1NCE burst onto the IoT connectivity scene at this year’s Mobile World Congress with a compelling flat rate offer of up to 500MB for ten years for €10. George Malim looks behind the headline to understand how the company will deliver on this offer
At first glance, a simple, flat rate, long term connectivity offering is exactly what the Internet of Things (IoT) has been waiting for. With device deployments set to be in the tens of thousands per application and many services only requiring relatively small throughput from connected sensors communicating in small packet sizes at sporadic intervals, it’s clear that a streamlined approach to IoT connections is required.
The attraction of the 1NCE offer therefore is in the straightforward, one-time deal that takes care of the connectivity for a device for its estimated lifespan – or at least for the first decade. This is such a new concept within the IoT industry, which is familiar with being billed per megabit consumed on a monthly basis, that questions about the long term viability of this type of offering spread quickly across Mobile World Congress. However, 1NCE feels it can address such skepticism thanks to its partnership with Europe’s leading telco Deutsche Telekom.
For Alex Bufalino, the chief sales officer of 1NCE, the controversy is no surprise. The offering is disruptive so disruption is inevitable. “It’s a fair question that people are asking how we are going to do this successfully,” he acknowledges. “Traditional consumer focused mobile network operators (MNOs) struggle to deliver low bandwidth applications as their customer facing processes are average revenue per user (ARPU) and volume driven, thus low bandwidth does not scale for them. 1NCE on the other hand is a company that we have created to enable exactly that offering through its very lean organisation.”
“For a traditional MNO it’s obvious that if you can only charge 50-70 cents per connection per month and on top of that you provide the SIM card and the device agent, the business case is not hugely attractive,” he adds. “Therefore, it made sense for Deutsche Telekom to partner with a lean and dedicated IoT carrier like us. 1NCE is designed in a very smart manner as a cloud-based mobile virtual network operator (MVNO) to enable large numbers of customer connections while keeping costs per unit as low as possible. This philosophy spans across our entire organisation from having an optimised headcount to minimising efforts by providing all main services via an online channel.”
However, it’s not possible to save your way to success, profit must also be generated.
“It’s great that Deutsche Telekom is our technical partner and provides us with a tier one host network, but we’ve developed a core network that is equipped with the latest technologies which enable us to run this at the minimal cost,” he explains.
A final element of 1NCE’s business case is the calculation of the tariff itself. “It’s not as simple as just taking a wholesale price and charging accordingly via a lifetime fee,” he says. “We have engineered each piece from a target cost perspective to ensure profitability. On top of this we have lowered the cost of customer services and customer delivery dramatically so that we can generate a sufficient margin with this unique pricing model without compromising on our customers experience.”
“We believe that a tier one quality, IoT-grade, low frills offering is the enablement element desperately needed to energise existing IoT use cases and to provide opportunities for further industry growth,” emphasises Bufalino. “1NCE will enable many of those use cases that previously have been unviable and that is probably one of the many reasons why Deutsche Telekom has taken this bold decision to enable IoT services with low bandwidth connectivity in cooperation with 1NCE.”
Bufalino is keen to distance 1NCE from other MVNOs. “We’re IoT natives and that doesn’t mean we’ll start from the perspective of a consumer centric technology and reshape this to accommodate the business-to-business IoT market,” he says. “We started with three key ideas: to make our offer simple, to make it plug and play and to design it for massive growth.”
Industry insiders have noticed the 1NCE proposition with VDC Research awarding 1NCE its Best of Show, Embeddy Award at this year’s Mobile World Congress. The award does not imply that 1NCE was the best IoT product or service on offer at the show, but rather that it was the most notable and had the potential to have the greatest market impact, VDC Research said.
Bufalino points out that 1NCE’s price per MB is 2 cents – including all the costs such as SIMs, a communications management platform and an enterprise access via VPN (OpenVPN) – but the value doesn’t stop there. “If your volume is already 80% spent, you are able to purchase a top-up of a further 500 MB,” explains Bufalino. ‘This can be done repeatedly once 80% consumption of the current data plan has been reached.”
It appears the pricing is sustainable, the service can be extended to vast volumes of devices and serve data requirements of far more than the €10 for 500MB for ten years headline but surely it faces limitations because it will only offer low bandwidth cellular connections? Not so, says Bufalino:
“We’ve saved the best for last,” he confirms. “Narrowband IoT (NB-IoT) is coming and offers great advantages, although there is no pan-European roaming so far. However, clients want to have the security that when they design their services today, they can go to NB-IoT when they want to in the near future.”
“Clients therefore want and should procure multimode hardware for NB-IoT and 2G/3G cellular,” he adds. “Until the appearance of 1NCE, there was no such connectivity product available. Customers needed one SIM card for NB-IoT with a contract and support services and in addition had to deploy 2G and 3G separate. A combination has never been available, but we have brought these 2 technologies together with our service platform and our card to seamlessly support NB-IoT as well as 2G and 3G. This is the ultimate innovation that 1NCE offers.”