Industry chain interprets new IoT policy: NB-IoT will take three years to replace 2G

After being included in the new infrastructure sector, the development of the Internet of Things industry has once again ushered in good news.

On May 7, the Ministry of Industry and Information Technology issued Document No. 25 of the Ministry of Industry and Information Technology's Communications [2020] "Notice on Deepening the Comprehensive Development of Mobile Internet of Things" (hereinafter referred to as the "Notice"), which for the first time clearly guided new IoT terminals to no longer use 2G/3G networks, and promoted the migration of existing 2G/3G IoT services to NB-IoT/4G (Cat.1)/5G networks.

The "Notice" proposes that by the end of 2020, the NB-IoT network will achieve universal coverage in the main urban areas of cities at or above the county level, and deep coverage in key areas; the number of mobile IoT connections will reach 1.2 billion; the price of NB-IoT modules will be pushed to converge with that of 2G modules, and new IoT terminals will be guided to migrate to NB-IoT and Cat.1; a number of NB-IoT application benchmark projects and NB-IoT application scenarios with a scale of millions of connections will be created.

In this regard, a person from a domestic IoT module company told Jiwei.com that although the government has prepared for the plan to promote the IoT this year, the previous news was that specific policies would not be released until June, but unexpectedly, Document No. 25 was released on May 7. "This may be to cooperate with the IoT construction content in the new infrastructure, speed up the supervision of operators to withdraw 2G and 3G networks, and the overall deployment of cellular IoT." The person analyzed.

Liu Yulin, deputy director of the Information and Communications Development Department of the Ministry of Industry and Information Technology, revealed at the 5G NB-IoT Billion Journey Online Industry Summit a few days ago that the number of mobile Internet of Things connections in the country has exceeded 1 billion, among which NB-IoT has exceeded 100 million after three years of rapid development.

The industry chain interprets the "new policy"

Industry insiders have different interpretations of the Ministry of Industry and Information Technology's announcement.

"I think the issuance of this document is closely tied to the rigid demand for 5G new infrastructure." Chen Zhenglei, marketing director of CoreWing Information Technology, told Jiwei.com that the Ministry of Industry and Information Technology chose this time to issue the document in order to consolidate the support for the implementation of 5G infrastructure.

In Chen Zhenglei's view, the new infrastructure is like a tree without grass without network support, because all kinds of applications rely on cellular wireless networks to be implemented. "Whether it is data collection or uploading data to the cloud for processing, multiple and dense collection systems are needed to effectively collect and monitor the status of the infrastructure of the entire physical world. Therefore, cellular communication networks with lower costs and lower power consumption are a better choice." Chen Zhenglei said.

In this context, Chen Zhenglei believes that the difference in this policy is that the previous relevant policies had stronger strategic significance, while this issuance of the document was based on more pragmatic needs.

Zhang Yi, CEO and chief analyst of iMedia Consulting, told Jiwei.com that this notice came "very timely" because the Internet of Things is one of the important application scenarios of 5G, but due to the impact of the epidemic, the deployment of 5G this year has actually been greatly disturbed. The issuance of this document not only means that the official has sent a clear signal to the Internet of Things market, but also sent a clear signal to the overall 5G construction in China this year.

On the other hand, many industry insiders have focused on the document's clear requirements for the withdrawal of 2G and 3G networks. After the Ministry of Industry and Information Technology issued the document, Xian Miao, vice president of Unisoc Industrial Internet of Things, immediately stated that China's cellular communication network is indeed facing a situation where four generations live under the same roof. Now that China's 5G has been officially commercialized, the conditions for the withdrawal of 2G/3G networks have matured, and the migration of networks in the field of the Internet of Things is an inevitable trend. In the future, NB-IoT, Cat.1 and 5G will become the three driving forces for the development of the Internet of Things.

According to Jiwei.com, as early as October last year, Wen Ku, spokesman for the Ministry of Industry and Information Technology and director of the Information and Communications Development Department, clearly pointed out that the withdrawal of 2G and 3G networks is an inevitable choice for the renewal of mobile communications, and the conditions for the withdrawal of 2G and 3G networks in China are now ripe. However, in just half a year, the withdrawal process is still progressing slowly.

