Estimating IoT Traffic Volume and Cost

Most companies involved with the Internet of Things today sell their products with web-based services thrown in. But the per-byte cost of providing support needs to be figured out. The experience of other companies and estimates from Cisco’s Visual Networking Index can help.

IoT companies provide free web services so that the end user will not have to worry about any recurring monthly costs in order to continue using the services. Customers pay for the product and subsequent services only at the time of purchase. But this is a cost to the vendor, and an IoT product that uses cellular connectivity involves additional costs for the flow of information. As a result, companies manufacturing cellular IoT products tend to charge more for their products, because they need to factor that cost into the initial price.

Determining what those costs might be is still a bit of an art. Adam Justice at Grid Connect, for instance, told us that, as a service, his company estimates the cost of running its own cloud service against the life of the device to figure out just how it should price its device. His advice: The cost of IoT device traffic is very affordable due to the small amounts of data most of these devices generate. The overhead of your cloud services depend on how you set up these sources. Building your own solution can be costly but helps to keep recurring costs low. There are some great third-party solutions out there, as well, but these sometimes come with a high price tag. The recurring costs to enable an Internet of Things device to transmit and receive data and messages might be very minimal, because each device sends very small amounts of data, but the costs might still add up if there are a lot of devices.

Developers also need to consider the total bandwidth their devices will consume. IoT traffic will compete with other types of traffic and is expected to burgeon through 2018. A good estimate of Internet traffic is available from Cisco’s Visual Networking Index. Here are some of its important facts, figures, and data.

By 2018, Cisco expects the number of global Internet users to grow 60% to close to 4 billion — or about half the expected global population. When that time comes, there will be 21 billion networked devices and machine-to-machine (M2M) connections around the world, versus only 12 billion in 2013.

Cisco also says M2M connections — and ultimately the IoT will more than triple by 2018 to represent 7.3 billion connections, or a third of all connected devices. Tablets will grow faster than smartphones. In 2013, tablets comprised 2.3% of all devices and connections, while smartphones comprised 14%. In 2018, those figures are expected to reach 5% and 19%, respectively.

Nevertheless, M2M communications will be responsible for only 3% of IP traffic in 2018, versus 0.4% in 2013.

Fixed broadband connections will be 2.6 times faster than they were in 2013; Cisco projects the average speed will be 42 megabits per second in 2018. And IP video will be responsible for close to 80% of all traffic; it represented about two-thirds of the global traffic in 2013. This is not surprising, because faster Internet connections seem to be directly correlated with the number of videos watched. It follows that WiFi connection speeds will also grow. Cisco predicts that the average WiFi speed will increase from 10 megabits per second in 2013 to 21 megabits per second in 2018.

The good news for IoT developers: WiFi connections are getting faster, as we have indicated above. The number of hotspots is increasing, as well; Cisco expects the global total to double to around 53 million.

These figures indicate that you may be seeing the foundation for an IoT that makes less and less use of cellular connectivity in favor of open access points to transmit or receive data. IP traffic might increase over the next few years, but at least not all of it will burden cellular networks, which could lead to higher access fees and slower speeds as the load burdens the network. Also, instead of sending and receiving text messages over cellular networks, you might move some of these services to the cloud, further decreasing your costs.

Taking a closer look at the traffic, by 2018, Cisco expects more than half of all IP traffic to come from non-PC devices, compared to only 33% in 2013. These include smartphones, M2M devices, TVs, and tablets. More than 60% of IP traffic will come from WiFi and other mobile devices in 2018, while wired devices will account for 39% of the traffic.

IoT product manufacturers can heave a sigh of relief, because they will be able to rely less on cellular networks. Nevertheless, they should consider how the increased amount of traffic over the next four years might offsett the benefits gained from faster broadband and WiFi speeds and the increased number of public WiFi and community hotspots.


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