Verizon to switch off 2G AND 3G by!

I saw this news article today stating that Verizon Wireless will turn off their entire CDMA network by 2021, leaving it as a 100% LTE operator. This was quite a surprise. I'm not entirely sure I believe it, but let's have a look at the implications for M2M.

***UPDATE: This was apparently just a "guideline" with Verizon spokesperson Brenda Raney stating on Thursday that "The Verizon Wireless 2G and 3G networks will be available as long as necessary to support customers who may have mission critical projects on those networks. We haven't made a sunset decision like our competitors."***

First thing to say is that we ask for clarity from operators about roadmaps and this is definitely clarity.

Second is the question of cost. Today LTE modules are 3-4x the price of CDMA. But that doesn't mean that will be the case in 2021. Much of the price premium is a function of scale. By making this decision Verizon has guaranteed a certain scale for LTE modules which by itself will reduce the cost. Conceptually, LTE production at scale could bring the price down dramatically (particularly as this will be a single mode LTE device, rather than including CDMA too). How far it can bring down cost is the big question.

In a way the cost of buying LTE modules in 2021 is not really the issue, however. The issue is the cost of modules for devices that will be in the field in 2021, i.e. devices that are being bought between now and then. AT&T set itself up for a few problems with acquiring M2M customers 4 years + from when it plans to sunset GSM/GPRS (1st Jan 2017). Basically, as soon as it announced the sunsetting in the summer of 2012 its competitors, RACO Wireless in particular, rubbed their hands with glee at all the customers that would shift their business. At a minimum Verizon will start to have problems from about 2016, but possibly earlier, as users start thinking about putting devices in the field that they will need to futureproof through their lifespan.

Another possibility is that Verizon could bring down the cost by subsiding LTE devices. Taking a chunk of the cost savings that come from network rationalisation and pouring it into subsidising LTE M2M devices would mitigate the problems caused by switching off CDMA.

Of course none of the decision is due to M2M. It's a small fraction of revenue and key strategic decisions about network roadmap are made with virtually no reference to impact on M2M. For Verizon it strikes me as a bold move and I give it the thumbs up (if it's right). The M2M unit just has to live with whatever technology choices the parent company makes.