IDC EMEA41731216

September 2016, IDC Energy Insights #EMEA41731216
Perspective
Gas Smart Metering in Italy: Rollout Update and Emerging
Communications Technologies for Utility-Grade IoT
Jean-François Segalotto Roberta Bigliani
IN THIS PERSPECTIVE
This IDC Energy Insights Perspective illustrates Italy's ongoing smart gas meter rollout and parallel
multiservice metering pilot projects. It looks at the rollout schedule and the metering
communication technology being deployed, the progress and performance being achieved in the
field, and the challenges facing gas companies. It also analyzes some of the emerging IoT
communication standards that will compete in the metering and smart city services space.
Along with France, the U.K., and the Netherlands, Italy is one of the few major EU markets to have
opted for a mandatory rollout of smart gas meters. The mass-market stage of the rollout started in
2013, in which 12 million gas customers will get a smart meter by the end of 2018, with 10 million
to be upgraded over the following years.
Italy's standard technical rule for smart gas metering currently restricts the choice of meter
communication technology to only two options:
 Point-to-multipoint (PM) radio frequency (RF) communication between meters and
gateways leveraging the Wireless M-Bus standard at 169MHz
 Direct point-to-point (PP) GPRS links between meters and utility systems
While 169MHz PM communication is the cheapest alternative operationally, GPRS is the most
mature technology. This means several gas companies have started their rollout using GPRS, but
PM communication will be the dominant option going forward, especially in areas with medium to
high meter density. Currently, around 70% of all meters being delivered for deployment in Italy is
equipped with a 169MHz radio module versus 30% having a GPRS modem onboard.
In terms of actual system performance, meter reach rates delivered so far range from 85%-96%
and from 93%-98% in PM and PP architectures, respectively. Concentration ratios in PM
architectures tend to vary widely, with peak sustainable performance ranging from 500 to 4,000
meters per concentrator. However, the optimal balance between meter density, performance, and
redundancy is reached in the range of 800-1,000 meters per concentrator.
In the wake of the smart gas metering rollout plan, pilot projects have been promoted by the Italian
regulator to test the possibility of sharing the gas metering network infrastructure among multiple
utility services — namely water and waste management — and other smart city services. Projects
have been launched collectively involving around 50,000 meters and sensors across multiple utility
and smart city services and with 169MHz PM communication as the core field network solution.

©2016 IDC Energy Insights #EMEA41731216 2
As this happens, the pool of Internet-of-Things (IoT) technologies designed for long-range, low-
power, narrowband applications continue to evolve and grow, and so do alternative smart meter
communication technologies. At least two emerging low-power wide-area (LPWA) standards are
attracting the attention of Italian utilities and multi-utilities for metering and other narrowband, low-
bitrate applications: LoRa (an open-standard PM RF communication technology using unlicensed
frequencies) and Narrow Band-IoT or NB-IoT (the newly-standardized cellular LPWA technology
for massive narrowband IoT applications).
Italy's Smart Gas Meter Rollout
Italy has led the way in smart metering several years ago by upgrading over 35 million electricity
meters, and it continues to push ahead in gas and, to a lesser extent, water meter deployments.
Along with France, the U.K., and the Netherlands, Italy is one of the few major EU markets to have
opted for the mass-market rollout of smart gas meters, following positive long-term cost-benefit
analysis.
Rollout obligations (including schedule and smart meter requirements) were laid down by Italy's
energy and water markets regulator (Autorità per l'energia elettrica il gas e il sistema idrico —
AEEGSI) in Resolutions n. 631/2013/R/gas and 554/2015/R/gas. These resolutions require the
initial upgrade of the largest industrial users — most of which were already being upgraded to smart
meters before any legal obligation existed — and progressively extend the obligation to midsize and
mass-market meters.
By the end of 2014, all industrial gas meters sized G40 and above had been upgraded, followed a
year later by G25 and G16 meters. In the mass-market segment, the actual rollout activities only
started in 2014, following the entry into force of the above resolutions. As a result, half of all lower-
end G10 industrial meters will have to be replaced by the end of 2016, with a full rollout mandated
for the end of 2018. For household-class G4-G6 meters (representing roughly 90% of the country's
total), the current replacement timetable for companies serving over 200,000 customers is shown
in Table 1. While the initial schedule has been progressively adjusted by the AEEGSI to account
for implementation difficulties, most gas distributors still consider it challenging.
TABLE 1
Rollout Schedule of Mass-Market (G4-G6) Smart Gas Meters
2014 2015 2016 2017 2018
Smart meters installed as a share
of total points of supply
3% 10%
Smart meters in operation as a
share of total points of supply
3% 15% 33% 50%
Note: Rollout obligation refers to December 31 each year and applies to gas distributors that served more than 200,000
customers, as of December 2013.
Source: AEESGI, 2015
For smaller distributors, the rollout obligation is less demanding and requires 33% and 8% of all
meters to be in operation by 2018 for companies serving 100,000-200,000 and 50,000-100,000
customers, respectively.

