5G RedCap: New Cellular IoT Technology Optimization

The latest version of the 3GPP standard for mobile communications, Release 17, includes a new variant of 5G specifically for the Internet of Things. It is defined as the Internet of Things Medium-High Speed ​​Application Scenario, referred to as RedCap, and is sometimes referred to as NR-light. This is an interesting development that attempts to create a less complex 5G New Radio equipment with the aim of contributing to 5GNR like LTE-m and NB-IoT did for LTE. However, with this iteration, and likely for at least the next decade, it is unlikely to have a significant impact on the connectivity technology market landscape.

5G RedCap is expected to become the 5G New Radio equivalent of mMTC technologies NB-IoT and LTE-M, achieving three goals.

The first is to reduce the complexity of the equipment, thereby reducing costs. With prices of hundreds of dollars per module, 5G is completely out of reach for all but a few IoT use cases. In comparison, LTE devices typically cost $10-40, depending on the category, and NB-IoT is around $5. 5GRedCap has had some success in this regard, with price cuts of around 80%.

The second goal is to reduce energy consumption. To fill this useful niche, RedCap needs to be able to run on batteries. Energy savings of more than 90% are reportedly possible.

The third goal is to maintain data transfer speeds of at least LTE Cat-1. With speeds of 85Mbit/s, it can easily do this.

None of these features really unlock a significant portion of the market. For anyone who follows IoT use cases closely, as we do in our highly granular IoT forecasts, it’s worth noting the bifurcation of IoT applications, with some requiring high data rates, such as CCTV or connected cars, and the rest, which make up the vast majority of use cases, requiring low cost, often battery power.

In 5G terms, IoT applications will require either enhanced mobile broadband or massive machine type communications, but rarely both. And today there are few that require ultra-reliable low latency communications, and certainly not large-scale mass market applications. While there are clear differences between 5G RedCap and other technologies, this does not mean there is a big opportunity. The question is, is there a demand for mid-range technology? Our analysis suggests not. 5G RedCap is mid-range and not optimized for anything.

In addition, it is worth noting that the main challenger of 5G RedCap is LTE Cat 4. Although RedCap supports lower latency and larger frequency bands, LTE Cat 4 is faster and cheaper. Fast and cheap far outweigh these two capabilities. In terms of cost, it is an order of magnitude behind NB-IoT and LTE-M.

It is logical to add a lower complexity 5GNR variant at a more cost-effective price point, with low power consumption and superior bandwidth and latency. Eventually, we are talking about more than 10 years from now, there will be a need to support low-power devices on 5G NRRAN. But in the next decade, battery-powered cellular IoT will be dominated by NB-IoT and LTE-M. We should note that Release 18 promises some further improvements, but they need to be significant to get close to existing mMTC technologies. We are looking forward to something more incremental.