Author: Qin Peng
Published by the IoT Think Tank
Please cite the source and origin
Introduction
Currently, NB can only serve as a supplementary means to meet specific application scenarios. There is no strong reason to achieve a nationwide NB network with no dead zones.
1. The Prosperity of NB
In the eyes of many, NB-IoT is synonymous with the Internet of Things (IoT).
People often ask me: Have you developed IoT modules? I would be momentarily confused before realizing they were referring to NB-IoT modules.
This often makes me feel ashamed, as if I am lagging behind the times: my product line has yet to release an NB module.
Later, various tenders flooded in, the universe’s first tender, million-dollar tenders, three-million-dollar tenders… Each tender would feature astonishingly low prices, causing a stir among industry observers.
It seems that the NB industry is developing vigorously, with a promising outlook.
2. The Tender Maze
The telecom industry’s push for NB services is very rapid, with Unicom and Mobile also quickly following suit to tender for NB modules. With operators driving the demand, how could it not be booming?
However, in the quiet of the night, a question often pops up to disturb me: Why do operators only tender for modules and not for products???
3. A Review of the TD Industry
This reminds me of TD-SCDMA from a few years ago.
The Ministry of Industry and Information Technology assigned the task of vigorously developing TD-SCDMA to the young and strong China Mobile.
After a brief struggle, China Mobile realized that this glorious yet arduous task was indeed their responsibility, and thus resolutely began to build base stations nationwide, also lowering terminal costs through tenders.
However, China Mobile never tendered for TD modules.
Through the tendering of wireless fixed-line services, China Mobile quickly accumulated over ten million online terminal numbers in the first year, and through successive rounds of mobile phone tenders, also brought the TD mobile phone industry to a brief peak.
In just two years, the variety of TD terminals flourished, including wireless fixed lines, feature phones, smartphones, data cards, and MiFi, with the entire industry chain’s shipment volume exceeding hundreds of millions.
At that time, Yang Hua, the secretary-general of the TD Alliance, was undoubtedly the industry’s opinion leader, warmly welcomed wherever he went.
However, all of this stemmed from China Mobile’s strong execution capability.
When the communication experience of terminals was frequently criticized by users, compared to the stable communication performance of neighboring operators’ EVDO and WCDMA, even a strong player like China Mobile had to reluctantly downplay TD and hasten the deployment of 4G, gradually reversing the decline with 4G.
4. NB Usage Scenarios
Returning to today, we see that in the seemingly prosperous NB industry environment, why are there tenders only for NB modules and not for terminals?
After operators purchase NB modules, who do they sell them to? Only when the end customers pay can this massive tender for modules truly materialize, allowing suppliers to receive payment.
Where are the end customers? Technology without application scenarios is just a gimmick.
We first need to understand the recent market demand for several NB usage scenarios.
First, Gas Meters
Each year, about 40 million new gas meters are added, with 10% incorporating communication modules, referred to as IoT meters.
Half of these meters use GPRS, 40% use NB, and 10% use Lora and other short-range metering solutions.
Gas meters are one of the main drivers for recent NB module shipments.
Second, Water Meters
Each year, about 20 million new water meters are added. Traditional water meters cost several dozen yuan, while water meters with added modules cost around 200 yuan, with the government providing corresponding subsidies for the increased costs of the modules.
Thus, about 10% to 20% of these will use modules.
Water meters are another major driver for recent NB module shipments.
Third, Smoke Detectors
The market demand for smoke detectors is enormous, but most market channels rely on mandatory installation by fire safety regulations to ensure public safety.
Traditional smoke detectors cost only around ten yuan, but adding a module increases the hardware cost, backend operation costs, and ten years of data fees, raising the cost by at least over a hundred yuan, which can only be passed on to small businesses, enterprises, and developers.
In the current harmonious environment, any complaints will trigger anxiety in law enforcement, and any incidents will escalate online, making it unlikely for fire departments to push for IoT smoke detectors.
The possibility of an explosion in the NB smoke detector market in 2019 is very low, primarily due to the lack of strong policy incentives.
Fourth, Monitoring of Manhole Covers
Since most manhole covers are made of cast iron and weigh around 30 kilograms each, stealing one can fetch a good price, leading to countless losses and casualties each year in China due to stolen manhole covers.
If communication modules are added to manhole covers to monitor for anomalies, it could significantly reduce such thefts.
However, monitoring manhole covers requires large-capacity lithium batteries to ensure the monitoring equipment works for at least five years. Thus, the costs for the circuit, battery, installation, and backend operations also exceed a hundred yuan.This budget must come from the municipal budget of the government, and apart from first-tier cities and developed coastal cities, other regions lack the financial capability.
More critically, replacing old cast iron manhole covers with quartz sand and concrete covers is cheaper and can eliminate theft risks, as stealing such covers would result in a loss.
Fifth, Monitoring of Trash Bins
Due to poor execution of waste classification in China, some have proposed using NB to monitor the classification execution of trash bins. Regardless of whether this technology can be implemented, the funding for the intelligent transformation of trash bins is a significant issue.
