2G and 3G switch-off: a navigation guide for IoT

02 November 2015
Report type: Strategy Report
Author(s): Andy Castonguay - Principal Analyst, Emma Buckland - Principal Analyst, Matt Hatton
Keywords: IoT, internet of things, internet, things, M2M, machine-to-machine, 2G, 3G, 4G, generation, GSM, GPRS, EDGE, HSPA, W-CDMA, UMTS, LTE, switch, off, refarm, refarming
Number of Pages: 29

The aim of this Strategy Report is to examine the likely evolution in support for different cellular generations over the next 10 years in countries around the world. This is critical for enterprises considering deploying IoT solutions supported by cellular technologies. Potential buyers of cellular connectivity are carefully considering this topic, or they certainly should be.

Mobile network operators are considering changing the technologies used in particular frequency bands (i.e. ‘refarming’), which will frequently result in the complete abandonment of certain technologies (‘switch-off’). In particular this relates to refarming 2G and 3G technologies to LTE, with the consequent switching off of 2G and 3G in various territories. This process has already happened in a few countries, with Japan and South Korea in the vanguard. Operators in Australia, Singapore and the US, amongst others, are also going through the process too.

The motivation for doing this is discussed in Section 4. Such decisions have potentially serious ramifications for IoT deployments. If particular technologies are abandoned, existing deployments in the field could be compromised, requiring an expensive refit or recall process. Also new deployments would need to be redesigned. Furthermore, uncertainty over which technologies will be available in the future may cause delays and potentially additional costs for companies looking to ensure that their chosen technology will be supported over the lifetime of the devices that they are considering rolling out.

There are many countries in which network operators have explicitly stated their plans. In others there is a lack of clarity. In Section 5 we examine what operators are saying about their approaches and stated plans. In many cases there are no official statements beyond, for instance, ‘maintaining existing technologies for the foreseeable future’ and similarly imprecise statements. At Machina Research we believe that some form of refarming is inevitable in most developed markets in the next 10 years. One aim of this report is to attempt to plug the knowledge gap, providing our view on when how long different technologies are likely to be available in different countries.

In particular we focus on a cross-section of countries which we believe represents a reasonable set of territories into which an enterprise may want to roll out a multi-country IoT deployment, specifically Canada, US, Finland, France, Germany, Italy, Norway, Spain, Sweden, Switzerland, UK, Australia, China, Japan, South Korea, and Singapore.

The aim is to provide enterprises with a view on the technologies that they will likely need to include within products being deployed in the next 2-3 years in order that they are supported over the lifetime of that device, say 5-6 years. Of course enterprises could simply deploy all technologies within their device, i.e. 2G, 3G and 4G, knowing that will guarantee connectivity. However, there is substantial additional cost associated with supporting more technologies and more frequency bands. The key is to optimize the number of technologies supported in order to minimize cost, and guarantee, as best as possible, that the device will be connected. It should be noted that there are no guarantees as it is impossible to predict the exact approach that MNOs will take and it what timeframes.

The timing of 2G and 3G switch-off will depend on a number of factors, which we have sought to consider. As discussed in Section 4, these include the potential cost savings with rationalizing network technologies, the pain of stranding existing connected devices and the competitive landscape. In Section 6 we also consider whether regulatory factors might have an impact, specifically in the EU, since other developed markets have largely granted permission for refarming.

In Section 7 we summarise all of this analysis into a single table where we attempt to predict which technologies will be available in which territories over the next 10 years, and in Section 8 we present our conclusions about these thorny issues, and make recommendations to mobile operators as well as potential users of cellular technologies.


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