Wireless network carriers’ growing interest in, and deployment of, 4G LTE infrastructure, products and services raises the prospect of shutting down or ‘refarming’ GSM or CDMA spectrum to accommodate growing demand. Determining “the sweet spot” for network closure is challenging, however, according to a new market research report from Ovum.
Wireless carriers need to consider the key revenues they derive from machine-to-machine (M2M), voice and roaming when deciding when to close legacy networks to make way for 4G LTE. “The amount of 2G, 3G, and LTE spectrum an operator has can also affect timing,” Ovum Principal Analyst Nicole McCormick states.
When to Shut Down 3G
A few wireless network operators in the U.S. and Asia-Pacific have announced network closures, Ovum points out. These are exceptions, however, the market research company adds.
“The majority of operators are not in a position today to close their legacy networks, nor will they be in the next 1–2 years,” McCormick writes. “Rather, operators are deciding how to best manage a transition towards full network closure, given that M2M, voice, and roaming revenue cannibalization remains a pertinent issue. We don’t expect networks to be retired en masse until closer to 2020.”
Other cost considerations factor into decisions to close legacy wireless networks, Ovum continues. These include: the cost of migrating residual customers to LTE and the cost of maintaining an aging legacy network.
Ovum sees some wireless carriers shutting down 3G networks before 2G networks. “2G is still an important source of revenue,” McCormick notes. “LTE provides a better mobile broadband experience than 3G, and with VoLTE, LTE can handle the voice responsibilities of 3G. This points to the possibility that operators opt to close their 3G networks before they close 2G,” McCormick concludes.