AT&T refarming to have little impact on M2M growth: analyst

A leading analyst company has called into question the claims that AT&T’s shutdown of its 2G network could leave M2M customers stranded.

The US operator recently announced plans to gradually phase out its 2G network, shifting customers and spectrum over to 3G and 4G technologies, and that a full transition would be finalized by 2017.

The news was met with a chorus of criticism that M2M customers would be left out in the cold, forced to change providers or pay AT&T higher rates for 3G or 4G connections.

A leading analyst company has called into question the claims that AT&T’s shutdown of its 2G network could leave M2M customers stranded.

The US operator recently announced plans to gradually phase out its 2G network, shifting customers and spectrum over to 3G and 4G technologies, and that a full transition would be finalized by 2017.

The news was met with a chorus of criticism that M2M customers would be left out in the cold, forced to change providers or pay AT&T higher rates for 3G or 4G connections.

Unsurprisingly, some of the loudest taunts came from rival operators Sprint and RACO, an MVNO customer of T-Mobile. Neither has announced plans to shut down its own 2G network, and they seem to view the AT&T scheme as an opportunity to mop up some of the operator’s disgruntled M2M clients.

But according to Current Analysis, M2M clients are already looking to 3G technology as a way to “future-proof” their services.

In a blog post, analyst Kitty Weldon says if there is any possibility customer needs for bandwidth will increase—perhaps due to more frequent sensor polling or hungrier applications—then M2M companies will consider migrating to 3G.

Indeed, according to Weldon, Verizon is actively promoting its 4G network as an option for M2M because it ultimately plans to use the infrastructure for all the communications services it supports. With that in mind, the operator is busy working with device companies to lower the cost of M2M modules using 3G and 4G technology.

AT&T says that only 12% of its current postpaid connections use 2G technology, while industry estimates are that approximately 80% of worldwide M2M connections use 2G, as opposed to 3G or 4G.

“All in all, AT&T clearly views that losing a few low-speed customers is worth it, as its short-term revenue and profit calculations are already tied to 3G, and its longer-term future is married to 4G LTE,” writes Weldon. “And by 2017, other operators may end up viewing their 2G networks as more of a liability than a source of revenue.”