AT&T claims it is the first carrier in the U.S. to introduce 5G Reduced Capability (RedCap) technology for the IoT sector, with commercial service now available in select areas of the Dallas metro area.

The service was launched on June 14 via a software upgrade from Ericsson, but AT&T is working with both Ericsson and Nokia on its RedCap rollout, according to Jason Sikes, AVP of Device Architecture at AT&T.

RedCap stands for “reduced capability,” which sounds like something’s gone missing, but it actually refers to reduced complexity and therefore, reduced costs. Introduced with 3GPP Release 17, it also sports power-saving features.

It’s still early days. No customers are using RedCap on AT&T’s network. AT&T is making its 5G standalone/RedCap network available now so that chipset and module suppliers can come in and get their devices certified to work on AT&T’s network.

“We want to take the lead in all of this and get our network in a position to where, as those chipsets, modules and devices come along, we’ve got the network that’s ready for them. They can start to innovate and bring those products to us, and we can work together to get those out commercially,” Sikes said.

Some people have joked that RedCap is akin to 4G running on a 5G network because some of the capability that RedCap is trying to deliver is very similar to what LTE Cat 4 delivers today.

However, Sikes said what differentiates RedCap is the fact that it’s 5G – which is important from a marketing standpoint – but also for the longevity aspect. A lot of IoT products are designed to run without any intervention for 10 or 15 years, so anyone who’s bringing a new widget to market will want the latest and greatest technology for the maximum life cycle. Plus, 5G is where the innovation is happening.

Eventually, RedCap will show up in smart watches and other wearables as well as in smart home and industrial settings, but Sikes said low-cost hotspots and dongles are likely to be the first types of devices to get it, and those could be for either consumer or enterprise applications.

No word yet on when AT&T will expand RedCap beyond Dallas, but Sikes said the plan is to expand to other innovation zones on the West Coast. Beyond that, AT&T will continue to scale the network and get ready for real growth in 2025, he said.

Fierce reached out to Verizon and T-Mobile for updates on their RedCap strategies and didn’t hear back before publication. Last year, Verizon was part of a RedCap data and voice session with Ericsson and MediaTek, and T-Mobile has talked about the importance RedCap testing for startups and developers.  

AT&T’s IoT lead

In the IoT space overall, AT&T certainly seems to have a commendable lead with an estimated 70% market share in the U.S., according to industry analyst Chetan Sharma of Chetan Sharma Consulting.

“I would say AT&T probably has more IoT connections than the other two combined because they have been at it much longer,” he said. Globally, it’s a different story because Chinese operators support a massive IoT market.

Outside of China, the IoT battle might be between AT&T and Vodafone, he surmised. “They are clearly in the top five and clearly No. 1 in North America,” he said.

From a revenue perspective, IoT accounts for a tiny percentage of an operator’s overall revenue, but it’s quite profitable, he said. IoT doesn’t require a lot of hand holding and small IoT devices like smart watches don’t tax the network. Operators can count on long-term revenue for relatively little effort.

“It’s a good revenue stream for the operators,” Sharma said.

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