How to Reduce the Costs of IoT Data Plans

October 5, 2020

Reduce the Financial Risks of IoT Data Plan Management

As an application service provider (ASP), you take chances when deploying a remote asset, as physical control is limited. The more devices deployed, the more problems you stand to encounter.

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In addition to operational liabilities, there’s the financial danger of assuming customers’ data use to fit your cellular provider’s rate plans, which resemble this:

500 KB$0.70
5 MB$3.30
10 MB$3.80
1 GB$15.00
2 GB$20.00
5 GB$50.00
Excess Usage Per MB on Any Plan$0.50

Assuming which rate plan is best for each SIM at the beginning of each billing cycle means factoring in variables beyond control. These include firmware upgrades, software bugs, unpredictable user behavior and devices repeatedly attempting and failing to connect.

Choosing a data plan size for each SIM card at the start of the cycle is a recipe for error. IoT project budgets are often inelastic, so faulty suppositions on connectivity costs can result in business failure.

Along with security, cost stands out among the top four barriers to implementing IoT projects. Aside from managing remote assets, you must invest time and effort in managing your IoT rate plan so that it doesn’t manage you.

Preventing IoT Rate Plan Overpayments

Digital graph with financial data.

Predictable applications can help avoid or even eliminate overpayments on your IoT connectivity plan. Consider an app for measuring the level in an oil tank for residential heating. Once per day or every seven days, it wakes up the SIM card, connects to the cellular network and sends a few kilobytes of data.

With such a predictable data profile, a 500 KB-per-month data plan for each SIM card would be enough even with a massive deployment of thousands.

However, if you offer various applications with a broad range of data profiles, data use isn’t uniform. Active customers of a generic GPS tracker, for example, may send 9 MB per month, and less active customers only 1 MB per month.

When charging both customers the same fee per month to have the SIM active, how can you turn a profit even in the worst-case scenario?

As your user base grows, so does the number of SIMs, which receive more data as you discover ways to offer new services and content.

Some cellular IoT providers allow mid-cycle changes in the rate plan for a SIM card, post-dated only at the beginning of the next billing cycle. That doesn’t ease the cost burden in the current period. Others allow changes in the current month, subject to proration in the billing system.

While this provides for mid-month plan changes, it doesn’t mitigate the overage if usage spikes before the change. In either event, you’re already over the data plan for the SIM card.

Telit Cinterion’s Connectivity Solutions

Telit Cinterion has comprehensive, all-in-one IoT connectivity solutions to prevent bill shock and data plan overpayments. We offer ways to analyze your data usage and automatically assign each SIM to the plan with the best rates and ensure all your devices have enough bandwidth.

If you want practical accounting and billing solutions that reduce operating expenses associated with rate plan management, contact us to request our IoT connectivity starter kit and experience what we can do for you.