Two companies are buying licensed 800- to 900-MHz spectrum to create new wide-area networks for the Internet of things.
Move over, LoRa and Narrowband IoT (NB-IoT); two new competitors see a space that you are missing. Iota Communications and Anterix are buying spectrum in the 800- to 900-MHz bands to create new licensed networks for the Internet of things.
The two rivals are leveraging work at the U.S. Federal Communications Commission to reorganize part of the sub-gigahertz spectrum. Both Iota, focused on building automation, and Anterix, targeting utilities, have significant spectrum holdings already and financing in progress, but neither has networks up and running yet.
It’s early days for both companies, which are still defining their service-level products. For that reason, they have not come on the radar for analysts who cover the low-power, wide-area networks (LPWANs) that LoRa and NB-IoT currently dominate and where the HaLow version of Wi-Fi is debuting this year.
LoRa uses unlicensed 800- to 900-MHz bands, which is inexpensive but subject to interference and requires users to set up their own networks. Narrowband-IoT, a low-cost version of LTE, typically uses higher frequencies with less range and penetration than the ISM bands.
“There’s an untapped market [for robust 800- to 900-MHz IoT network services that] we can address,” said Terrence DeFranco, chief executive and co-founder of Iota.
Iota got its start in 2013 as the Solbright Group, Inc., specifying gateways and developing IoT applications for end users. It worked with partners Tatung, a Taiwan ODM that builds gateways and other products, and STMicroelectronics, which was trying to commercialize the powerline networking protocol that it acquired with startup Arkados.
“We leveraged cellular, Wi-Fi, Bluetooth, Zigbee — whatever would work — but we were turned away from some jobs because we lacked connectivity,” said DeFranco.
For example, an effort to automate operations in New York’s Chrysler Building “tried different cellular carriers to get backhaul out of building, but it got costly and our app was not feasible,” he said. “Cellular is a mainstream technology for IoT, and it works well for many apps, but it’s still power-hungry and delivers broadband links that a lot of apps don’t need.”
Seeking a solution, Solbright purchased in August LPWAN provider M2M Spectrum, which owned some 800-MHz bands on which it ran a variant of LoRa based on the Symphony protocol from Link Labs. “They were a network in development looking for apps, and we had apps looking for connectivity,” said DeFranco.
Seeing an opportunity in the FCC process to acquire enough spectrum for a U.S. national network, Solbright renamed itself Iota to mark its new mission. “We believe a licensed 800-MHz network would be a huge differentiator,” he said.
Iota, Anterix getting licensed IoT networks up
The FCC aims to license up to 16 channels in and around 900 MHz in each of about 177 geographic areas. Companies who buy it are required to set up two-way nets on the channels.
Iota already owns enough spectrum to cover a little more than half of the U.S. The latest FCC proceedings should give it enough bands to cover about 90% of the country. The FCC has yet to create a process for spectrum along the northern and southern U.S. borders.
Iota has 221 sites constructed or leased so far and is outfitting them with $2,000 base stations the size of a shoebox that can cover a 3- to 5-mile radius. Smart buildings that it automates will also become broadcast stations, filling in metro areas. “We are marrying the proliferation of our network with sales of our apps,” said DeFranco.
Iota designed its own spec for 800-MHz gateways using the LoRa transceiver from Semtech and made by Tatung and Taiwan’s Elitegroup. The hardware should be installed by the end of the year with the network coming online in early 2020.
Iota’s customers are building managers who want to automate energy operations for greater efficiency. Within 90 days, it aims to release a software-based service with analytics running over its network and hosted in the cloud. “We’re a Fitbit for building energy efficiency, with a WebMD-like knowledge base,” DeFranco said.
Once it gains traction in building automation, Iota will start licensing other service providers to use its network for other applications. “Many other IoT apps can be powered by a network like ours, so we will sell an app platform with connectivity,” he said.
Terrence DeFranco (Source: Iota Communications)
Iota is conducting field trials to determine the data rates, ranges, and other details of its network, specs that it aims to publish in the fall. It expects to be able to support hundreds of thousands of devices per channel in a given area.
The company estimates that it will cost as much as $50 million to build out a national network, plus even higher costs for additional spectrum. So far, it has raised $85 million and expects to raise another $60 million in two tranches, part from a consortium of individual investors that it has created and part from public markets.
For its part, Anterix was founded by two executives, the former chairman and the former CEO of Nextel, whose 800- to 900-MHz spectrum was returned to the FCC and is the subject of the new proceedings. The company recently raised $100 million and has a large private-equity backer, largely on the founders’ success building Nextel and selling it to Sprint.
Unlike Iota, Anterix plans to leverage the cellular technology that was the heritage of its founders. It describes its licensed network as private LTE with a roadmap to 5G.
Anterix bought 900-MHz spectrum and equipment from Sprint, making it the largest 900-MHz holder in the U.S. with coverage that includes Alaska, Hawaii, and Puerto Rico. It holds, “on average, approximately 60% of the 399 channels in the 900-MHz band in the top 20 metropolitan market areas in the United States, which covers approximately 70% of the U.S. population,” according to its latest annual report.
In February 2019, Anterix created a trade group to market IoT networks to power utilities, its target market. The Utility Broadband Alliance has about 16 members so far, including Ameren, Cisco, Ericsson, General Electric, Motorola Solutions, Multi-Tech Systems, and Sierra Wireless.
Anterix has already leased some of its spectrum, including one swath to Motorola, which paid $7.5 million for it in 2014. Motorola also invested $10 million in the company.
It’s not clear exactly when Anterix will launch its network or what its products will be. The company declined a request for an interview.
So far, Anterix has only about $6 million a year in revenues. It has “incurred net losses each year since [its] inception, including net losses of $42.0 million, $24.6 million, and $39.2 million in the fiscal years ended March 31, 2019, 2018 and 2017, respectively,” its annual report said.
“We’re in the same church, different pew,” said DeFranco of Iota. “We’ve had some discussions. A merger would make sense, but we haven’t mentioned it.”