In the face of 5G, LatAm industry debates what to do with 2G

As the world and Latin America prepare to enter the 5G era, regional telecom executives and experts have different visions regarding what to do with the oldest generation of mobile technology in use, 2G.

Latin America's first 5G trials are expected this year and commercial rollouts to begin in 2020, making the 2G question all the more relevant.

In the opinion of Eduardo Ricotta, CEO for Brazil at telecom equipment provider Ericsson, operators will soon have to decide to effectively shutdown the 2G networks. Accelerating the phase-out of 2G and the migration to new technologies is a cost necessity, according to Ricotta.

"Between 2018 and 2019, according to our predictions, the costs to maintain 2G networks will be greater than the revenues they will generate," Ricotta told BNamericas.

"In 2G you have essentially voice. And the voice usage and revenues have fallen very fast in recent years. What's more, 2G is transmitted through old equipment and energy and leasing costs to keep them are high. It makes sense for carriers to shut it down."

In general, 2G networks are used for voice calls, but some modern machine-to-machine applications such as the POS machines used in the retail sector also run on the technology.

However, it is possible to accelerate transition and keep the reminiscent 2G connections covered with a "thin layer" using for that the guard band that separates operators' frequencies from one another, said Ricotta. With such layers, coverage is not totally lost, but has a very small capacity and it reduces the cost of the networks, he added.

Different bands are employed for 2G transmission. One of the most common is those in the 1.8GHz spectrum, used in countries like Brazil. There, as in other markets, operators are allowed by the regulator to perform so-called refarming of the 1.8GHz bands, migrating users and using the frequency combined with the 700MHz and the 2.5GHz bands for an enhanced 4G LTE service. This combination is known as carrier aggregation.

América Móvil's Claro, together with Telecom Italia's TIM Brasil, are among the most advanced in this process in Brazil. The group brands the 4G provided via carrier aggregation through 1.8GHz refarming as "4.5G."

Speaking at the 5G & LatAm Summit in Rio de Janeiro last week, Eduardo Fonseca, the manager of Claro's 4.5G project in Brazil, said he does not think 2G will be disconnected anytime soon; not even with the completion of the refarming process by the company, planned for 2019.

"We do not tie the spectrum refarming to the 2G shutdown," said Fonseca, who cited the POS base and the use of 2G in other bands as key reasons why Claro does not have any near-term plans to disconnect the long-running technology. "It's very difficult to finish with GSM [2G], which is still a very important legacy in the communications landscape."

With respect to 5G, Carlos Alberto Camardella, tech evolution consultant for Claro, said the group believes the technology will only truly become a reality in Latin America after 2020.

Roberto Medeiros, senior director of product management at US chipmaker Qualcomm, disagrees with Claro. According to the executive, all of Qualcomm's clients are migrating their POS machines from 2G to 4G networks and he is in favor of Brazilian telecom regulator Anatel encouraging and championing a 2G disconnection process.

Medeiros, as Ericsson's Ricotta, believes 2G is a waste of resources. In order to reduce costs, operators could coordinate to share infra and jointly use the 2G network of just one incumbent per region, shutting down the networks of the others in that locality, Medeiros.

"Carriers are afraid of being the first to pull the plug on 2G and then losing clients to competitors who still maintain that network on. What we suggested operators do is to coordinate the shutdown between them and leave a thin layer," Medeiros said. "The cost with 2G is increasingly high. I think they will be disconnected. And all the carriers, privately at least, express the will to get rid of these networks."

In Medeiros' opinion, 2G will be disconnected before 3G.

Sebastián Cabello, Latin American director of telecom industry association GSMA, has a different opinion. He has already said he expects 3G to be switched off before 2G - albeit only in a few years' time - precisely because of POS and other M2M accesses in the 2G base. Meanwhile, mostly everything 3G does can be done by 4G, and in a better way.

Ari Lopes, principal analyst at Ovum, sides with Cabello. He believes 2G will go on for a while, highlighting is still widely used by POS in Brazil - and that 3G should be blocked out before that.

"The fate of 2G and 3G has little to do with 5G. 2G and 3G refarming is already under way when telcos need further spectrum for LTE, regardless of 5G," he said at the Rio event.

In many markets, 4G overtook 3G as the dominant technology faster than 3G overtook 2G.

Of the 236mn mobile lines in service in Brazil by March, 12.7% were 2G. The technology shrunk by 2.41mn accesses in the 12 months through March, while 4G gained 8.10mn, nearing 111mn. 3G kept diving, losing 6.9mn accesses in the period to 76.6mn.

Brazil leads in regional 4G adoption, but the 2G scenario is not much different in other markets. In Mexico, the national chamber of the electronics, telecoms and ICT industries wants to propose a project to the presidential candidates for the July election that would see the migration of all Mexican users from 2G to 4G networks.