Decentralized wireless (DeWi) providers, such as Nova Labs’ Helium, have exploded onto the wireless scene, promising a new means of constructing and operating wireless networks through the use of blockchain technology and crypto-economics.
The underlying assumption for many of these DeWi providers is that, rather than using the traditional paradigm in which a single telecom operator spends billions to develop and operate a wireless network, millions of individuals join in deploying and operating wireless infrastructure in the DeWi world. In exchange, such persons get compensated in cryptocurrency. However, because of the significant decrease in cryptocurrency value, this strategy currently provides little motivation.
Nova Labs is the firm behind both FreedomFi and Helium. Both companies are similar in that they entice people to deploy infrastructure gear in exchange for cryptocurrency but they are building slightly different types of networks. FreedomFi uses the Citizens Broadband Radio Service (CBRS) spectrum and its equipment is used to offload cellular traffic onto CBRS. Helium uses IoT gateways to build a distributed IoT network.
According to Coindesk, in March 2022 Nova Labs has more than 680,000 hotspots online and was adding new hotspots at a rate of 75,000 per month. At that time Helium (HNT) tokens were trading at a rate of $24.68. Today HNT is only worth about $1.76, according to CoinGecko. At the deadline, Nova Labs had not responded to inquiries from FierceWireless about the impact.
But analysts say there is no doubt that the drop in value is harming these companies. According to Tammy Parker, lead analyst, of global telecom consumer services at GlobalData, individuals who deployed DeWi hardware are unlikely to see a return on their investment. “Individuals have to pay hundreds of dollars for equipment to mine HNT, which is now worth roughly $1.75, so recouping the hardware investment is becoming increasingly difficult,” Parker added.
She also mentioned that another issue for DeWi networks such as HNT is that as more individuals deploy equipment, there is increasing competition for network traffic, and as a result, participants receive fewer and fewer tokens for their deployments.
However, Parker acknowledged that, while cryptocurrencies are currently in a slump, there are many “true believers” in the mission of Helium and other decentralized crowd-sourced networks.
Helium’s DeWi model caught the attention of both Dish Network and T-Mobile. In September the company signed a five-year exclusive deal with T-Mobile for the launch of a Helium Mobile commercial service that will leverage T-Mobile’s macro network and Nova Labs’ CBRS network. The service is set to launch in beta early in 2023.
Furthermore, Dish Network intends to employ Helium’s bitcoin incentive scheme with customers that deploy their own CBRS-based 5G hotspots. Dish sees the agreement as a means to expand its coverage by allowing customers to pinpoint regions where a Helium hotspot may improve cell phone connectivity.