This interview is part of an ongoing series VDC conducts with IoT and embedded solution providers to share views on their company, products, and state of the market.
At Mobile World Congress in February 2018, the new company 1NCE announced a cellular-based NB-IoT communications service for the revolutionary price of only 10 euros for 10 years of service with up to 500MB of data transfer.
Alexander Bufalino has been Chief Sales Officer of 1NCE since January 2018. Prior to that, Alexander served as SVP Sales & Marketing at Kore Wireless, one of the leading managed service providers for IoT and M2M. From 2005 through 2016 Alexander worked for Telit Communications PLC, most recently as Chief Marketing Officer, and was responsible for building the brand into a global leader in M2M / IoT business. Prior to Telit, Alexander served as Sales Director for Southern Europe at Siemens AG from 1998, before joining EnOcean GmbH in 2002 as International Sales Director. Alexander is also a qualified banker and has participated in a business management training program.
VDC: Please describe the relationship between 1NCE and Deutsche Telekom, and to what extent if any DTAG is involved in decision-making at 1NCE.
Alexander: Deutsche Telekom AG (DTAG) is our cooperation and technology partner and our initial host network. As the leading operator in Europe and one of the strongest MNOs worldwide, DTAG enables us to guarantee high availability, transparency and security, and also to engage the market with optimized roaming agreements in all target markets.
1NCE will be operating as an independent company using connectivity services from DTAG at market-standard conditions.
VDC: What type of testing is currently underway for the service?
Alexander: 1NCE is currently carrying out final testing with selected partners and customers. Additional test phases before commercial launch are not currently planned. Individual 1NCE SIM cards can also be purchased for testing through our web shop as of August 2018. There is no minimum order quantity.
VDC: In which verticals do you anticipate the greatest initial uptake of 1NCE?
Alexander: 1NCE supports IoT and M2M use cases with rather low data volumes and a high number of connected devices. A large proportion of the applications in the Internet of Things is classified in this category of devices and networks. Examples are monitoring in smart agriculture, intelligent streetlighting and further applications in the smart city, tracking of logistical processes and elements, monitoring of building stock and materials during bridge and road construction, infrastructure monitoring and many more. In addition, we anticipate our offer will enable a whole range of completely new IoT use cases, previously considered too expensive, too complex or too unprofitable.
VDC: What sales and distribution channels will be offering 1NCE? For example, will SIMs be available off-the-shelf at retailers, or will they just be via professional B2B channels? Are you seeking partnerships directly with device makers, OEMs, carriers, etc.?
Alexander: 1NCE SIM cards can be ordered online from the 1NCE web shop (1nce.com) or via the 1NCE customer portal. The web shop will be available starting in August 2018. Furthermore, the 1NCE Lifetime Fee is uniquely suited to integrate "connectivity as a feature" with OEMs, IoT module and IoT gateway manufacturers as well as IoT platform providers. 1NCE will establish strong partnerships with those types of companies, enabling them to offer complete end-to-end solutions.
VDC: With the service term of 10 years, what portion of the devices using 1NCE do you anticipate will need more than 500MB of data over that time frame?
Alexander: 1NCE supports use cases with low data volumes ranging between 0.5 and 4 MB per month. As of today, there are de facto hardly any devices in this market which exceed data volumes of 50 MBs per year. And even if this would be the case in the future, we will have an extremely simple and inexpensive repurchasing mechanism. Once the 500 MB data volume included in the 1NCE Lifetime Fee has been used up the customer has the option to purchase another data volume of 500 MB as often as necessary.
VDC: Many industry participants consider NB-IoT to be best suited for basic IoT devices that are stationary, due to power consumption and data complexities that would be involved in roaming. Do you agree, or do you see NB-IoT as also applicable to moving and/or roaming devices?
Alexander: As Low Power Wide Area (LPWA) technology NB-IoT is optimally suitable for networking devices distributed over a wide area with low energy requirements and relatively low data transmission frequency. Thanks to its optimized range, NB-IoT can also transmit in areas in which network coverage was previously unavailable such as, for example, inside buildings or in underground garages and basements.
