Shutting Down 2G or 3G first?
That's the dilemma many mobile operators face in this LTE onslaught-now accounting for 10% of total mobile subscribers on the planet. Well, it depends who you are and where you are! In other words, you need to make the decision that makes the most sense given your situation. But shutting down 2G first is the common wisdom and seeing 3G shut-down while keeping 2G for a while announcements has caught many in the industry by surprise! Here are two distinct tales
Europe says 3G first…
In June 2015, Telenor Norway's CTO, Magnus Zetterberg, announced plans to completely shut down its 3G network in 2020, which is 5 years before it closes 2G in 2025. Zetterberg highlighted the company's 4G evolution since it began in Norway in 2012: 4G now accounts for 60 percent of all mobile data traffic in the country. As a result, the company is now focused on a data-centric model, with a longer term view to dismantle legacy networks and eventually phase out 3G in 2020, before shutting down 2G by 2025 and completing the data transition.
Why keeping 2G then? He said because all the devices today are still embedded with 2G, including the M2M market into which Telenor entered early. As I discuss this issue many times with mobile operators worldwide, I found that this story is particularly compelling in Europe, which happened to lead the GSM revolution that started in the late 1990s. As we all know, Europe was slow on 3G and is behind with 4G. Consequently, the 2G footprint that both featured phones and M2M form remains so significant that it's better to maintain it while it continues to deliver a steady revenue stream and instead, sunset 3G W-CDMA and refarm the spectrum for LTE capacity expansion and perhaps also for potential 5G in the longer term.
…while 2G first goes mainstream and becomes ordre du jour!
Japan and South Korea were the first to shut down 2G and have built a reputation of early adopters by swiftly embracing next generation of mobile technology. Japan was also the very first market to launch W-CDMA in 2001 but waited a bit before taking the plunge in 4G, launching the technology exactly ten years later. Now those 2 countries are beefing up the capacity of their 4G networks and are heavily involved in developing 5G. Are they ready to shut down 3G that fast? Not quite yet because LTE roaming is not ubiquitous enough to allow visitors to roam on 4G and therefore the 3G network is used to park the foreigners!
In 2012, AT&T said in its SEC filing that it would shut down its 2G network by 2017. At that time, the telecom giant said about 12% of its contract wireless customers were using 2G handsets at the end of June, but it would work "proactively" in coming years to move them to more advanced devices, and stopped selling 2G phone contracts. Like the other major mobile operators in North America, AT&T was aggressively rolling out its LTE network while customers were mostly using 3G devices. Regarding M2M, AT&T said they would gradually migrate this business over 4G, which might be the reason of the 2017 deadline.
2012 is also the year Sprint started to shut down its 2G push-to-talk iDEN network as it moved users to 3G CDMA2000 1xEV DO and LTE in order to free up spectrum. Since, Sprint has completed the modernization of its network with dual 3G/4G radios. And in Canada, only Rogers has GSM; the others moved from CDMA to W-CDMA/HSPA and LTE.
Last year, for the exact same reasons of freeing up the 2G spectrum for LTE, Australia, Brazil and Thailand joined the bandwagon. And finally, Singapore will also shut down 2G; in a joint announcement in June 2015, Singapore's 3 mobile network operators Singtel, StarHub and M1 said they plan to shutter their 2G networks on 1 April 2017. The companies will assess their respective 2G footprint left and believe for most of their customers, it will be a simple SIM upgrade.
Shutting down 2G first is more common and is particularly occurring in countries that were behind front GSM leader Europe. Conversely, shutting down 3G is shaping up in the region that struggled with the technology that has been marked with the exuberance of spectrum auctions of the early 2000s.
But in the end, it's just a question of how significant the 2G footprint remains as well as how aggressive mobile operators have been in moving their business to 4G. However, as they continue to deal with ever increasing data usage on their networks, they are facing a spectrum shortage to carry all the traffic. Shutting down legacy networks is one part of the plan, along with acquiring new spectrum and finding innovative ways to use unused airwaves.
Let's see if Telenor is a trend setter, I'll certainly keep an eye on 3G shut downs in Europe!
Stéphane Téral is a research director, mobile infrastructure & carrier economics for IHS
Posted on 23 October 2015
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