Breaking The Decision Deadlock: Positioning Your Business to Thrive Amid The Sunsetting of 2G and 3G Networks

Decision Deadlock 

The IoT market tends to look to the future, with a focus on innovations and new solutions. However, we don’t believe this means the industry should lose sight of the here and now. Whilst 4G and 5G networks are being deployed globally, simultaneously, 2G and 3G networks are being turned off to make way for their successors.

Although each new generation of technology seems like a step towards the future, vast amounts of IoT technology depends on 2G networks. The prospect of networks sunsetting such services is unsettling for customers with products that rely on 2G, especially as 4G equipment is considerably more expensive. This predicament means that both IoT suppliers and buyers are hitting a stalemate: what equipment do they buy, and when do they swap existing devices for 4G supported technology? 

To combat this deadlock, it is our belief that suppliers and buyers should look to multi-network providers who can ensure that as long as 2G or 3G networks exist in the UK, they will be able to guarantee a connection for hardware out there in the market. This switch will help the industry buy some time during which companies can start to rollout new equipment.

Setting the 2G and 3G scene

The G in 2G stands for ‘generation’, so 4G and 5G technologies are simply the latest phase of standards for mobile networks. 2G networks were the start of mass deployment for mobile services, and since then, the focus for new generations has been to develop and improve connectivity. The component welded into a 2G or 3G supported device at the point of manufacture is entirely different from that used in 4G and 5G, therefore as the networks shut down, the SIMs in 2G or 3G devices cannot just be swapped out. The only way to switch networks is to send an engineer to swap out the equipment that is monitoring the device. Meaning, at the point of purchase for IoT-connected devices, customers are required to make an almost irreversible decision on which network they want their equipment to connect to. 

The 4G conundrum

If all networks were to remain in place, we wouldn’t be facing such a dilemma. However, following the announcement from EE that it would be shutting down its 2G network by 31 December 2025 (disclosed in documents available to GMSA members) and Vodafone announcing that 2G in Europe will be live until “at least 2025”, the decision is more complex. Imagine you are buying life-changing equipment for medical monitoring purposes, if this is the case you would want to be sure that device will remain connected and fit for purpose for as long as possible. With that in mind, you’d opt for the 4G device, right? But what if that device was up to three times more expensive* than the 2G option. Considering that, you might revert back to the 2G connected equipment, especially as it will be running for at least another five years. And maybe longer?

In a nutshell, this is the decision deadlock buyers and sellers in the IoT market are facing right now: to buy, or not to buy, the 2G chip, or the 4G chip. To go with the most cost-effective decision or longevity. And so, the uncertainty lingers.

Commercial costs

If it’s causing such ambiguity in the market, you might be wondering why it’s happening in the first place. Mobile Network Operators (MNO) are constantly striving to improve their offering – 5G only just emerged, and 6G is already hotly anticipated in the industry. Keeping older networks running that can be replaced by ‘better’ alternatives is costly and time-consuming. MNOs only have so many licences and frequencies they can use, so to free up capacity and cut costs, the simplest solution is to shut down older generations of networks to make way for new technology. After all, their decisions have to be based upon what is best commercially for them as company, not the IoT industry. 

The Smart Meter 

Although the sunsetting of 2G will affect all devices connected to the network, the closure will affect some sectors more severely. Industries that use vehicle trackers, medical monitoring equipment, and wearable devices that provide emergency signal for staff working alone, all rely heavily on 2G devices. The uncertainty in these industries was illustrated perfectly in a Freedom of Information request submitted in 2020 to Ofcom, by a company that manufacturers vehicle security and tracking equipment. It asked when the termination of 2G networks is expected to happen as the products they provide carry a five-year warranty. Ofcom could not give confirmation of this situation, but in an update in February 2021, they did  reveal they were working with MNOs to provide more information on 2G and 3G networks closing. However, they were still unable to provide clear timescales which further demonstrates the vagueness that persists in the market.

For other industries, the main difficulty is the sheer volume of equipment that would need to be replaced as or when 2G networks shut. One example of this is smart meters. Over the past decade, energy providers have been rolling out smart meters that use IoT connectivity to record and send readings automatically to the provider: removing the reliance on households to self-submit readings, resulting in more accurate bills throughout the year. In the latest Government Smart Meter Statistics quarterly report, published in August 2021, there were an estimated 25 million households and small businesses in the UK that now have smart meters installed – the vast majority of these will be connected to a 2G network. So, if MNOs decide to close 2G networks in 2025, there will be tens of millions of smart meters that no longer work. The cost of replacing the 2G components and hiring the staff to undergo such a large operation will be huge.

Breaking the deadlock

What we are now left with is an industry that is in a deadlock. Suppliers are worried about pricing out customers if they sell 4G components, and buyers are hesitant to invest in new technology when there’s a chance cheaper historical equipment will be around longer than expected. 

It is this hesitancy, that is affecting the market. But there is a solution: choose a multi-network SIM when you purchase 2G or 3G equipment. A multi-network provider has access to networks across the countries they operate in, so when the major networks start shutting down their 2G or 3G services, the multi-network provider simply moves your supply to another 2G or 3G network. As long as there is a network operating in the UK, your equipment will remain connected. Contrastingly, if you buy from a single network provider, you will be at the mercy of their decision.

The market needs confidence if it is to grow and trade smoothly; purchasing a SIM from a multi-network provider means you can be certain that equipment will remain connected for as long as possible. And while companies have this confidence, they can start phasing out 2G or 3G equipment and introducing new technology in the natural cycle that would have existed before the threat of losing connection.

We hope that by 2025, there will be a resolution to the debate around 2G and 3G networks. By then we hope fixed dates will provide certainty on any planned closures and the market will be able to make a measured and confident decision on what technology to invest in.

Future-proofing IoT devices

So, how can we future-proof devices to prevent the same issue from occurring in another ten years, when the newest generation of network surpasses 4G’s capabilities? 

Enter the eSIM and the iSIM: the long-term resolution for the IoT industry. The eSIM is a component embedded into the equipment that can be connected to any operator. The iSIM, although still in its infancy, is software, rather than a component, that’s soldered into equipment. Both options remove the reliance on a single-generation network, overcoming the hurdles we are facing with traditional SIMs. 

However, a lot of devices deployed across the UK right now contain plastic SIMs, making multi-network providers the go-to, short-term solution. This will give the market time to do business today, with the confidence to plan for tomorrow. Then, with the introduction of eSIMs and iSIMs when – or if – the next network shutdown comes around, the IoT market will be safe from the worry and uncertainty that arose with the sunsetting of the 2G and 3G networks. 

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