In this regard, Yang Yueqi, vice president of Shanghai Yixin Communication, told Jiwei.com that it is undeniable that the current volume of 2G IoT products is still large. The main reasons are two-fold: First, IoT products are relatively long-tail. Many products were designed and deployed many years ago. For enterprise customers, replacing NB-IoT products requires re-development and investment of resources, which undoubtedly corresponds to higher costs; second, the current 2G network coverage is indeed better than NB-IoT. Because the number of 2G base stations is far higher than that of NB-IoT base stations, with more frequencies and more users.

"So it seems that 2G has greater coverage advantages in all aspects, but in fact, compared with the same number of base stations, 2G coverage is far inferior to NB-IoT." Yang Yueqi said that 2G is a technology from more than 20 years ago, and the spectrum utilization rate is very low. At the same time, Yang Yueqi pointed out that 2G used to be used for more voice traffic, but after being replaced by 4G, 2G has now transformed into a dedicated Internet of Things network, which overlaps with the NB-IoT Internet of Things function that operators are vigorously deploying. "This is a huge waste of resources and social resources." Yang Yueqi said.

Therefore, Yang Yueqi said that in the long run, 2G must be withdrawn from the network, and the document issued by the Ministry of Industry and Information Technology this time clarified this point in the form of an official document, which can also play a role in regulating the market.

In this regard, Yang Yueqi explained using water meters and gas meters as examples, saying that when companies buy cards and sign contracts from operators, they often sign one-time long-term contracts and pay fees for several years. However, this also means that they cannot withdraw from the network midway, otherwise the operator will definitely need to bear the breach of contract fees. The release of this policy can regulate this market behavior from the source, reduce the burden on operators, and accelerate the withdrawal of 2G and 3G networks.

In addition, Luo Wei, vice president of Neoway Technology, told Jiwei.com that compared with NB-IoT, the current price of Cat.1 is still very high, and operators and enterprises are relatively less enthusiastic about deploying it. The Ministry of Industry and Information Technology has clarified the status of Cat.1 in a formal document, which may greatly benefit the future domestic popularization of Cat.1.

Currently, the number of mobile IoT connections in China has exceeded 1 billion (Image source/Internet)

There are still three major challenges for NB-IoT implementation

Although the official document also made it clear that NB-IoT and Cat.1 will jointly replace 2G/3G IoT terminals, the industry believes that since the current domestic IoT market is still dominated by medium and low-speed connections, NB-IoT, which accounts for nearly 70%, is the main beneficiary of this policy, and its development will surely accelerate significantly this year.

However, even with the policy support, NB-IoT still faces many challenges in its successful implementation. According to industry insiders, the difficulties in its promotion mainly come from three aspects.

The first is cost and price. According to Chen Zhenglei's disclosure to Jiwei.com, the average market price of NB-IoT modules in China is about 25 yuan, which is still about 10 yuan higher than 2G modules. This has become the biggest obstacle to the popularization of NB-IoT devices in the market. Yang Yueqi also agreed with this: "Real market development not only depends on government promotion, but also respects market rules." Yang Yueqi told Jiwei.com that only when the price of NB-IoT modules drops to the same level as 2G or even lower, the market will be able to truly explode.

According to the results of Jiangsu Telecom's centralized procurement, the first winning bidder, CoreWing Information Technology, has taken the lead in reducing the price of NB-IoT module products to less than 15 yuan. According to Chen Zhenglei, with the increase in shipments in the future, this price will definitely have room for decline. At present, the company is committed to reducing the cost of chip solutions to enhance the market competitiveness of NB-IoT modules.

However, Yang Yueqi also reminded users that although NB-IoT module products with lower prices than 2G have appeared, this does not mean that the market can quickly complete the switch. This is because it involves a series of links such as new product promotion, redesign of downstream enterprises in the industrial chain, and upgrading and popularization. "It will not be as fast as mobile phone products, but a very slow process." Yang Yueqi estimated that it would take about three years to complete this switch.

Currently, the number of NB-IoT connections in China has exceeded 100 million. (Image source/Internet)