In total, around 12 million gas customers will get a smart meter by the end of 2018, with the
remaining 10 million households to be upgraded during the following years.
In the field, the mass-market rollout is well underway and mostly in line with the rollout schedule.
The gas companies and multi-utilities interviewed by IDC Energy Insights had upgraded at least
10% of all points of delivery with smart meters as of June 2016, with peaks of almost 20%.
Forecasts for the end of 2016 range from 12% to 30%.
Smart Meter Communication Options
The Italian Gas Committee (Comitato italiano gas — CIG), the country's technical rule maker for
combustible gases, defines and maintains the technical specification for gas smart metering
systems on behalf of the AEEGSI. Standard rule UNI/TS 11291 contains the general features,
device specifications, reference network architecture and communication protocols, as well as the
security, interchangeability, and interoperability requirements of smart gas metering systems.
UNI/TS 11291 provides gas distributors with two communication technology options for the field
area segment of their smart metering network:
 PM radio communication between meters and data loggers, concentrators, or smart meter
gateways leveraging the Wireless M-Bus Mode N standard and DLMS/COSEM protocols
at 169MHz, which is a license-free frequency band in Europe. Backhaul links between
concentrators and utility meter data management/collection (meter data management or
MDM/meter data collection or MDC) can be based on cellular (e.g., GPRS, UMTS) or
fixed-line technologies (e.g., fiber optics, Ethernet, xDSL).
 Direct PP SIM-based cellular communication between meters and utility MDM/MDC
systems, mainly leveraging GPRS on public mobile networks.
In conversations with meter manufacturers and smart meter network providers, IDC Energy
Insights estimates that around 70% of meters currently being delivered for deployment in Italy is
equipped with a 169MHz radio module, while 30% have a GPRS modem onboard.
Although many have started their rollout using more mature cellular systems, current data from
major gas distributors confirms PM communication at 169MHz will be the dominant option going
forward, especially in areas with medium to high meter density where it offers lower total cost of
ownership (TCO). In particular, a 169MHz PM system enables longer battery life (a critical
business case determinant), with a worst-case scenario of a single replacement over a meter's 15-
year depreciation period. This adds to better indoor penetration and higher network flexibility,
which in turn favor redundancy and meter reach, especially in medium- to high-density areas.
Further reinforcing the business case is the ability of gas distributors to recover direct network
investments (i.e., the cost of gateways/concentrators) through the regulated metering tariff, and the
possibility to share the network infrastructure with other metering/smart city services (e.g., water
metering, smart lighting).
Additionally, gas distributors that have opted for PM communications as their main field area
solution will be able to leverage the network infrastructure (i.e., gateways, concentrators) for
additional telemetry applications, such as cathodic protection monitoring, pressure regulators
management, and network sensing.
On the downside, 169MHz PM communication technology is still somewhat immature. There are
fewer available field devices, significant interoperability issues, higher network complexity, and
less network planning expertise available on the market.

