Shutting down 2G and 3G is ramping up across the globe as operators make way for more capacity for 4G and 5G networks. It is the inevitable cycle of progress, out with the old, and in with the new as the old saying goes.
The majority of shutdowns are occurring in Europe and North America but developing countries are also following suit as technologies and consumer habits evolve, leading to demand for higher capacity connectivity such as 5G. In Asia-Pacific, the first wave of 5G launches took place across the Philippines, South Korea, China, Australia and New Zealand. Following suit were Indonesia, India, Thailand and Malaysia.
According to ABI Research, operators in Asia-Pacific and Oceania will lead in shutting down their 2G and 3G networks. Between 2019 and 2030, the analyst company predicted 13 operators will shut down their 3G networks in Asia Pacific and Oceania.
Europe will follow with four operators, Africa and South America will shut down two apiece and one in North America, but we can assume the more developed continents rank low in this data pool as many operators there have already shut down their older networks.
As for 2G, Asia Pacific and Oceania will see nine operators ditch the relatively ancient connectivity technology by 2030. Meanwhile, three operators in Africa, North America and Europe will shut down their 2G networks, and South America will see one provider drop it.
This raises the question of why operators in Asia Pac are accelerating their 2G/3G sunsets? ABI Research VP of Asia-Pacific and advisory services Jake Saunders told Developing Telecoms that underlying technologies in developing markets in Asia-Pacific are “evolving rapidly” as have demands from subscribers, which is clear from the amount of 5G networks being launched.
Saunders noted 2G/3G devices are becoming “marginal” while 5G devices are dropping in price “rapidly”.
“Operators want to minimalize and consolidate their infrastructure assets. Also, regulators want to repurpose spectrum to enhance services. 2G sits in 900MHz and 1800MHz and 3G sits in the 2100MHz. Those frequencies are very good for propagation signals, so they’re very good for indoor and wider coverage,” said Saunders.
Canalys analyst Le Xuan Chiew agreed that operators are “trying to streamline resources” and aid in “driving digitisation” by connecting more subscribers to advanced connectivity.
But a key challenge remains - device affordability. Churning subscribers over to more expensive data plans and devices can prove a challenge for obvious reasons. Le pointed out that even devices under US$100 would represent someone’s entire budget for food, particularly in the current climate of high inflation.
“In 2022, Indonesia decided to switch off its 2G and 3G networks and we predicted smartphone uptake to grow between 10% and 15%, but this fell to 5% because of the pandemic and rising inflation.
“People became very reluctant to buy a new smartphone because of inflated prices, not only for smartphones but for all commodities. This became the main challenge for smartphone vendors and operators to tackle, in their efforts to chase growth,” said Le.
“In the UK and Singapore, people typically go on a contract plan, which allows access to some fancy handsets costing around $1,500 per device. That cost can be spread over a two-year contract, and that makes it viable," added Saunders.
“But in emerging markets, most people will buy their device upfront, get a hand-me-down or buy a second-hand phone. The grey market is quite a big part of how phones from the West, or developed markets such as Hong Kong, funnel their way down into Southeast Asia and India. This is how advanced replacement devices make their way to developing markets, that's what will drive replacement rates in emerging markets and different regions.”
Streamlining resources
It also comes down to streamlining resources as Saunders pointed out, and Le expanded on this, pointing out that mergers and acquisitions have become a way for operators to combat rising prices by deploying expensive infrastructure.
In Thailand, True and Dtac finally completed their drawn-out and controversial merger. By doing so they overcame the challenge of limited resources by sharing infrastructure. This enables them to shut off 3G to open up the chance to drive subscribers from more advanced 5G plans.
“I would think that it's a step in the right direction for the telcos to drive digitalization in the developing economy,” said Le.
Shutting down legacy networks in the West stirred concerns as they served emergency services and militaries. For developing nations in the Asia-Pacific, 2G and 3G serve as the only avenue to connect to the modern world from the remotest locations.
It is in these remote locations where Asia’s rich plethora of cultures are preserved staunchly, even against the fast-rising tide of globalisation and its key tool – connectivity.
“Locals were actually more reluctant to stop using 3G because they feared their cultural belief would decline as everyone became glued to their smartphone devices. There was some sort of resistance from local tribes,” said Le.
Saunders added there are around 800 million people who still live in areas that do not have decent coverage, and operators and regulators have a duty to ensure when 2G/3G is switched off “to make sure everyone is still being brought along on to the next wave of connectivity.”
Saunders predicted 4G will continue serving a vital role in the Asia-Pacific for the next seven years, even until 2040 depending on how developed a country is and the legislation put in place to spur the telecoms sector.
The march of progress continues despite the current turbulent landscape of global economics. Asia-Pacific is a region that will look starkly different in 2030 and that will no doubt be fuelled by the next wave of connectivity, at the cost of 2G and 3G.
It was the launch of the first iPhone in 2007 alongside 3G, which ushered in a golden age for the telecoms sector, as they hand in hand showed how people can be better connected and even more productive than before, all thanks to airwaves and a smartphone.
A better-connected world is a more developed world, as many economists have pointed out, the way in which countries have opened themselves to each other has pulled many out of poverty and opened more doors of opportunity. One can only hope this will continue to occur as 2G/3G networks sink below their horizons.