1NCE initially will be offering NB-IoT in the Deutsche Telekom footprint countries seamlessly, and step by step when GSMA has set the NB-IoT roaming standards, in more countries outside the DTAG footprint as roaming agreements take place.
Generally NB-IoT is not capable of cell handover but will disconnect from a cell and reconnect to the next cell in milliseconds when available. Therefore, it is suitable for use cases such as asset tracking within a country and between countries depending on roaming agreements in place.
At the same time our SIM card is not dependent on the NB-IoT network standard, instead it supports all the relevant mobile communications technologies. In places where NB-IoT coverage is not yet available we will be able to provide seamless connectivity using 2G and 3G networks.
VDC: Do you anticipate that 1NCE will offer LTE-M (Cat-M1) in the future, for devices that needs greater bandwidth?
Alexander: Yes, we will be offering LTE Cat-M if and where roaming will be available.
VDC: When 1NCE NB-IoT service becomes available beyond Europe, do you expect it will be priced equivalently to 10 euros for 10 years, or will the price need to be higher to accommodate carriers other than Deutsche Telekom?
Alexander: 1NCE will offer at the same rates in other geographies too.
VDC: Besides pricing, what differentiates 1NCE from other IoT communications service providers?
Alexander: 1NCE is an IoT Native Company. This means that we are set up structurally, technologically and personally for the Internet of Things right from the start. We do not have any legacy systems, we do not have expensive personnel and administration structures, and we don't have to adapt our low bandwidth business to the systems and teams designed for human communication and high data rates. Our end customers are the things. They do not need hotlines or personal service. For this reason, our customer support does not need to follow cost-intensive B2C logic. We are highly automated and perfectly set up for the low bandwidth business. And finally, 1NCE has an ecosystem which nowadays includes not just our strategic partner, Deutsche Telekom, but also major players in the IoT market, like IoT module manufacturers, IoT gateway manufacturers and IoT platform providers. This already allows us to develop optimum solutions in every respect. We will expand this ecosystem in a targeted and focused manner.
VDC: Do you anticipate that 1NCE will eventually expand to offer additional services such as an IoT cloud platform, device management, or data analytics?
Alexander: At this moment we do not plan this.
VDC: Any other comments you’d like add to help our readers better understand 1NCE?
Alexander: 1NCE is the world’s 1st IoT native carrier. Our mission is to energize IoT and M2M through innovation and simplicity. We believe many businesses will benefit from it and billions of connections analysts predict years from now can come to life.
By virtue of Deutsche Telekom’s network infrastructure, 1NCE has the rare opportunity to leverage the resources of a major telecommunications provider, while simultaneously behaving as an innovative startup.
At the equivalent of a euro per year of service for many IoT devices, 1NCE’s business model breaks through the bottom end of our prior expectations for the price range of IoT wireless communications services in the near future. As such, the company effectively will become a real-world test case for price elasticity of such services, finding out whether or not low connectivity service price will enable entirely new classes of devices to take advantage of LPWANs. VDC now suspects that for the time being, other IoT wireless communications services vendors will wait and see how the market takes to 1NCE once its service goes live in August, before those competitors might react to 1NCE’s aggressive pricing.
Although 1NCE’s service will be extremely enticing for many device maker (and users), it remains to be seen what portion of engineers and product managers at OEMs will be willing to choose 1NCE’s pay-by-the-data-volume pricing, given the need for many IoT devices to be able receive periodic firmware updates that may consume significant data. This aspect could limit adoption to devices running MCUs with relatively low memory and firmware size requirements, as opposed to devices just with low data transmission requirements. But even if that’s the case, there will be many billions of such devices coming soon to the IoT.
[Note that VDC previously awarded 1NCE our Embeddy Award for Best of Show at the 2018 Mobile World Congress trade show.]