Mallinson: 2G is dead, long live 2G

Keith Mallinson Wise HarborIt's astonishing to see how rapidly mobile broadband phones with HSDPA and EV-DO have almost entirely eliminated 2G and narrowband phone sales in developed nations including Western Europe and the US. However, backward compatibility to 2G mode operation will remain essential for many years.

WiseHarbor research figures reveal only a very small proportion of phones sold in developed nations now are categorised as CDMA2000 1X or GSM (i.e., including GPRS and EDGE) and WCDMA has almost entirely been replaced by HSDPA. This is particularly remarkable in the US where 3G services were not launched by AT&T and T-Mobile USA until 2005 and 2008 respectively. It is not, however, that the old technologies are going away just yet. Instead, these are being supplemented by the mobile broadband technologies in both devices and networks on new and increasingly on the old "2G frequencies."  By convention, mobile devices and network operators are defined by their most advanced technologies, but use of some older standards will remain indispensible.  

Devices are invariably dual mode or multimode and multiband. This will continue. In addition to using 3G technologies on the new "3G frequencies", such as 2100MHz in most of the world and 1700MHz in North America, devices can now also use their 3G technologies on refarmed 2G frequencies including 850MHz and 1900MHz in the Americas and 900MHz in Europe. The 1800Mhz band remains almost entirely unsupported for 3G on phones so far. Older technologies GSM and 1X remain essential for voice in particular and in order to access the widest selection of frequencies available.

It's the network, stupid

Which technology is actually used depends on network availability, carrier and consumer preferences. Whereas 3G technologies take the headlines, 2G is still used extensively. It never ceases to amaze me how frequently my 3G phones, dongles and embedded data cards revert to 2G service. This is a common problem when moving rapidly on train journeys, which is particularly frustrating when trying to connect my laptop, use the browser or watch video on a smartphone. Displacement of 2G by 3G is most rapid and pronounced in the US where HSPA and EV-DO are significantly substituting for GSM and 1X respectively as the 850MHz and 1900MHz bands are substantially refarmed. Alternatively, while static in cities with network congestion including New York, San Francisco and London one's lucky to get automatically bumped-off 3G onto WiFi connections that generally provide faster--not slower with 2G--speeds on bandwidth-guzzling devices such as the iPhone.

Whereas Finland, Sweden and France are already seeing widespread deployments of 3G at 900MHz, the vast majority of 900MHz and 1800MHz bands in Europe and elsewhere worldwide have yet to be refarmed. This represents a large proportion of capacity and most coverage for networks. There are regulatory restrictions that mandated GSM and some long-running challenges to refarming. GSM continues to be the only way to use most of those scarce assets. The UK regulator Ofcom has proposed a compromise plan to refarm 2G spectrum, but resistance is significant and persistent. Whereas Vodafone and O2 agreed; they license spectrum in the prime 900MHz band that has most favourable propagation characteristics and economics, competitors Everything Everywhere (a joint venture between T-Mobile and Orange with GSM) and 3UK objected. These opponents allege existing market distortions with uneven distribution of spectrum among competitors. They resist this continuing with 3G refarming. T-Mobile and Orange operate their GSM networks with 1800 MHz licenses. All these operators also have 3G networks using 2100MHz, whereas 3UK is only licensed for this band. Oftel warns that uncertainties with complaints and litigation will also delay the next round of spectrum licensing with 800MHz "digital dividend" frequencies.

Retirement of 2G networks will take even longer elsewhere in the world.  Peak worldwide sales of GSM network equipment were reached just a couple of years ago. The world's most populous nations China and India have only started deploying 3G in the last year or two. While China Mobile is hobbled with an obligation to deploy China's home-grown TD-SCDMA technology that was late to market and has minimal export potential, it may prefer to continue significantly with GSM for years until it can leapfrog to LTE. A major dispute on the last round of 2G spectrum licensing in India will likely inhibit moves to reallocate these frequencies to 3G for several years.

In contrast, both devices and usage in Korea and Japan have been exclusively with 3G and then mobile broadband-only. Users there do not use last-generation legacy networks because backward-compatibility was not required and 2G networks have been withdrawn. 

Lowest common denominator

The final and most significant reason why 2G technologies will remain essential in most mobile phones until the end of the decade--even if these capabilities remain dormant for most of the time or are never used--is because GSM is and will remain the most universal technology for international roaming.  It is inevitable that developing nations or large parts of them, for example in Africa, will only have GSM service coverage for many years. Global travellers are accustomed to and expect to be able to use their phones pretty much anywhere. They will not want an existing capability such as roaming taken away when they "upgrade" to a new phone. 

If these roamers travel to Korea or Japan where there are no GSM networks, or to most other nations worldwide where there are, they can use their phones with the same 3G technologies they use at home. Whether they actually want to do so for anything other than voice and SMS services with the exorbitant data roaming prices that prevail is a different matter. The several mobile phone operator sales reps I have asked recently all discouraged me from international data roaming on the basis of their high charges. But this is an entirely different question for another column some time.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. WiseHarbor has recently published its Extended Mobile Broadband Device Forecast to 2020. Further details are available at: