The costs of 2G, 3G shutdown for Brazilian companies

The gradual shutdown of 2G and 3G networks could involve costs of more than 10bn reais (US$1.8bn) in costs for Brazilian companies in the next four years related to the acquisition of devices, replacement of equipment and for services associated with the process.

The projection is from Links Field Brasil, a specialist in IoT and M2M connectivity, and shared exclusively with BNamericas. The values mainly refer to costs for tracking sensors and POS retail payment machines for 2024-28.

“Essentially, half of the Brazilian market [of 2G/3G] is POS and the other half is tracking. So, what will this base look like? Regulators lack clarity on who will be impacted by this process," Thiago Rodrigues, founding partner and CEO of Links Field, told BNamericas.

Telecoms watchdog Anatel has not yet established a detailed schedule for the shutdown of 2G and 3G. Elsewhere in Latin America, operators from Puerto Rico, Colombia and Chile have already begun the shutdown process, as reported by BNamericas.

Last year, the Brazilian regulator launched a consultation to gather observations on plans to switch off the two networks and transfer spectrum used by the technologies to 4G and 5G – a process known as spectrum refarming.

The idea is that spectrum permits for 2G and 3G expiring in 2028 will be used for 4G and 5G.

Anatel also aims to curb the certification of devices made to run only on the legacy technologies, a request that has been made by both operators and chipset manufacturers such as Qualcomm.

According to Links Field, the transition toward 2028 would require the replacement of almost 12mn devices.

“Issues of device compatibility between old and new networks are a challenge. Another issue is the speed at which users will update their devices. In addition, some essential services, such as alarm systems, vehicle tracking and cargo monitoring, still depend on 2G/3G networks,” Marcos Betiolo, Links Field CTO and founding partner, said in the study.

As a result, users may face interruptions or difficulties when accessing regions that no longer have the capacity to offer those networks.

BASE

The Brazilian IoT/M2M market has had consistent growth since 2012, when there were approximately 6.8mn connected devices across the country, according to the company.

In 2023, this number grew to 43mn, for a compound annual growth rate of 18.3%.

Links Field's projections indicate that Brazil will have more than 88mn IoT devices connected via cellular networks by 2030, accounting for approximately 68% of the market in Latin America.

Currently, 2G and 3G networks are responsible for 7.8% and 7.4%, respectively, of all mobile accesses in Brazil. 

Combined, the technologies represented a base of 39.5mn connections at end-June, with Vivo (44.9%), Claro (38.8%), TIM (7.4%), Datora (6.5%) and Algar (1.9%) accounting for almost all the accesses.

Both 2G and 3G are used particularly to connect vehicle trackers and monitoring devices, in addition to some sensors and to POS machines. These are services that require less bandwidth and data transmission capacity.

Yet newer POS equipment already runs on 4G or even 5G, as part of a “natural” lifecycle technological transition process resulting from the replacement of devices by retailers and companies.

“In the POS segment, the proportion that runs on 4G is already large, almost half of the total of these devices. This is closely related to new functions and services that these devices are able offer to retailers,” Rodrigues told BNamericas. 

SUPPORT AND RAN SHARING

This year, according to Rodrigues, some operators began to stipulate in new contracts and commercial proposals for companies service guarantees only for 4G and 5G networks, leaving 2G/3G networks out of contractual commitments.

“The volume of antennas, coverage and support that operators give to these networks is decreasing,” he said.

This is the second study related to the topic launched by the company this year. 

The first was released in May, with the title ‘Guide to the 2G/4G Technology Transition in Brazil’ and aimed at supporting companies in the strategic planning for the shutdown of 2G/3G networks, according to Rodrigues. 

That study did not include estimates of economic impacts.

Links Field Brasil is part of the Links Field group, headquartered in Singapore and with branches and offices in China, Hong Kong, South Africa, India and Poland, in addition to Brazil.