TABLE 2
169MHz PM Communication: Strengths and Weaknesses
Strengths Lower total cost of ownership or TCO (longer battery life, cheaper radio modules, lower operational
costs), better indoor penetration, European smart meter communication standard (EN 13757-4) on
unlicensed frequencies, greater flexibility in network topology flexibility, ability to recover direct network
investments through regulated tariff, ability to share the network infrastructure with other services,
extensibility to smart gas grid applications
Weaknesses Equipment (i.e., meters, concentrators) availability, interoperability and interchangeability, network design
expertise, bandwidth
Source: IDC Energy Insights, 2016
While most gas distributors will use it to complement 169MHz networks in low-density areas, some
companies have chosen cellular as their main smart metering communications technology despite
the cost disadvantage. This includes one of the country's leading pure gas players.
The main advantages of cellular include a consolidated technology stack offering all-IP
communication, readily available infrastructure, and turnkey services from mobile operators. These
are all factors supporting quicker time-to-market of smart metering systems, which can be critical
for distributors with substantial customer bases, especially at the start of the mass-market rollout
phase. Additionally, a SIM-based solution offers a smooth migration path toward the latest cellular
IoT standards like NB-IoT and LTE-M.
The main downside of cellular solutions is its (current) cost disadvantage, including higher
manufacturer cost for the onboard modem and higher operating costs from SIM card management;
shorter battery life (and little extra space on smaller meters for bigger batteries); and a risk of
mobile operator lock-in. The latter could be overcome when and if embedded SIMs are embraced
by telco operators.
TABLE 3
GPRS Communication: Strengths and Weaknesses
Strengths
Existing networks, proven technology, wide device availability and interoperability, availability of turnkey
machine-to-machine (M2M) services offered by mobile operators and short time to market, full-IP
communication, easier migration to new generation cellular IoT technologies, complementarity to PM
architectures in low-density areas
Weaknesses
Total cost of ownership (battery life, line rental, SIM management), mobile operator lock-in, rigid network
topology, GMS service sunset.

Field Performance of Smart Gas Metering Systems
KPIs utilities look at when designing and rolling out smart metering communication networks
include:
 Meter reach (i.e., the number of meters successfully read over a read cycle)
 Network redundancy (i.e., the average number of concentrators/gateways "hearing" each
meter)
 In the case of PM architectures, concentration ratios (i.e., the number of meters heard by
each concentrator/gateway)
While theoretical meter reach rates can rise close to 100%, neither technology option provided by
UNI/TS 11291 can guarantee full coverage of the meter base. In fact, meter reach rates delivered
so far range from 85% to 96% and from 93% to 98% in PM and PP architectures, respectively. Gas
distributors and solutions providers interviewed by IDC Energy Insights are currently working on
minimum target daily meter reach rates of around 90%, while at the same time trying to minimize
the number of unheard/silent meters over the read cycle.
The concentration ratios currently reached in the field also vary widely. Depending on meter
density and concentrator location/site characteristics, the number of meters heard by each
concentrator/gateway can range from a few dozens in a rural setup to several thousands in a high-
density urban environment. In particular, different meter suppliers and smart meter network
providers are working on significantly different concentration ratios, with peak sustainable
performance ranging from 500 to 4,000 meters per concentrator (up to almost 8,000 meters heard
by a single concentrator in one case). The current leading network vendor suggests 800-1,000
meters per concentrator is the range that strikes the optimal balance between meter density,
performance, and redundancy.
As for redundancy, the target ratio is for the large majority of meters (i.e., 95%) to be heard by at
least two concentrators, but to keep up with the mass-market rollout schedule, some distributors
have initially traded redundancy for higher average concentration rates.
Major Deployment Challenges So Far
Gas distributors are generally satisfied with both the performance they have achieved so far and
know-how they are building on the ground. In particular, those deploying PM communication
solutions are satisfied with the network's capacity and adaptability of the technology to multiservice
metering contexts. As pointed out, however, the technology still needs maturing. Below are some
of the issues encountered so far by gas companies.
 Meters
 Reliability. Higher-than-expected failure rates early in the meter life cycle negatively
impacting replacement budgets and customer perception.
 Availability. Limited availability of UNI/TS 11291-11 certified meters (i.e., devices
complying with release 11 of the standard technical rule) in the market.
 Battery life. Uncertainty regarding the actual battery life of both 169MHz and GPRS
meters.
 Size. In some cases, the size of new meters requires modifications to be carried out at
a customer's premises.
 Software stability. High number of firmware updates released by meter manufacturer
(up to eight for a single manufacturer reported by one distributor), which can have
consequences on meter communication, querying, and reading procedures.

