What will be the impact on M2M of announcement to shut down 2G?

AT&T just announced that they will shut down their 2G network no later then January 1 2017. They want to free up spectrum for mobile Internet network capacity. “Well in advance of this change, we will reach out to our relatively small percentage of 2G customers and offer them options to meet their needs” says a spokesperson to Fierce MobileIT. According to Berg Insight AT&T had 13.1 million M2M subscribers by the end of 2011. It is often stated that the 2G share of the M2M subscriptions are bigger then 90%. I don’t know the AT&T mix but it is likely that at least half of their 13 million subscribers use 2G.

PricewaterhouseCoopers recently made a study and found that 60 percent of wireless operators plan on decommissioning their legacy networks over the next five years. Their study would suggest that more operators would like to make similar announcements as AT&T.

M2M terminals are often expected to be operational¬†5-10 years which makes the choice of network technology difficult. From a capacity point of view 2G is often enough and 2G modules are cheaper than modules supporting 3G and 4G/LTE. Coverage of the 3G networks are often not as good as the 2G networks. It is far too early for LTE networks to take over. Support for circuit switched connections which are required when moving terminals from the fixed phone networks (PSTN) to mobile networks is only available in 2G. It will be interesting to see what AT&T’s announcement will do to customers, regulators and other mobile operators. And what about countries were mobile networks are all 2G?

I believe this is a challenge for the development of the M2M market. As far as I understand it, AT&T will have to subsidize the remaining 2G M2M customers to replace terminals or loose the customers to other operators. This new situation for ongoing and planned M2M projects might delay or in worst case kill them if the up-front investment becomes substantially bigger. This news also explains why M2M customers need over-the-air provisioned SIMs.

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3 Responses to What will be the impact on M2M of announcement to shut down 2G?

  1. ytd2525 says:

    Reblogged this on ytd2525.

  2. For the Swedish market I believe that 2G networks will be around for quite a long time. A lot AMR installations rely on GSM and it will be very costly to shut it down, also Telenor/Tele2 replaced every old GSM base station with brand new ones quite recently. I bet that 2G will be around even in the future, but I think it will be used in parallel with 4G. Most likely 2G and 4G will co-exist on the same bands, I also know that Telenors new base stations has the capability of dynamically reducing/increasing the capacity for 2G/4G over time. This means one base station could have a lot of 4G traffic during daytime hour and more capacity for 2G during the night. So there is still a future for 2G, but of course capacity will be reduced in the future in favour of 4G and 5G.

  3. wonderful insight. Really enjoyed looking over this blog.
    Keep up the good work and to everyone keep on learning!

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