Aeris Blog

7 Pricing Factors that Affect M2M/IoT Cellular Rates

March 21, 2014

5tipscostMachine-to-machine (M2M) communications and the Internet of Things (IoT) are taking hold in many industries, particularly as a key resource for businesses using cellular remote-monitoring devices to save costs, add new revenue streams, and stay in compliance. With applications beginning to proliferate, it’s important to understand the costs behind these promising technologies.

There are seven factors in particular that affect IoT/M2M cellular rates.

  1. Monthly access fees: IoT/M2M service plans typically have a monthly access fee for connecting to a wireless service. This charge is typically independent of the fees incurred for data usage. If your devices will be dormant for an extended period of time, such as when a farming combine is not used during the winter months, weigh the costs of suspending the device. Some providers don’t allow you to suspend devices and may still charge a monthly access fee even if the devices are inactive.

  2. Data plans: Fees for IoT/M2M plans are typically either pay-per-use, where you pay per megabyte (MB), or per-device, where you subscribe to a fixed amount of data per month. IoT/M2M applications use significantly less data per month than do consumer devices. Some can use less than 30 kilobytes (KB) per month while high-volume apps may use in excess of 50 MB per month. Paying per MB is typically the most cost effective, especially if the monthly usage fluctuates. However, at higher usage profiles, per-device plans with pooling could be most cost effective, especially if the monthly usage is consistent.

    While per-device plans may offer some savings and manageability for small-to-medium-size operations, organizations with thousands of devices spread across many different per-device rate plans may find that pay-per-use is more cost effective and easier to administrate and manage. IoT/M2M connectivity providers typically have portals with tools to help manage and monitor usage. These include portals that offer real-time visibility into data usage along with thresholds that alert you to potential overages. Some providers even offer an alert system that allows you to block traffic on devices that have exceeded predefined thresholds.

  3. Actual data usage: It’s easy to underestimate the amount of data required for your solutions. But some providers offer flexible rate plans that allow you to change your plan in the middle of the billing cycle. Plans that let you pool data usage across a large number of devices can also help you control your rates. Both of these options are great for avoiding costly overage.

  4. Rounding: Some carriers limit the amount of time that a device can be connected to their network. A session typically lasts four hours before the device is disconnected to free up resources for other cellular devices. When the four-hour session ends, usage is generally rounded up one KB. While rounding charges may not seem significant on its own, over time, rounding can add up for an organization with thousands of devices. Additionally, some providers round up considerably more when calculating roaming sessions.

  5. Taxes and surcharges: Carriers regulated by the FCC — such as Verizon, Sprint, and AT&T — are required to charge more taxes than non-regulated carriers. Although these costs may vary, the provider should be able to give an estimate of the charges.

  6. SIM costs: SIM costs can vary greatly, but some providers offer volume discounts. Embedded SIMs can provide additional benefits such as smaller form factors and increased security over removable SIMS.

  7. Activation and/or hidden fees: Setup fees also vary greatly but should be clearly defined in the agreement. Be aware of whether setup fees are one-time costs and or if they include monthly recurring fees added to your bill.

IoT/M2M connectivity commonly uses two basic technologies: Code Division Multiple Access (CDMA) and Global System for Mobile communications (GSM). CDMA has lower data costs than GSM and traditionally has better coverage, particularly in remote areas. However, CDMA is limited primarily to North America, whereas GSM is a global service.

If your operations span several continents, consider using a provider that also provides a global GSM service. A single-source provider often makes it easier to obtain support and to control usage, billing and costs.

Aeris offers the lowest IoT/M2M prices across all these factors, and offers both CDMA and GSM services. To view a real-world case study of how Aeris provides the lowest Total Cost of Ownership, download our free whitepaper below.

 

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