The Global State of 2G, 3G,

4G, and 5G

Aeris White Paper

www.aeris.com

THE GLOBAL STATE OF 2G, 3G, 4G & 5G COPYRIGHT 2016, AERIS COMMUNICATIONS, INC. 1
Let our experts lead
the way

Table of Contents

INTRODUCTION 1 IOT / M2M TECHNOLOGY USE 5

GSM DOMINATES GLOBAL FACTORS INFLUENCING

DEPLOYMENTS 1 TECHNOLOGY LONGEVITY 6

2G GSM UNITS DECREASING 2 Smartphone Growth 6

3G GSM LEADS MOBILE VOLUME 3 Operator Size and Spectrum

Pressure 7
CDMA HAS STRONG GLOBAL PRESENCE 3
RECOMMENDATIONS 7
STRONG 3G HSPA GROWTH 4
ABOUT AERIS 8
LTE DEPLOYMENTS GROWING FAST 4

IOT / M2M TRANSITION TO 2G

CDMA AND 3G 5

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INTRODUCTION
The standards and technologies for wireless mobile communications are rapidly evolving to offer ever more advanced and
efficient cellular services. Mobile cellular operators, including Internet of Things (IoT) and machine-to-machine (M2M) service
providers, can no longer be sure the two dominant worldwide cellular standardsGSM and CDMAwill remain unchanged
and in place permanently.
In fact, both GSM (Global System for Mobile Communications) and CDMA (Code Division Multiple Access) are giving way to
the faster and more spectrum-efficient cellular standard Long-Term Evolution (LTE)as operators recognize its potential.
But the shift to LTE is happening slowly around the world. There are many issues for operators to consider as they evaluate
their cellular network service deployment strategies.
This white paper describes the state of global 2G, 3G, and 4G cellular services and what alternatives are available to
companies when deploying IoT / M2M cellular devices internationally.
This paper will not offer an in-depth analysis of 5G because serious development has not yet begun. In fact, there is not yet
an agreement internationally on what might constitute 5G. An article by GSMA Intelligence stated, Discussion around 5G
falls broadly into two schools of thought: a service-led view which sees 5G as a consolidation of 2G, 3G, 4G, Wi-Fi, and other
innovations providing far greater coverage and always-on reliability; and a second view driven by a step change in data speed
and order of magnitude reduction in end-to-end latency. However, these definitions are often discussed together, resulting in
sometimes contradictory requirements.

GSM DOMINATES GLOBAL DEPLOYMENTS

For the worldwide global mobile communications market, the dominant standard for cellular networks is the Global System for
Mobile Communications (GSM), serving 90% of the market and reaching more than five billion people across more than 215
countries and territories, according to the GSM Association.

FIGURE 1. GLOBAL GSM MOBILE CONNECTIONS

THE GLOBAL STATE OF 2G, 3G, 4G & 5G COPYRIGHT 2016, AERIS COMMUNICATIONS, INC. 1
GSM is in flux, as standards and technologies for mobile communications are evolving quickly and offer more advanced and
efficient cellular services. In North America, 2G GSM, the low-cost standard favoured by many IoT / M2M deployments, is
being phased out over time as operators seek to use its spectrum for more advanced 4G LTE networks.
AT&T is shutting down its 2G GSM (including GPRS and EDGE) cellular network in the US by 2017. Although T-Mobile in
the US has not yet formally announced 2G GSM sunset plans, it has begun re-farming its 2G GSM spectrum for use with 3G
HSPA and 4G LTE. Clearly, it will also eventually announce a 2G GSM shutdown, although this is likely to be after the AT&T
sunset date.
Outside of the US, 2G GSM networks are not facing imminent shutdowns. Ultimately, this older technology will also be
removed almost everywhere, but no operator has announced plans or schedules.

FIGURE 2. 2G GSM REGIONAL CONNECTIONS

Companies operating outside the United States have more time to transition from 2G and to choose a variety of options. Those
options include replacing 2G GSM devices with 3G HSPA, 2G CDMA, or 4G LTE devices.

2G GSM UNITS DECREASING

As projected by GSMA Intelligence in its The Mobile Economy 2015 report, the number of 2G GSM units is continuing to drop
over time, as existing 2G users migrate to 3G and 4G units.

Customers must carefully balance their product

lifecycle, device cost, and market deployment
requirements to select the correct technology
for their IoT / M2M application.

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As seen in Figure 3 below, the number of 2G GSM units peaked in 2013, but is projected to drop to 3.2 billion by 2020. The
number of 3G HSPA units will increase to 3.7 billion units by 2020; LTE units will increase to an expected 2.3 billion units by 2020.