Thus, there are currently no implemented projects for NB monitoring of trash bins, and this industry can be ignored for now.
Sixth, Tree Monitoring
Some are indeed working on this, but who will pay for it? I don’t know.
Seventh, GPS Locators with NB Communication
While it seems unlikely, the tender for an electric bicycle locator with NB in Henan has indeed shaken the entire industry, reportedly with government funding in place…
However, government funding is essentially taxpayer money, which is quite concerning! It remains uncertain how many devices will actually be installed in bicycles and what the user experience will be like after installation. Only those who use it will know.
In summary, remote meter reading for water and gas meters remains the mainstay for NB shipments.
5. Can Government Projects Support the NB Industry?
Most NB projects originate from government-initiated tenders or government subsidies to drive project implementation. This approach is suitable for guiding the initial development of a new technology.
However, projects funded by government finances are merely pilot attempts, as the funding comes from taxes paid by various enterprises and individuals, so the budget is ultimately limited.
The funds invested by the government require a reasonable economic return or social benefits. Therefore, if these guiding funds cannot effectively stimulate more genuine demand, further funding is unlikely to continue.
Real demand needs to have both social benefits and economic benefits to attract sustainable investment from all parties involved.
6. The Internet of Things Relies on the Power of the People
The Internet of Things cannot be considered an industry; the term IoT (Internet of Things) actually emerged rather mysteriously. To this day, it is unclear who invented this term, but it became popular because it sounds catchy. It is similar to O2O, which inexplicably became wildly popular despite lacking substantial meaning.
The Internet of Things essentially encompasses all industries except for mobile phones.
Networking can be considered a rigid demand for any object; only through networking can information be synchronized, and communication efficiency can be improved.
The bandwidth of networking between objects, between people, and between people and objects determines the speed of evolution for the entire world.
Therefore, there is no need to consider how large the market value of the Internet of Things will be in the future, as there may be no other industry apart from it.
However, the Internet of Things is also so elusive.
Relying solely on a single force, such as government promotion, is like a feather under the wheels of history, unable to produce any substantial impact.
What truly drives the Internet of Things industry is the vast masses of people; only with the participation of a large population can the applications in a field be promoted to the extreme.
Just like the rapidly developing scan-to-pay industry in the past two years, there has been no trace of government promotion, but that hasn’t prevented a massive number of people from participating in the industry wave, creating a unique mobile payment phenomenon in China in just two to three years.
Regardless of whether NB possesses technical advantages, due to its ultra-narrowband communication properties, it can only rely on mass participation in this industry to form a commercial closed loop and establish a long-lasting industrial chain.
At least for now, the number of participants in NB is still not large enough; the vast majority are still in a wait-and-see state, or more specifically, are in a speculative mindset to earn subsidies.
7. What is the Core of User Experience?
Good products naturally attract traffic. While every product has its flaws, they share a commonality: poor user experience.
The user experience of IoT products heavily relies on network quality and coverage.
Currently, in China, the order of network quality and coverage, according to a non-authoritative ranking from best to worst, is: Telecom 4G, Mobile 2G, Mobile 4G, Unicom 3G, Unicom 4G, Telecom NB, Mobile NB, Unicom NB.
Perhaps in six months, this order will change, with Mobile 4G’s ranking continuing to rise.
As for the ranking of NB networks, it remains unclear where operators will place it.
Good networks lead to good device experiences, which is the premise and foundation for user votes.
8. The Reasonable Positioning of NB
Based on the above analysis, it is not difficult to draw the conclusion: NB can currently only serve as a supplementary means to meet specific application scenarios.
To achieve a nationwide NB network with no dead zones, there is currently no strong reason to pursue this goal.
As one of the practitioners in the NB industry chain, preventing risks and firmly grasping the local opportunities brought by NB is the core strategic task.
9. Do Not Expect NB to Support the IoT Landscape
Where do device manufacturers go from here?
The answer is quite simple: leaning against a big tree is always the safest choice.
Only with overwhelming strength can one have the power to be chosen.
Clearly, NB coverage does not possess such strength.
Currently, the annual data fee for NB devices does not exceed 5 yuan. The revenue for operators relying on the NB network is merely this meager data fee.
In 2018, the number of devices will not exceed 10 million;
In 2019, the number of devices will not exceed 100 million.
Do not ask why; this number will not be questioned by anyone.
Thus, the total revenue for the three operators from the NB network in 2019 will not exceed 500 million yuan.
Building a new NB network will cost no less than 50 billion yuan. Although the hardware investment for building the NB network is not large, China is simply too vast; network optimization, network planning, business training, and billing systems combined will certainly require more than 50 billion.
With annual revenue of less than 500 million but an investment of 50 billion, operators are businesses, not charitable organizations.
Therefore, a network without revenue achieving perfect coverage is akin to a pipe dream.
NB,may truly be unable to NB.
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