrades. Perhaps faster cellular data speeds will attract more people to drop landlines, but that’s also a zero-sum for the market as a whole.

There is one new aspect of 5G that the cellular carriers are counting on to create a new revenue stream. Once the 5G technology has been developed, the 5G standard calls for the ability of a cell site to communicate with as many as 100,000 devices – a huge increase over today’s capabilities. The cell carriers are clearly banking on IoT as the new revenue opportunity.

However, that kind of transition isn’t going to happen overnight. There are a whole lot of steps required before there is a huge cellular IoT revenue stream. First, the technology has to be developed that will handle that huge number of IoT devices. The 5G core standards were just developed last year and it will take years for vendors and labs to achieve the various goals for 5G. As those improvements are realized it will take a lot longer to introduce them into the cellular networks. We are just now finally seeing the deployment of 4G LTE – AT&T is just now deploying what they call 5G Evolution into any major markets, which is actually fully-compliant 4G LTE. The same slow roll-out will occur with 5G – we’ll advance through 4.1G, 4.2G, etc. until we see fully-compliant 5G network in a decade.

We’ll also have to wait for the rollout of IoT sensors that rely on a 5G network. It will be a bit of a chicken and egg situation because nobody will want to deploy devices that need 5G until 5G is active in a sufficient number of neighborhoods. But eventually this will come to pass – to a degree we can’t predict.

The question is if IoT usage is the trillion-dollar application. I certainly look forward to a time when I might have an embedded chip for 24/7 health monitoring using a 5G network – that’s a service that many people will be willing to pay for. But there is no guarantee that the revenue streams will materialize for IoT monitoring to the extent envisioned by AT&T and Verizon. I’ve done the math and the only way that the carriers can see a trillion-dollar benefits from IoT is if future homes have an IoT monitoring bill of the same magnitude as our current cellular or broadband bills – and that may never come to pass. I would love to see a concrete business plan that predicts where these huge new benefits come from, but I’ve seen nothing specific other than the big claims.

There is one aspect of the hype that I do buy. While I can’t see any way to equate the value of 5G to be as important as electricity, it is likely to share the same kind of introduction cycle that we saw with the electric grid. It took 25 years for electricity to spread to the majority of US cities and another 25 years until it was in most of rural America. New technologies today deploy faster than the deployment of electric grids – but this still can’t happen overnight and is at likely to be many years until rural America sees 5G cellular and a lot longer for 5G fixed broadband.

If you believe the hype in the press, we’ll start seeing big benefits from 5G in 2019 and 2020. I can promise you a blog at the end of next year that looks to see if any of this hype materialized – but I already suspect the answer will be no.

The Latest on Agricultural IoT

For years we’ve heard about how broadband was needed to support agriculture. However, for many years it was hard to find widespread use of farming technologies that need broadband. Finally, agricultural use of the Internet of Things is spreading rapidly – the research firm Alpha Brown estimates that there were over 250,000 US farmers using IoT technology at the end of 2017.

Alpha Brown says there are 1.1 million farms that could benefit from the technology, with broadband connectivity being a huge limiting factor today. Surveys show that more than half of farmers already say they are interested in deploying the technology. Berg Insight, another firm that tracks the industry says that there is the potential for as many as 27.4 million sensors being deployed by US agriculture by 2021.

Agricultural sensors mostly rely on the 802.15.4 standard, which defines the operation of low-rate wireless personal area networks (LR-WANs). Any given sensor doesn’t generate a huge amount of data, but the deployment of multitudes of sensors can require significant bandwidth.

Following are just a few of the agricultural IoT applications already being deployed.

Cattle Farmers and Ranchers. This is the most widespread use of IoT so far. There are numerous IoT applications being used:

  • Moocall is a device that monitors the delivery of calves. It’s a wireless sensor that is strapped to a pregnant cow and that provides an hour’s notice when a cow is ready to give birth.
  • eCow makes a bolus (IoT ‘pill’) that sits in a cow’s stomach for up to five months and which transmits constant readings for temperature and pH.
  • There are several vendors making sensors specific to dairy cows that measure a wide-range of biometric data including temperature, animal activity, GPS position, pulse and various biological metrics. Dairy farming has become scientific with farmers treating each cow individually to maximize milk output.

Crop Farming. There are numerous sensors not available for specific crops:

  • Bosch makes a sensor specific to asparagus farming. Asparagus yields depend upon the ground temperature and farmers use a two-sided foil (black on one side, white on the other) to add or deflect heat from the soil. The sensor measure temperature at various depth and notifies the farmer when it’s time to flip the foil.
  • Semios makes sensors that are specific to fruit orchards which measure leaf-wetness, soil moisture, pest presence, and frost monitoring that can be tailored to each specific orchard.
  • TracoVino makes similar sensors that are specifically to monitor grape vines.
  • There are numerous vendors making IoT sensors that measure characteristics of the soil, plants and environment to notify the need for irrigation.
  • There are several vendors providing systems to automate and monitor greenhouses.