 Network design and PM communication chain
 Network planning. Difficulty in identifying appropriate sites for the housing of
concentrators/gateways, site leasing being one of the major operational cost elements
for PM networks.
 GPRS service availability. Handling of the future termination of the GPRS service upon
expiration of GSM licenses and migration of smart meter communication onto a
different mobile service and frequencies.
 Communication integrity. Issues with the meter-concentrator-utility system
communication chain, especially under severe interoperability/interchangeability
conditions.
 Technical regulation and certification
 Interchangeability. Poor diffusion of device interchangeability certification (UNI/TS
11291-11-6) negatively impacts meter procurement processes.
 Tariff regulation. Cost recognition within the regulated tariff should evolve to better
reflect gas distributors' experience on the ground and evolve with technology
advances.
 Multiservice regulation. A technical and regulatory framework is still missing enabling
the reuse of the gas metering network infrastructure for other utility and non-utility
services, although pilot projects have been launched (see next section).
 Process and organization
 New skills, new activities. Retraining of field workers replacing meters; development of
new activities and professional qualifications for testing, meter integration, radio
planning, network design and rollout/monitoring.
 New meter reading and customer management processes.
Multiservice Smart Metering and Smart City Applications
On the back of the smart gas metering rollout plan, between 2013 and 2014, the AEEGSI has
promoted a number of multiservice metering pilots through Resolutions 393/2013/R/gas and
334/2014/R/gas. The projects are designed to test the possibility for multiple utility services (with a
focus on gas and water) and smart city services to share a single metering network infrastructure
that is built and managed by a third-party carrier or agent.
Six projects were approved, involving around 50,000 metered points of supply and sensors across
seven major Italian cities and a few smaller towns. Metered utility services include gas, water,
electricity, and district heating, while smart city services tested span parking, lighting, waste
management, noise control, tele-assistance, and water smart grid concepts. The infrastructure has
been rolled out across all pilots, and projects have now entered their two-year operational phase.
PM communication at 169MHz was chosen as the core field network solution across all the pilot
projects, not only for smart gas metering, but also for many of the other services involved. This
adds to alternate communication technologies, including:
 PM communications at 868MHz (another license-free frequency band). Mainly used as an
alternative to 169MHz in water and district heating metering, as well as for water smart grid
applications.
 GPRS. Mainly used to complement 169MHz networks in low-density areas, as mentioned
for gas.
 PLC. Italy's main standard for electricity metering, also used in pilot smart lighting projects.

TABLE 4
Communication Technologies Trialed or Adopted for Services Other than Gas
Metering
Service Technology Service Technology
Electricity 169MHz, 868MHz, PLC,
GSM/GPRS
Noise monitoring 169MHz, 868MHz
Water 169MHz, 868MHz, GPRS Fire hydrants 169MHz, 868MHz
District heating 169MHz, 868MHz Heating management SRD, GSM/GPRS
Waste management 169MHz Parking management 169MHz, 1800MHz
Street lighting 169MHz, GPRS, PLC Tele-assistance 169MHz, 1800MHz
Water smart grid 169MHz Home displays 868MHz
Emerging Communications Technologies for Utility-Grade IoT
While gas smart metering in Italy is subject to a tight rollout schedule and restricted to use either
Wireless M-Bus at 169MHz or GPRS for field connectivity, other services (particularly unregulated
smart city services) can pick from a larger technology pool. This includes emerging LPWA
technologies that are specifically designed for applications requiring long range, low data volume,
low data rate communication with long-battery life sensors.
There is a growing number of proprietary and unlicensed cellular technologies competing in the
LPWA space, such as Sigfox, Ingenu, LoRa, NB-IoT, EC-GSM, and LTE-M. At least two of them
are attracting the attention of Italian utilities and multi-utilities for metering and other narrowband,
low-bitrate applications: LoRa and NB-IoT.
LoRa is a PM RF communication technology that was originally developed by Semtech. Its open
technical specification LoRaWAN was released in June 2015. The technology is promoted by the
LoRa Alliance, an open non-profit association founded by a group of technology vendors and
telecom operators. The alliance has over 300 among sponsors, contributing members, and
adopters.
Critical features of the technology are the long range, high capacity, and low power delivered
through efficient use of spectrum resources. Key elements include:
 Star network topology ranging of up to 15km, allowing the coverage of an entire city or
several hundreds of square kilometers with a single gateway through chirp-spread-
spectrum-based (CSS) modulation.
 Extended capacity using adaptive data rate, multichannel gateways, and redundant
architecture.
 Use of sub-GHz spectrum providing deep indoor coverage. The European specification is
for use in the 868MHz unlicensed band, but deployment at 433MHz is also possible.
 Low power and robustness of interference, thanks to CSS modulation and adaptive data
rate. Three devices categories available with different latency and battery life (between 10
and 20 years for the most energy-efficient class).
 Low-cost radio modules and open software.

