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Post written by:

Carole Manero

Wireless Services practice leader

Now that 5G is clearly emerging, the issues around the shutdown of older networks have become very hot. Some players have already decommissioned their ‘legacy’ networks while others have announced their plans to do so. Easier said than done: the inevitability of the shutdowns is posing quite a challenge to most MNOs. What to leave in, what to leave out? What is the rationale behind all this?

Carole Manero, Wireless Services practice leader at IDATE DigiWorld offers through this interview on the occasion of the “2G & 3G shutdowns” report release, a highlight of the reasons of these future shutdowns and the opportunities for the years to come.

Will Europe take the Asian and the US’s path?

Shutting down a network is a natural and cyclical trend. The 1G generation in mobile ceased operation fifteen years ago. It is now the turn of 2G and of 3G. KDDI initiated the move in Japan and closed its home-grown PDC service. Many other MNOs have announced their intent to decommission old networks. Such moves have spread into other world regions. Some small Asian countries no longer have any 2G networks – after a government or regulatory decision. Today, shutting down 2G or 3G is almost a red herring: technically LTE supersedes 2G and 3G mobile technologies.

Taking 2G out of commission appears to be the preferred option in Asia and the USA, and some MNOs announced plans to shut down 3G networks as the next step. In Europe the trend is different with announcements of 3G decommissioning coming first ahead of 2G. There are more GSM shutdowns announced or completed so far than of CDMA networks.

In reality, different mixes of customers between regions can explain the various patterns of network closures. Discrepancies in the breakdowns of customer profiles are mainly due to the type and time of the service launch of the previous mobile technology (i.e. 3G for LTE). In countries where 3G launched later than in other regions like Asia and the USA, 2G customers were not migrated fast enough before the 4G launch. Migration from 3G to 4G is much easier and faster and this transition mechanism creates a range of customer mixes whereas 2G and 3G bases are almost the same.

The KT and AT&T cases provide interesting insights in fully anticipated and prepared 2G closures. KT struggled to close its 2G network while AT&T announced the sunset of its GSM network three years in advance of a smooth move.

Why shutting down these networks?

The rationale is to decommission old networks and leapfrog to newer networks and upgraded user experiences and capabilities. In reality, both technologies, 2G and 3G, are now obsolete compared to the potential of the 4G and the emerging 5G. They should be shut down in order to free up valuable spectrum as soon as 2G or 3G customers account for less than 2% of the total MNO base.

The decisions by MNOs to close old networks are driven by a number of reasons, including the higher spectral efficiency of LTE, the freed-up frequencies they can use to increase LTE coverage, and significantly higher network efficiency on LTE than on either 2G or 3G.

The highly MNO-  and country-dependant network shutdown decision takes into account the interplay between technologies at MNO and country-level, the MNO market position, the country market dynamics…

What opportunities for the future?

The voice or SMS issue has been almost fully addressed with VoLTE maturity in advanced markets. The M2M topic is ever current, ever green: M2M has indeed been using cellular connections since the early days of 2G for cost and lifespan reasons. A question mark still hangs marketing expenditure to ease customer migration. The subject of M2M now helps to shape strategies for network shutdown: 4G evolution appears to be a sustainable technology for this segment and will soon be mature. M2M should not be migrated senselessly and expensively towards 3G