LTE-M vs Private LoRaWAN® Connectivity Cost – Which Is Lower?

With more IoT deployments taking place around the globe, the question of what LPWAN technology is lower-cost and better fitting for outdoor Smart City, Utility, Asset Tracking, or similar use cases is common (that, at times, leads to numerous marketing debates and claims).

There is no single answer as it depends on several factors:

• total service areas;
• number of IoT devices;
• availability of cellular LTE-M/NB-IoT coverage;
• rate of cellular LTE-M/NB-IoT coverage;
• private LoRaWAN® network deployment;
• operating cost.

However, the answer is simple, and anyone can derive it from a few simple calculations to make a comparison between the two IoT technologies and business models, specifically if one should buy cellular IoT connectivity or deploy a private LoRaWAN® network to address its needs.

The below example demonstrates how one can derive such costs in less than 1 hour with ~80% accuracy or higher to understand and analyze them and make the right decisions and trade-offs.

First, one needs to:

• Generate a LoRaWAN® network cost calculator as per Table 2 at the end of this article (or make a request at info@tektelic.com).
• Enter applicable local costs (country- or region-specific or as negotiated).
• Derive the LoRaWAN® network Year One Deployment Cost and Ongoing Yearly Operating and Maintenance Cost.

Next, one should calculate the Total Network Cost over 5 years (or 10 years, but there will be little difference as the Ongoing Operating and Maintenance Costs define the overall Total Network Cost). The Total Network Cost should be derived over its amortization period (simple straight-line amortization) to get the effective Yearly Network Cost to deploy, operate, and maintain the private LoRaWAN® network.

The final step is to use Excel to generate a Yearly Network Cost table under data by specifying the total number of devices in a row and city radius or size in a column as provided in Table 1 and compare or, from the derived LoRaWAN® Yearly Network Cost, subtract the LTE-M connectivity Cost per Year for the same number of devices and city size. For simplicity, it was assumed the LTE-M connectivity cost is $1 per device per month or $12 per device per year, regardless of the volume.

The results are as expected and common sense: for a network with significantly low density (a small number of IoT devices), the cellular LTE-M connectivity cost is lower, assuming it is available in the areas and provided by local operators, than deploying and operating a private LoRaWAN® network amortized over its useful life. However, as the number of IoT devices increases, the LoRaWAN® network cost or the LoRaWAN® connectivity cost gets much lower than the cellular LTE-M connectivity cost.

Table 1: Private LoRaWAN® Versus LTE-M Connectivity Cost Comparison

As one can see from Table 1 above, between 10,000 to 100,000 IoT devices, the LoRaWAN® connectivity Cost per Device is reduced considerably and provides substantial savings per year from 100s of thousands to millions of dollars for smaller-sized cities.

The provided calculations use realistic and conservative LoRaWAN® costs to emphasize the example and account for other costs and the fact that many Smart City, Utility, and Asset Tracking companies procure LoRaWAN® connectivity from LoRaWAN® operators that include other services like IoT device onboarding, management, roaming, and housing fees.

Table 2: Private LoRaWAN® Network Deployment and Operating Costs Calculation

This is a rather simple but powerful tool to help companies and individuals:

• analyze and optimize LPWAN network deployment and operating costs;
• negotiate with cellular or LPWAN operators;
• most importantly, make informed and the right decisions.

If you have comments, questions, or suggestions, feel free to reach out to info@tektelic.com, and one of our people will address them.