LTE’s appeal and increased affordability means operators in developed markets have to refarm GSM or CDMA spectrum to accommodate this demand. The next step is to close down these legacy networks, but determining the “sweet spot” for network closure is challenging, according to a new report by global research firm, Ovum.
“For operators in transition, there are key revenues – M2M, voice and roaming – that need to be considered in the trade-off when determining the optimal time to close the network,” said Ovum principal analyst, Nicole McCormick. “The amount of 2G, 3G, and LTE spectrum an operator has can also affect timing.”
A few operators in the US and Asia-Pacific have announced network closures. However, Ovum found that these are the exceptions.
“The majority of operators are not in a position today to close their legacy networks, nor will they be in the next 1–2 years,” said McCormick. “Rather, operators are deciding how to best manage a transition towards full network closure, given that M2M, voice, and roaming revenue cannibalization remains a pertinent issue. We don’t expect networks to be retired en masse until closer to 2020.”
Aside from important commercial factors that need to be considered, there are also cost factors that affect the timing of shutting down the network. These include the cost of migrating residual customers to LTE and the cost of maintaining an ageing legacy network.
“Ovum believes that in some markets 3G networks may see closure before 2G ones. 2G is still an important source of revenue. LTE provides a better mobile broadband experience than 3G, and with VoLTE, LTE can handle the voice responsibilities of 3G. This points to the possibility that operators opt to close their 3G networks before they close 2G,” concludes McCormick.
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