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How Iot Network Works: IoT Basics for Your Business

As we know, IoT, or the “Internet of things” has been the major buzzword throughout the last decade, along with terms like web 4.0 and AI, among others. 

Yet, what actually is the IoT network? How does it work? Is it really going to be beneficial for my business, or is it just another jargon?

In this guide, we will discuss all you need to know about IoT and the terms associated with the Internet of Things, and how IoT will affect your business. 

What Actually is IoT Network?

The term “Internet of Things” was coined back in 1999, and basically, it refers to how “things” are connected to the internet so that users can control these devices remotely over the internet and/or they can be used to send information to other “things”. 

These “things” are any devices in households and businesses that are connected and accessible online: smart doorbells, smart printers, thermostats, webcams, smartphones, wearables, and even cars. 

Today in 2021, virtually any device we can possibly think of can connect to the internet and exchange data. Meaning, IoT connectivity is now a reality, rather than being just a pipe dream. 

IoT connectivity enables the IoT network: a network where these “things” are actively connected to each other. A device, for example, can receive information from sensors, and on the other hand, can send information to other devices and even systems over the internet.

According to Juniper Research, the number of connected IoT devices is expected to reach 46 billion by the end of 2021, which is a 200% increase from 2016. The number is still expected to grow in the years to come thanks to the “omnipresence” of wireless networks all over the world. More and more IoT devices from very small chips to large autonomous trucks will be connected to the IoT network in the years to come. 

Key IoT Terminologies You Should Know

  • IoT: Internet of Things, mainly referring to the active exchange of information between connected devices, allowing devices to be controlled remotely and/or automate themselves. 
  • IoE: Internet of Everything, referring to the fact that IoT is not solely about the connected devices (“things”), but also interconnected people, processes, and data. 
  • M2M: Machine to Machine, a term often used interchangeably with IoT, referring to the data transfer between two machines, enabling networked devices to exchange information and perform actions without any human supervision and intervention, allowing these machines to be autonomous. 
  • Device: or “things”, a unit of physical hardware that can perform at least one computing function within a functional system.

How IoT Network Works: The Physical World Meets The Digital

An IoT network happens when devices are connected to each other via a connectivity solution or connectivity technology. 

There are actually many different connectivity solutions that can power IoT networks. For example, when your smartphone is connected to a wireless earbud via Bluetooth, here Bluetooth acts as a connectivity solution. The same thing also applies when two devices are connected via Wi-Fi. 

Why are there many different IoT connectivity options? Can’t we just stick with one best option?

The thing is, at the moment there isn’t any connectivity solution that is considered perfect for any IoT use case. 

Basically, any IoT network would have three main technical requirements: coverage range, energy efficiency, and data rate. So, an ideal IoT network connectivity solution should be: 

  • Has the widest coverage area possible (i.e. can connect two devices separated half the world apart). 
  • Use as little energy as possible (close to zero or zero energy usage)
  • Can transfer an unlimited amount of data at any given time

Obviously, at the moment we don’t have such technology (yet), and this is why all IoT network connectivity options always have their tradeoffs:

High Bandwidth, High Coverage Range, High Energy Consumption

The tradeoff here is high energy consumption, but this type of IoT network solution can allow a high amount of wireless data transfer over a great distance. 

Only two solutions belong in this category: cellular and satellite. However, satellite connectivity is much more expensive and difficult to implement than cellular IoT. Thus, cellular IoT is the most viable IoT network solution if you need high bandwidth and a wide coverage area. 

By partnering with an IoT data plan provider that offers global coverage, businesses can easily deploy a global-scale IoT network without having to worry about connectivity. 

High Bandwidth, Low Coverage Range, Low Energy Consumption

The tradeoff here, as we see, is the short coverage area, but we can transfer a high amount of data with low energy. Wi-Fi and Bluetooth, as well as mesh technologies (Zigbee, Z-Wave), are popular examples of this type of IoT connectivity solution. 

Low Bandwidth, High Coverage Range, Low Energy Consumption

As you can see, the tradeoff here is bandwidth. The idea is by lowering the data rate, we can maximize coverage area while still using low energy consumption.

There are actually various IoT devices that don’t actually need to send and receive a lot of data, such as sensors and thermostats. This type of IoT connectivity solution is ideal for such applications.


With the diversity of available options to connect IoT devices, businesses should be very careful when choosing the right IoT connectivity solution to power their IoT network projects. 


For starters, businesses should carefully weigh the requirements of their project: which between energy efficiency, data rate, and coverage range is the most important for its success, and which can be compromised.


Businesses that are planning to scale their IoT projects into a global scale project should consider cellular IoT connectivity by partnering with the right network provider to maximize scalability and reliability.