FIGURE 3. GLOBAL CONNECTIONS BY TECHNOLOGY

3G GSM LEADS MOBILE VOLUME

A majority of mobile devices are still connected via 2G GSM cellular, however, the Third Generation Partnership Project (3GPP)
family of cellular technologiesi.e., GSM, GPRS/EDGE, HSPA, etc.dominate the mobile services available throughout the
world. In 2013, almost 6.1 billion subscriptions used this 3GPP family of cellular technologies, with about 1.47 billion HSPA units
in usecomprising almost 90% of the entire global mobile market, according to Informa Telecoms & Media.

CDMA HAS STRONG GLOBAL PRESENCE

Although GSM technologies dominate cellular deployments around the world, CDMA has a strong presence in North America
particularly in the US. However, there is a common misconception that CDMA is restricted to North America and a few
Asian countries. On the contrary, as shown in Figure 4, CDMA networks are available worldwide, and 2G 1X and 3G EV-DO
technologies are deployed by 314 operators in 118 countries. CDMA networks are available worldwide, and 2G 1X and 3G EV-
DO technologies are deployed by 314 operators in 118 countries.

FIGURE 4. CDMA2000 DEPLOYMENTS WORLDWIDE (CDMA DEVELOPMENT GROUP)

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As seen in Figure 5, the number of CDMA operators in Asia-Pacific and Africa-Middle East is larger than in North America. Most
have deployed 2G 1X data services, along with a revision of 3G EV-DO in many markets, and there are also CDMA network
deployment projects in progress.

FIGURE 5. CDMA OPERATORS BY REGION (CDMA DEVELOPMENT GROUP)

STRONG 3G HSPA GROWTH

3G HSPA networks continue to add users at a rapid pace. In October 2015, the GSA reported that there are 588 commercially
launched HSPA networks in 218 countries. Of these, over 70% increased their data throughout with HSPA+ network deployments.
The GSA estimates that over 80% of operators worldwide are continuing their 3G investments, considering total global
3G connections are expected to exceed LTE until at least 2020. However LTE adoption is rising rapidly in the Asia-Pacific region
and North America.

LTE DEPLOYMENTS GROWING FAST

LTE network deployments are growing dramatically as cellular providers recognise the need to upgrade their infrastructure to
accommodate high data traffic volumes and deliver services more cost-effectively.
LTE technologies use All-IP infrastructures and are more cost-effective to deploy and operate than 2G and 3G cellular
technologies that use Signaling System 7 (SS7) for messaging.
Operators across the globe realise the potential of LTE for data services. As costs of deployment come down and as more
handsets and applications are developed for LTE services, they will gravitate away from GSM and CDMA (and even HSPA, in
time) to LTE.
According to the GSA, by the second quarter of 2015, LTE subscriptions hit 755 million worldwide. LTE is forecast to reach 8.54
billion global subscriptions in 2020. Also, the number of commercially launched LTE networks reached 422 by July 2015.

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 FIGURE 6. LTE DEPLOYED NETWORKS AS OF JULY 2015

IOT / M2M TRANSITION TO 2G CDMA AND 3G

With 2G GSM use declining and LTE still years away for some IoT / M2M applications, migrating to 2G CDMA and 3G can
represent a reasonable deployment strategyparticularly if the availability and longevity of those technologies is sufficient for
the product. For example, if using a 2G GSM module, the application providers can switch to 3G HSPA as an intermediate step
to a 4G LTE solution.
For 2G CDMA applications, there is more time to transitionsince 2G CDMA is expected to be available for longer than 2G
GSM. Businesses using 2G CDMA have the opportunity to skip 3G entirely and instead deploy 4G LTE later, after module
prices have dropped and service is more readily available.

IOT / M2M TECHNOLOGY USE

FIGURE 7. DEPLOYED IOT / M2M DEVICES BY TECHNOLOGY

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As shown in Figure 7, 2G and 3G will begin to decrease as the primary technologies for IoT / M2M devices during the next few
years, and the number of 2G devices will not grow substantially after 2016.
There are a variety of reasons for this:

Coverage of LTE networks is increasing worldwide, but has not overtaken 2G and 3G.

Cost of LTE modules started highbut is dropping rapidly.

Increased complexity of LTE designs (multi-band support, MIMO antennas, etc.).

The data rate of LTE was not needed for early IoT / M2M applications, while new use cases
for LTE and high data are growing rapidly.

Once the LTE coverage is complete, and the cost of LTE modules continues to drop (this is occurring at a faster rate than
other technologies), IoT / M2M devices and applications using LTE will become more common.
Recently, cellular chipsets that are LTE-Only have become availablethis allows handset suppliers to remove fall-back
support for 2G and 3G technologies that are needed for markets without LTE today. These LTE-only chipsets, and LTE-only
IoT / M2M modules, are making LTE much more cost-effective for IoT / M2M applications.

