NTT DoCoMo in NB-IoT Network Closure Surprise

In an industry first, Japan’s NTT DoCoMo has “terminated” its Narrowband Internet of Things (NB-IoT) network. In a press release dated March 30, 2020, NTT confirmed that its NB-IoT network had been operational since April 25, 2019, i.e., for less than one year, but that it would “stop providing this communication system in order to concentrate management resources.” The literal Japanese to English translation loses some context, but NTT’s short press release makes it clear the carrier has greater financial priorities and will keep its Cat.1 and LTE-M networks operational. The formal date of “discontinuation” of NTT’s NB-IoT service is March 31, 2020, just one day after its announcement to do so—very short notice indeed and tellingly indicative of the fact that there must be very few connections live on the network.

Japan is a country whose trends do not normally match those elsewhere in the world. Historically, it has been wrong to assume that what is successful in Japan will be successful elsewhere: Personal Handy Phone System (PHS), i-mode, pachinko, square watermelons, canned food restaurants, and live lobster vending machines, to name a few. Similarly, it may be wrong to assume that what fails to be successful in Japan will also fail elsewhere. First announced in January 2017, NTT’s NB-IoT offering had more than two years to build up market interest before its launch. Softbank had the first commercial NB-IoT network in Japan as of April 2018, with KDDI trialing NB-IoT with Ericsson in 2016. Clearly all the national carriers had an expectation that NB-IoT would be a worthwhile investment, not just NTT. By comparison, NTT launched LTE-M after NB-IoT on July 30, 2019, and Cat.1 services as far back as November 2016.

NTT DoCoMo began trialing LoRaWAN in Japan in mid-2017 and launched a LoRaWAN-based industrial refrigerator monitoring service in the United States, through subsidiary NTT DoCoMo USA, in late 2018. As a carrier, NTT has covered all bases for wireless IoT communication technology during the last three years and is likely to have a firm idea of what works for it and what does not; apparently, the stationary NB-IoT technology is of insufficient utility while the mobility-centric LTE-M and the more traditional data-centric Cat.1 LTE are. NB-IoT roaming agreements are comparatively rare, thanks to inconsistency between carrier pricing strategies, and tend to only exist within carrier groups or between Tier 1 strategic partners. It may be that NTT has decided LTE-M is sufficient for low bandwidth, low power consumption Cellular IoT (C-IoT) needs, fixed and mobile, while Cat.1 can cater to any higher bandwidth IoT use cases, covering all potential use cases between them while including the ability to roam.

Roaming for IoT connectivity, especially international services for Japanese enterprises operating and launching connected products abroad, is a focal point of NTT’s IoT strategy. For decades Japan has been a global hub for the original design, manufacturing, and distribution of automotive, consumer electronics, and robotics products. In June 2018 NTT launched Globiot, combining its membership in the IoT World Alliance, Strategic Cooperation Framework Agreement, and Conexus Mobile Alliance to provide global connectivity through a single platform using a combination of local International Mobile Supplier Identities (IMSIs), embedded Subscriber Identity Modules (eSIMs), and traditional roaming agreements. NB-IoT fits less well into this strategy than any other cellular communications technology, as roaming availability is poorer, it is less well suited to mobile use cases, and it has by far the highest latency. Minimum feature sets for NB-IoT must match between carriers, and their configurations must be aligned in order for roaming to work.

Another possible reason is cost control. NTT’s press release about the closure of its NB-IoT service was short and contained few details. But what it did say was that the decision was made “in light of the current business environment.” It is not known if this mention of the current business environment was in reference to the COVID-19 pandemic or simply to the state of NTT’s IoT business. Either way, the selection of NB-IoT as an asset to cut for the sake of cost control would not have been made if the network had been successful in attracting customers and/or generating profits. The implicit suggestion is that NTT’s NB-IoT network may have simply failed to pull in enough business, and that 11 months after launch the cost of keeping it running in the hope of a change in fortunes was not worth the wait.

Ever since the standardization of NB-IoT, all conversations have been about how many networks are being launched, how quickly national network coverage is being expanded, what NB-IoT chipsets, modules and devices are available—and how many are being sold—and how it is that services are being priced. What people have not been speculating on is when the first NB-IoT network would close. So has NB-IoT been unsuccessful? Not at all, according to cellular module shipments. In 2019, 290 million cellular modules were shipped, of which 15.5% were NB-IoT. The ramp up in NB-IoT shipments was far and away the most dramatic across all cellular module products, increasing by 300% since 2018. However, the vast majority—95%—of those shipments were made by Chinese module vendors, with the bulk of that product suspected of being intended for use within China.

What does this mean for NB-IoT in the wider context of the global carrier market? Is the technology overhyped and failing? Will we see more network closures? NB-IoT has definitely been overhyped, as IoT as an industry, and every mass market wireless communications technology since Wideband Code Division Multiple Access (WCDMA), has been in the past. NB-IoT rollouts have been occurring at the rate of around 30 new networks per year since 2017, outstripping the popularity of LTE-M as a network choice by 2.5 times. It is true that the sale of connections has been slow outside of China, despite the large and influential international carrier groups Vodafone, Deutsche Telekom, Telia, and Telefonica firmly putting their confidence behind NB-IoT, but the same has been true for all other Low-Power Wide Area (LPWA) technologies, both cellular and proprietary.

There is no current indication of support for NB-IoT abating. The future of massive Machine-Type Connectivity (mMTC) is assured in LTE-M and especially NB-IoT through their forward compatibility with 5G New Radio (NR) and their inclusion in the 5G standards. They will exist beyond 2G, 3G, and LTE. NTT’s NB-IoT network closure doesn’t even necessarily mean that NB-IoT has been wrong for Japan, only that it was not the correct fit for NTT, which by itself is something that may change in time. Wireless carriers are service providers at large, who will seek to sell whatever type of connectivity there is demand for, be it licensed or unlicensed. There is nothing to stop NTT DoCoMo reopening its network should it decide to in the future once its current period of resource management has come to an end.