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4G hype won't kill 2G/3G nets

Posted: 23 Apr 2009     Print Version  Bookmark and Share

Keywords:mobile broadband  3G networks  LTE  2G 

The mobile broadband spotlight is on LTE, WiMAX and 4G, dominating discussions at trade shows and coverage in trade publications. It is as if 3G is on its death knell and 2G but a distant memory. However, when looking at the facts, the reality of today's mobile data networks are quite the opposite—2G dominates, with 3G just coming into its own, according to market research group In-Stat.

Hype cycles in the wireless industry operate at much higher velocity than the actual market. It can take decade or more for an operator to shut down a legacy network. AT&T started transitioning users off its 1G network, TDMA, in 2001. The network was not completely shut down until last year. NTT Docomo, which launched the first 3G network in 2001, stated in February of 2009 that it would shut down its 2G network in 2012. In many areas of the world, such as India and Africa, 2G has many years of life left. China has just begun to roll out 3G networks. India, the second most populated country in the world, lags China in this area.

Next time you start to hear about the oncoming rush of 4G, there are a few data points to put it into perspective:

• Over half of all base stations shipped in 2008 were 2G.
• In 2012 LTE base stations will be less than 1 per cent of all base station shipments for the year. Shipments of 2G base stations, primarily those using Edge, will be 25x greater than those with LTE in 2012.
• In 2013, of the over 150 crore handsets In-Stat forecasts to ship that year, only 1.7 per cent will be LTE. The rest will consist of 2G and 3G technologies.
• Looking at mobile data revenues, 3G service revenues will not overtake 2G revenues until 2012.
• While 2G in total generates more revenue, on a per user basis, 3G has higher average revenue per user.
• The top markets for 3G are North America, Western Europe, and the developed regions of Asia.

There are several reasons why these older technologies will still be around long after operators start talking about their 4G networks. For one, not all regions of the world develop at the same rate. Less economically developed regions are slower to adopt newer technologies. Secondly older technologies are needed to ensure total coverage of a region. Take a look at the United States.

The Unites States has several well developed 3G networks. These networks however lack total nationwide coverage. Operators when deploying new networks start in areas with the highest population concentrations. Today 3G can mainly be found in larger U.S. metro areas. Operators keep their 2G networks in operation to provide coverage, albeit slower, for users traveling outside of those areas. To retire an older network an operator needs to have complete coverage in its network with the newer technology, and make sure all of its subscribers have devices that can work with the newer network. As we will see in the next decade with 4G, these things take lots of time.

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