IoT Wireless Connectivity’s Business Case

Let’s examine the key connecting technologies (Zigbee-like, Low power Wifi , Low Power Wide area, Cellular 3GPP) in detail from a value proposition point of view i.e. technology versus business proposition versus cost effectiveness.
Following three things need to consider:

• First, they look at Reliability. This determines if the technology can meet the performance requirements of the IoT application at hand.
  • Reliability in the wireless IoT setting generally translates to
    • resilience to interference,
    • data delivery guarantees,
    • low system outages, etc.
  • Second, they would look at Availability which determines if the same technology can be used without any further efforts in other places, in case business opportunities pop up somewhere else.
    • Availability generally translates to
      • guarantee of coverage,
      • ability to support mobility and roaming,
      • critical mass in rollout, etc
  • Finally, they would look at Viability, i.e. cost. It determines if there is a business case in the first instance, and that the business case remains viable in the near future.
    • Cost pertains to
      • Total Cost of Ownership which is the sum of CAPEX (Capital Expenditure) and OPEX (Operational Expenditure).

Following graph examined the Reliability and Availability of these connecting technologies. Further we will work out the viability of the four different connectivity options.

Image Courtesy : King’s College London
Viability of Connectivity options in an urban IoT (use case)
Now let’s look at a scenario where we find out a little more about the costs involved in each connectivity option.
Let’s assume to deploy advanced sensing IoT infrastructure in 1km²   area, which in turn will power interesting smart city applications.

Without specifying the details about the type of IoT infrastructure we are implementing, we need to place 10,000 sensors in your 1km² area. Compare the different connectivity solutions. What we are ultimately interested in is the total connectivity infrastructure cost to the city after 5 years of operations (approximately 1 legislation period) and after 10 years (approx. 2 legislation periods).

Below you can see the availability, reliability and the costs of the four connectivity options. Note that the calculations given are only approximate, but gives a good indication of the orders of magnitude.
Zigbee
Availability and reliability
Zigbee and variants perform rather poorly – reliability and availability are low.

Image Courtesy: ITU
Assumptions:

• 20 sensors (End Devices) are connected to 1 repeater (Router); and 10 repeaters to 1 gateway (Coordinator) (ie 200 sensors per gateway)
• A sensor radio costs $20; repeater costs $100; and gateway costs $500
• 2 people need to be hired full time to trouble shoot, at $50k per year each

CAPEX and OPEX :

• CAPEX: $200k sensor radios + $50k repeaters + $25k gateways = $275k one-off
• OPEX: 10% of CAPEX for repair, replacement, change of batteries, etc at approx. $27k p.a. + 2 full time staff at $100k p.a. = $127k per year

Project costs:

• 5 year project = $910k
• 10 year project = $1,545k

Wi-Fi
Availability and reliability
Low power Wi-Fi enjoys a very good availability since Wi-Fi is universally available these days, and reliability is acceptable.

Assumptions:

• 200 sensors directly connected to a gateway
• A sensor radio costs $30; and gateway costs $500
• 1 person needs to be hired full time to maintain network, at $50k per year

CAPEX (capital expenditure) and OPEX (operational expenditure):

• CAPEX: $300k sensor radios + $25k gateways = $325k one-off
• OPEX: 10% of CAPEX at $32k p.a. + 1 full time staff at $50k p.a. = $82k per year

Project costs:

• 5 year project = $735k
• 10 year project = $1,150k

Low power Wide Area Networks
Availability and reliability
The emerging low power wide area networks generally enjoy a good availability since they are easy to deploy and offer wide coverage. Reliability is also acceptable whilst critical applications cannot be supported.

Assumptions:

• All sensors connect directly to 3 base stations
• Sensor radio costs $10; gateway costs $5k
• 1 person needs to be hired full time to maintain network, at $50k per year

CAPEX (capital expenditure) and OPEX (operational expenditure):

• CAPEX: $100k sensor radios + $15k base stations = $115k one-off
• OPEX: 10% of CAPEX at $11k p.a. + 1 full time staff at $50k p.a. = $61k per year

Project costs:

• 5 year Project = $422k
• 10 year project = $730k

3GPP Cellular
Availability and reliability
Cellular enjoys a great availability and reliability, and is also able to serve really critical applications.

Image Courtesy: ITU
Assumptions:

• All sensors connect directly to operator’s infrastructure
• Sensor radio costs $50
• Using existing field support manpower

CAPEX (capital expenditure) and OPEX (operational expenditure):

• CAPEX: $500k sensor radios one-off
• OPEX: 20% of CAPEX (higher since includes data plans and more frequent change of batteries) at $100k per year

Project costs:

• 5 year Project = $750k
• 10 year project = $1,000k

In the above article we looked at four different connectivity solutions our sample city. Which solution do you think would work best for the city project? Remember that cheap component costs are important to a competitive IoT product, but what really matters is the total cost when the system becomes operational.

Use the comment area below to share which solution you think would work best for the city project.
Link  IoT Connectivity Project Cost Calculation
Note:The calculations given are only approximate, but gives a good indication of the orders of magnitude.
Concept (Courtesy) : King’s College London