3G in the US is about to be phased out! But how difficult is it to reduce the frequency of 2G/3G in China?

The withdrawal of 2G/3G networks is an inevitable global trend. However, it is also a systematic project that cannot be completed in the short term.

Recently, the withdrawal of 3G network in the United States has attracted much attention, because according to the plan of the three largest operators in the United States, the 3G network will be shut down in 2022. The 3G network, which has served American users for more than ten years, will completely withdraw from the stage of history, but a series of problems brought about by the withdrawal of network have also begun to emerge.

China has also started the process of withdrawing 2G/3G networks, but we need to be prepared for a long-term battle for this process.

3G is about to end in the United States

According to the plan, the three largest operators in the United States, AT&T, Verizon and T-Mobile, are all expected to completely shut down their 3G networks this year. Among them, AT&T plans to shut down its 3G network at the end of February, T-Mobile plans to shut down in two batches on March 31 and July 1, and Verizon will shut down at the end of this year.

It is natural to eliminate old networks and free up spectrum resources to develop 4G and 5G, but the shutdown of 3G networks will affect millions of users.

Take AT&T as an example. In its annual report to the U.S. Securities and Exchange Commission, it mentioned that about 5% of postpaid users use 3G mobile phones. Recently, AT&T mentioned in the documents submitted to the Federal Communications Commission that about 2.7 million customers will be affected by its 3G shutdown. AT&T expects to spend about $380 million to shut down its 3G network in the next few months. However, it is worth noting that although AT&T has been instilling the plan of 3G withdrawal to users several years ago, it has encountered some resistance recently. Many companies and public organizations have asked the Federal Communications Commission and AT&T to postpone the 3G withdrawal schedule. These agencies include the National Public Safety Telecommunications Commission, the Security Industry Communications Commission, etc. For example, the Security Industry Communications Commission has indicated that AT&T's plan to shut down the 3G network will affect millions of alarms installed in homes and businesses across the United States. A manufacturer of electronic surveillance equipment for the U.S. criminal justice system once mentioned that AT&T's shutdown of the 3G network would create "significant public safety risks" and "put tremendous pressure on law enforcement resources" because law enforcement agencies across the country use surveillance equipment to track criminals who are not in prison, and some of these devices still use AT&T's 3G network to provide network connections.

Analysts from some research institutions also pointed out that AT&T's shutdown of the 3G network will not only affect iPads, mobile phones and laptops connected to the 3G network, but more importantly, medical equipment, security alarms, voice assistants and in-vehicle communication devices. Most of these devices are IoT devices with a long life cycle.

Of course, AT&T has some experience in network decommissioning. The operator shut down the 1G network in 2000 and the 2G network in 2017. In particular, when the 2G network was shut down, there were still 4 million users running on the 2G network, and most of these users were IoT users. AT&T successfully decommissioned the 2G network through various means. Whether the 3G decommissioning process will be smooth this time remains to be seen.

Domestic 2G/3G network withdrawal: There are still more than 2 million base stations

In China, there have been strong calls for the withdrawal of 2G/3G networks in recent years, and relevant policies have been continuously strengthening their support.

• As early as a press conference in 2019, Wen Ku, then director of the Information and Communications Department of the Ministry of Industry and Information Technology, stated that "the conditions for the withdrawal of 2G and 3G mobile communication networks in my country have gradually matured." This was the first official statement on the withdrawal of 2G/3G networks.
• In May 2020, the General Office of the Ministry of Industry and Information Technology officially issued the "Notice on Deepening the Comprehensive Development of Mobile Internet of Things" (Document No. 25), which clearly proposed at the beginning of the notice to "promote the migration and network transfer of 2G/3G Internet of Things services."
• In November 2021, the Ministry of Industry and Information Technology issued the "14th Five-Year Plan for the Development of the Information and Communication Industry", which clearly proposed to "accelerate the withdrawal of 2G and 3G networks and coordinate the coordinated development of 4G and 5G networks", and listed the withdrawal of 2G/3G networks as a key task of network infrastructure during the "14th Five-Year Plan" period.

2G/3G has a development history of more than 20 years, and there is still a huge infrastructure that carries a large number of users. Therefore, the pace of network withdrawal cannot be completed in the short term.

From the perspective of infrastructure, mobile communication base stations are the core fixed assets of the industry. The scale of base stations determines the capacity of access users, the quality of the network and the quality of service. In the past 2021, the number of mobile communication base stations in China once again hit a new high.

