2G Versus 4G: The Winner May Be Surprising

An interesting situation is arising in the cellular arena: Operators, in an era of exploding wireless usage, are moving to reclaim - the term being used is "re-farm" - bandwidth for 4G Long Term Evolution (LTE) services. At the same time, increasing swarms of devices are relying on the same swatches of bandwidth to exchange information via machine-to-machine (M2M) communications networks.


On the surface, it seems like a no-brainer: LTE is sexier and in the news. A burglar alarm reporting to central station that all is fine is mundane.


The challenge is that, collectively, the burglar alarms, refrigerator truck sensors, home automation systems and almost limitless legions of devices that have reason to speak to another machine constitute a huge opportunity. There are a few things that characterize M2M: Since the messages are short and sweet, low-capacity 2G networks are fine. As a business it is predictable and, while each subscribing entity doesn't generate as much revenue as its teenage texting counterpart, it collectively creates a lot of income. Subscribing companies in this sector also don't churn, or switch providers, often.


This begs the question of how operators should slice and dice the bandwidth that they have. A Light Reading story on a panel at a Connected World conference noted that Verizon Wireless continues to invest in 2G. On the other hand, Sprint Nextel aims to shut down the 2G Nextel network within about a year. The company said in late May that this month it will begin moving business and government customers to its Sprint Direct Connect network. It also will begin outreach to other customers about the shutdown of the network.


The complexity and tension between 2G, M2M and the needs of the carriers is well documented in this GigaOm story. It says that despite the fact that T-Mobile is shutting down its 2G network, Raco Wireless - an M2M provider with which it is closely associated - just signed Apriva Wireless, a payment terminal firm and one of the big fish in the M2M business. The story is worth a read, simply to get an idea of how carriers are struggling with the bandwidth shortage and the promise of M2M business. Here is the Raco press release on the Apriva deal.


The staid world of M2M is anything but boring for network providers. Refrigerators tend not to move from one carrier to another due to a special offer. They also tend not to call customer service. On the other hand, demand for bandwidth for 4G services is exploding. It's a problem - but one that carriers probably like having.

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