NB-IoT is the leading cellular LPWA technology for massive narrowband IoT -applications requiring
extended coverage and very low bitrates. In June 2016, the technology was standardized in
Release 13 of the 3GPP standard (the global standard for mobile communication technologies),
along with two other technologies for machine communications over cellular networks: EC-GSM
and LTE-M.
Of the three new standards, NB-IoT offers the lowest cost profile for both manufacturers and users,
and supporting the largest-scale use cases. Application sweet spots include smart city/building,
smart metering, asset tracking, and smart agriculture applications. Some of the key characteristics
of NB-IoT include:
 Native narrowband solution consisting of a self-contained carrier that can be deployed with
a system bandwidth of only 200KHz (the equivalent of a GSM carrier).
 Flexible deployment within existing 2G, 3G, and 4G frequencies. Options include
standalone deployment in GSM spectrum (replacing a GSM carrier with an NB-IoT carrier),
guard-band deployment next to an LTE or WCDMA carrier or in-band, using part of an LTE
carrier.
 Usage of existing LTE infrastructure. NB-IoT is enabled using new network software on an
existing LTE network providing quick service time-to-market.
 Support for more than 200,000 devices with a single cell and 200KHz carrier, according to
initial capacity evaluations, which can be extended by adding further frequency blocks. In
addition, a 20dB link budged improvement offers a sevenfold increase in coverage area in
an open environment compared to existing cellular technologies and greatly improved
indoor coverage.
 Over 10 years of battery life, thanks to functionality enabling device communication on a
per-need basis and longer device sleep times, including power saving mode (PSM) and
extended discontinuous reception (eDRX).
 New ultra-low-end device categories, featuring up to 85% less complex modules than a
standard LTE modem and unit cost under $5.
 Other 3GPP standard benefits, including use of the LTE ecosystem, existing management
framework, state-of-the-art security, future development path integrated with LTE and 5G.
The critical investment mass and scale behind mobile standards mean cellular LPWA is likely
going to account for a majority of IoT devices in a few years' time. However, some of the
competing technologies like LoRa have the potential for a good life cycle, especially given their
head start over cellular.
Several mobile operators have already started testing NB-IoT, with the first large-scale trials
expected before the end of 2016. However, the launch of the first commercial NB-IoT services
won't generally happen before the second half of 2017. On the contrary, the first LoRa networks
have already been rolled out by supporting telcos and commercial services are already available in
some countries. Furthermore, several utility equipment providers have now added LoRaWAN to
their commercial portfolio and a number of utilities in Europe are known to have ongoing projects
based on the technology for smart metering, smart gas grids, and smart city applications.

LEARN MORE
Related Research
To learn more about other smart metering rollouts, smart metering devices and associated
operational and IT systems, as well as market updates, please refer to the following IDC Energy
Insights documents:
 Perspective: Utilities Smart Customer Operations Quarterly Update: April–June 2016 (IDC
Energy Insights #EMEA41626716, August 2016)
 Perspective: EMEA Utilities Industry Quarterly Update: April–June 2016 (IDC Energy
Insights #EMEA40125316, July 2016)
 IT/OT Integration Across European Utilities: Results from the IDC Energy Insights IT and
OT Integration 2016 Survey (IDC Energy Insights #EMEA40828716, May 2016)
 IDC MarketScape: Meter Data Management Software for EMEA Utilities 2015 Vendor
Assessment (IDC Energy Insights #EMEA40706815, December 2015)
 The Use of Industry Data to Facilitate Supplier-Led Smart Meter Rollout in the U.K.: The
Case of the Smart Meter Installation Dataset (IDC Energy Insights #EIRS56W, December
2014)
 Electricity and Gas Smart Metering in Europe: Who's Doing What? (IDC Energy Insights
#EIRS05V, January 2014)
 Smart Meter on a Chip — Could This Be the Answer for Less Expensive Smart Meters?
(IDC Energy Insights #EIRS59V, November 2013)

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