Number of mobile communication base stations nationwide from 2011 to 2021 (Unit: 10,000, source: Ministry of Industry and Information Technology, IoT Think Tank)

In 2021, the number of mobile communication base stations nationwide reached 9.96 million, while the number was 1.75 million in 2011, an increase of nearly 8.21 million base stations in 10 years. According to data from the Ministry of Industry and Information Technology, the total number of base stations increased by 650,000 in 2021, of which the total number of 4G base stations reached 5.9 million; 5G network construction has been steadily advancing. According to the principle of moderate advancement, more than 650,000 new 5G base stations have been built, and more than 1.425 million 5G base stations have been put into operation, of which 840,000 are jointly built and shared 5G base stations.

Changes in the structure of base stations of different standards from 2014 to 2021 (Source: Ministry of Industry and Information Technology, IoT Think Tank)

Based on the number of base stations of different standards, we found that mobile communication base stations are undergoing structural changes: from mainly 2G+3G base stations to mainly 4G base stations. In the future, the number of 2G+3G base stations will decrease, while the number of 5G base stations will increase.

However, we can see that although there are many calls for 2G/3G network withdrawal, at least from the data of the past two years, the absolute scale of 2G+3G base stations has not declined rapidly. As of the end of 2021, the number of 2G+3G base stations is still 2.635 million, far higher than the 1.425 million 5G base stations in the same period, and the net decrease in the past year is less than 210,000. The scale of 2.635 million base stations is not a small number, accounting for more than 26% of the total number of base stations. The number of 2G+3G base stations has decreased slowly in the past two years. In my opinion, the reason behind this is that 2G and 3G still carry a huge user scale.

Private network is the key for IoT users to migrate

Among the users of 2G and 3G, there are some mobile phone users, but the majority are still IoT users, and the most difficult to quit the service are also IoT users, and the number of these users cannot be underestimated. According to data from the Ministry of Industry and Information Technology, as of the end of 2021, the three basic telecommunications companies have developed 1.399 billion cellular IoT users, with a net increase of 264 million throughout the year. IoT terminals are widely used in smart public utilities, smart manufacturing, smart transportation and other fields. The number of IoT terminals deployed in these three key areas reached 314 million, 254 million and 218 million respectively.

Number of mobile IoT connections (unit: billion, source: Ministry of Industry and Information Technology, IoT Think Tank)

As we all know, before 2020, the number of NB-IoT connections was less than 100 million, and LTE Cat.1 had not yet started to develop on a large scale, so IoT terminals based on cellular networks were mainly accessed through 2G and 3G, especially 2G carried most cellular IoT connections. Based on this, it can be inferred that most of the 1.03 billion connections in 2019 were IoT connections carried by 2G/3G. Even after the "water squeeze" in the next two years and the migration to NB-IoT and Cat.1, the remaining stock is still in the hundreds of millions.

In fact, in response to the withdrawal of 2G/3G networks, operators have introduced a number of policies. For example, China Unicom has stated on many occasions that it will accelerate the withdrawal of 2G networks. China Mobile issued a document in June 2020 "deciding to stop adding new 2G IoT users before the end of 2020" and promoting plans to develop medium and low-speed IoT.

Recently, China Mobile once again issued an announcement regarding "2/3G network subscription restrictions". "Starting from March 1, new mobile users who want to activate 1G and below packages must choose NB or 4G cat.1 packages. The system will shut down 2/3G networks by default and will not be able to activate them."

Of course, whether it is stopping the addition of new 2G IoT users or limiting 2/3G network subscriptions, both are incremental restrictions on 2G/3G, while existing IoT users still need to be provided with services, and the 2G/3G network cannot be shut down. This requirement makes the 2G/3G network withdrawal process last for a long time. The characteristics of IoT users are that on the one hand, the life cycle is long, and on the other hand, many of them are used in key production and operation scenarios of enterprises in various industries. These characteristics determine that there must be continuous network services, and the cost of replacing the network is very high. For example, the UK Spectrum Policy Steering Committee pointed out in a recent report that the UK's 2G network must maintain service until at least the 1930s, because in addition to the demand for 2G networks by a small number of mobile phone users, the UK's smart meters and the EU-led eCall rescue system rely on 2G network support. Taking smart meters as an example, the UK's smart meter transformation plan will be completed in 2024, and the designed service time is at least 15 years. During this process, changing and upgrading the communication format of smart meters will incur high costs.

It can be expected that the withdrawal of 2G/3G networks in China will be a long process. As Wen Ku said at the press conference, "From the user's perspective, mobile network withdrawal cannot be simply announced today and then shut down tomorrow. This is inappropriate. Network withdrawal must be planned in advance. Mobile network withdrawal by operators must be planned and announced early, so that users and operators have sufficient time and psychological preparation to promote the withdrawal process." Be prepared for a long run, but also make adequate plans.