Drones. Drones are being used for a number of different agricultural tasks:

  • DroneSeed provides drones for forestry management. The drones can identify trees with pest problems and then selectively spray only those trees. The drones also collect data on forest conditions – something that was never easily available in the past. They are several vendors using drones to plant new trees being used to reforest empty land and to renew mangrove swamps.
  • Water Conservation. Drones can provide real-time moisture monitoring that can allow farmers to save as much 90% of irrigation water by only watering where needed. This requires real-time collection of data tied into watering systems.
  • Chemical use. Drones are also reducing the amount of chemical being applied by monitoring plant health to direct fertilizer or insecticide only where needed.

 

The Future of AT&T and Verizon

The cellphone companies have done such a great job of getting everybody to purchase a smartphone that cellular service in the country is quickly turning into a commodity. And, as is typical with most commodity products, that means less brand loyalty from customers and lower market prices for the products.

We’ve recently seen the cellular market demonstrate the turn toward becoming a commodity. In the first quarter of this year the cellular companies had their worse performance since back when they began. Both AT&T and Verizon posted losses for post-paid customers for the quarter. T-Mobile added fewer customers than expected and Sprint continued to lose money.

This is a huge turnaround for an industry where the big two cellular companies were each making over $1 billion per month in profits. The change in the industry comes from two things. First, people are now shopping for lower prices and are ready to change carriers to get lower monthly bills. The trend for lower prices was started by T-Mobile to gain market share, but low prices are also being pushed by cellular resellers – being fed by the big carriers. The cellular industry is only going to get more competitive when the cable companies soon enter the market. That will provide enough big players to make cellular minutes a true commodity. The cable companies have said they will be offering low prices as part of packages aimed at making customers stickier and will put real price pressure on the other cellular providers.

But the downturn in the first quarter was almost entirely due to the rush by all of the carriers to sell ‘unlimited’ data plans – which, as I’ve noted in some earlier blogs, are really not unlimited. But these plans offer lower prices for data and are freeing consumers to be able to use their smartphones without the fear of big overage fees. Again, this move was started by T-Mobile, but it was also driven heavily by public demand. AT&T and Verizon recognized that if they didn’t offer this product set that they were going to start bleeding customers to T-Mobile.

It will be really interesting to watch what happens to AT&T and Verizon, who are now predominantly cellular companies that also happen to own networks. The vast majority of revenues for these companies comes from the cellular parts of their companies. When I looked at both of their annual reports last year I had a hard time finding evidence that these companies were even in the landline network business. Discussions of those business lines are buried deeply within the annual reports.

These companies obviously need to find new forms of revenues to stay strong. AT&T is tackling this for now by going in a big way after the Mexican market. But one only has to look down the road a few years to see that Mexico and any other cellular market will also trend towards commoditization.

Both companies have their eyes on the same potential growth plays:

  • Both are making the moves necessary to tackle the advertising business. They look at the huge revenues being made by Facebook and Google and realize that as ISPs they are sitting on customer data that could make them major players in the targeted marketing space. Ad revenues are the predominant revenue source at Google and if these companies can grab even a small slice of that business they will make a lot of money.
  • Both are also chasing content. AT&T’s bid for the purchase of Time Warner is still waiting for government approval. Verizon has made big moves with the purchases of AOL and Yahoo and is rumored to be looking at other opportunities.
  • Both companies have been telling stockholders that there are huge amounts of money to be made from the IoT. These companies want their cellular networks to be the default networks for collecting data from IoT devices. They certainly ought to win the business for things like smart cars, but there will be a real battle between cellular and WiFi/landline connections for most other IoT usage.
  • Both companies are making a lot of noise about 5G. They are mostly concentrating on high-speed wireless connections using millimeter wave spectrum that they hope will make them competitive with the cable companies in urban areas. But even that runs a risk because if we see true competition in urban areas then prices for urban broadband might also tumble. And that might start the process of making broadband into a commodity. On the cellular side it’s hard to think that 5G cellular won’t quickly become a commodity as well. Whoever introduces faster cellphone data speeds might get a bump upward for a few years, but the rest of the industry will certainly catch up to any technological innovations.

It’s hard to foresee any business line where AT&T and Verizon are going to get the same monopoly power that they held in the cellular space for the past few decades. Everything they might undertake is also going to be available to competitors, meaning they are unlikely to make the same kind of huge margins they have historically made with cellular. No doubt they are both going to be huge companies for many decades to come since they own the cellular networks and spectrum. But I don’t think we can expect them to be the cash cows they have been in the past.