FACTORS INFLUENCING TECHNOLOGY LONGEVITY

SMARTPHONE GROWTH
During the last five years, users have moved rapidly from simple cellular handsets that are only capable of voice and text
messaging to smartphones that use IP data services for new capabilities (such as web surfing, etc.). In many countries, the
deployed number of smartphones exceeds the number of simple cellular handsets, and sales of smartphones are growing
rapidly everywhere.
Strategy Analytics notes that 2.5 billion people worldwide own smartphones as of 2015. In its VNI Mobile 2015 report, Cisco
projected that the percentage of smartphones will grow to 40% of all connected devices in 2019. See Figure 9 for more detail.
This requires spectrum-efficient IP data technologiessuch as those provided by W-CDMA-HSPA and LTEto be made
available by most operators.

FIGURE 8. GROWTH OF MOBILE DEVICES

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OPERATOR SIZE AND SPECTRUM PRESSURE
In the US, two large operators, Verizon and AT&T, together comprise two-thirds of the deployed cellular devices, with about
135 million and 123 million subscribers, respectively. Thus, these two operators have far more subscribers than the largest
European operators within their respective countries. For the data needs of their customers, the two US operators need
efficient use of their spectrum for deploying LTE.
That process has already begun, and as noted earlier, AT&T has announced a date when it will remove its 2G GSM (including
GPRS and EDGE) network to convert that spectrum into more efficient cellular technologies. Other operators have re-
farmedi.e., convertedexisting 2G spectrum to deploy 4G LTE. This trend is likely to continue as the number of 2G devices
decline.
Outside the US, however, the available spectrum capacity can still support older cellular technologies. Hence, it is likely that
2G GSM will continue to be available in most countries for the next six to eight yearspossibly longer in some countries.

RECOMMENDATIONS
In many cases, IoT / M2M devices and applications enjoy long product lifecycles. Unlike the consumers who tend to replace
their cellular handsetswhether simple cellular phones or smartphonesevery two to three years on average, IoT / M2M
devices are often deployed for a decade or longer.
Thus, businesses must carefully balance their product lifecycle, device cost, and market deployment requirements to select
the correct technology for their IoT / M2M application. For example, in the US, it is no longer viable to deploy a new 2G GSM
device and application and expect service longevitycustomers must choose other technologies.
Across Europe, regardless of the continued availability of 2G GSM services, it is best if businesses deploying IoT / M2M
devices avoid using 2G GSM modules if their applications require operation for more than eight to ten years. This could
include a transition deployment over some years to avoid high module costs today. In many cases, if the application devices
last for many years, then the costs of later replacementfor example, for a relatively inaccessible IoT / M2M unitmay be
considerably more expensive than deploying a 3G (or even a 4G LTE) device today.
Another benefit of taking the intermediate step of moving from 2G GSM to 2G CDMA and 3G technologies is that the number
of IoT / M2M applications absolutely requiring LTE capacity and throughput is relatively low right now. Customers may be able
to get some benefits for their IoT / M2M applications using 2G and 3G for the next two to four years before LTE becomes more
widely used.
Jumping from 2G GSM over 3G to 4G LTE is a viable option for IoT / M2M customers who understand that the applications
they need will use LTE in the future for other features that need the performance. However, if the cost of a 3G or 4G module
inside the device is too high for the application sales today, then a 2G GSM device could be deployed nowwhile a clean
product transition plan for new devices using 3G HSPA or 4G LTE is readied. This would minimize exposure to 2G GSM
longevity concerns.

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ABOUT AERIS
Aeris is a pioneer and leader in the market of the Internet of Things as an operator of end-to-end IoT and M2M services
and as a technology provider enabling other operators to build profitable IoT businesses. Among our customers are the most
demanding users of IoT services today, including Hyundai, Acura, Rand McNally, Leica, and Sprint. Through our technology
platform and dedicated IoT and M2M services, we strive to fundamentally improve their businesses by dramatically reducing
costs, improving operational efficiency, reducing time-to-market, and enabling new revenue streams.
Our global headquarters is in Silicon Valley (Santa Clara, California). Our European headquarters is near London, UK.
Visit www.aeris.com or follow us on Twitter @AerisM2M to learn how we can inspire you to create new business models
and to participate in the revolution of the Internet of Things.

Get in touch

Copyright 2016 Aeris Communications, Inc. All Rights Reserved.

To learn more, contact us at info@aeris.net or 1-888-GO-AERIS in North America or +44 118 925 3202 in Europe.

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