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Understanding the hidden costs of IoT (Part 2 of 5) – Network communication costs

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Network-Communications-Mobile-Main
Network-Communications-Mobile-Listing
April 21, 2016

by

Theresa Bui

In last week’s blog, I outlined the hidden OpEx costs that need to be factored into understanding the total cost of ownership in running an IoT business: network communication, technical support, administrative labor and the impact on revenue when you delay deploying new devices into the field. This week, I’ll dive deeper into network communication costs.

These are the costs associated with connecting devices to the internet. There are several different types of connects, with cellular and Wi-Fi being the most popular. Cellular enables companies to better control the IoT experience at the point of customer delivery (read more in this Fierce Wireless article), so I focus on cellular here.

In terms of ongoing costs for IoT initiatives, payments to your mobile operator (service provider) typically account for 33-50 percent of the overall OpEx spend for delivering IoT services. There are six factors that can impact this cost, and each have unique characteristics that are important to understand when building your business plan:

  • Monthly access fees: IoT service plans typically have a monthly access fee for connecting to the mobile network. This charge is often independent of the fees incurred for data usage.
  • Data plans: Fees for IoT deployments are typically either pay-per- use, where you pay per kilobyte, megabyte, or gigabyte, or per- device, where you typically subscribe to a fixed amount of data per month.
  • Overages: The costs incurred when you exceed usage within your current rate plans.
  • Roaming: If your devices will be on the move, consider whether they will be used outside their primary coverage area. If so, there are usually additional charges for roaming, which vary by country and zone.
  • Rounding: Some service providers limit the amount of time that a device can
 be connected to their network. A session may typically last four hours before a device is disconnected to free up resources for other devices on the network. When the four-hour session ends, usage
 is generally rounded up the nearest KB.
  • Taxes and surcharges: Some service providers are are governed by country- specific regulatory bodies, and are required to charge additional taxes and fees.

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So what can you do to minimize your network communication costs? It comes down to understanding how you’re using the network and tailoring a rate plan to suit. Here are three best practices for managing your network communications costs:

  1. Monitor your device data usage in real-time. This is just liking tracking your teenager’s phone use every month, so you’re not surprised if she streamed the entire Game of Throne series while away at camp. Although overall IoT applications use significantly less data per month than consumer phones or tablets, some IoT applications average as little as 25 kilobytes per month, while others can be as much as 1GB per month.
  2. Understand how and when your devices need to access the network. For example, if you’re in the agricultural industry, your bug-density tracking device may be dormant during the winter and your data plans should take that into account. For example, check to see if there is a cost for disconnecting or reconnecting services.
  3. Work with an experienced IoT service provider. At Cisco Jasper, we happen to know 27 mobile operator groups , representing more than 100 networks across five continents. When you choose cellular for your connectivity, partnering with an experienced IoT service provider is an easy key to success, as they can help you create data plans that meet your unique device and data usage needs. They have experience with unusual device lifecycles (like the agricultural example above). And if you’re tracking real-time data usage, the right service provider will work with you to align your usage with the most optimal rate plans.

In my next blog I’ll delve  into how much you should budget for administrative labor costs to support your devices in the field. Can’t wait? For specific numbers to understand the full cost of implementing IoT in different industries, download our white paper.

In the meantime, do you have any tips or best practices for keep network communications costs in check?

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