T-Mobile may be sunsetting 2G, but its M2M biz keeps growing

T-Mobile USA is shutting down 75 percent of its GSM capacity in order to clear its airwaves for new HSPA+ and LTE networks. You would think that such a large-scale retirement of its 2G capacity would wreck havoc on its high profit margin machine-to-machine (M2M) communications business, which leans heavily on its GSM/EDGE networks. But the opposite appears to be case.

T-Mobile’s M2M services provider Raco Wireless announced today at the Connected World Conference that it has landed one of the biggest fish in the M2M industry, point-of-sale (POS) transaction manager Apriva Wireless, which processed $ 7 billion in sales last year through wireless payments terminals.

Apriva isn’t shifting all of its business to T-Mobile. But, in a carefully worded press release, Raco, T-Mobile and Apriva said that they would be replacing the terminal SIM cards of Apriva’s current carrier in areas where that carrier is shutting down its 2G network. They didn’t name that mystery provider but it’s easy to read between the lines.

AT&T is one of Apriva’s current M2M network partners, and AT&T plans to shut down its GSM network on the 1900 MHz PCS band in New York City (it’s keeping GSM up on the cellular band) devoting that spectrum to its HSPA network. That means Apriva will need to find a replacement network for its PCS-only payment terminals in the country’s biggest commercial center. T-Mobile and Raco may have won the contract by default – there aren’t any GSM alternatives besides T-Mobile in the NYC — but a win is a win.

Raco President John Horn said there would be many more wins in same vein. As carriers – again he wouldn’t name Ma Bell by name – start refarming more of their 2G spectrum for mobile broadband, they’ll be abandoning their M2M customers, who are counting on 2G networks being around for years to come, Horn said.

So why is T-Mobile any different? Of the four Tier I operators, T-Mobile has been the most aggressive when it comes to cannibalizing its 2G spectrum for mobile broadband. While its true T-Mobile is refarming its airwaves, Horn said, T-Mobile is only shutting down GSM to a point. It’s committed to keeping that remaining quarter of its 2G capacity running for the “foreseeable future,” which is more than enough to support a robust a M2M business.

“That 25 percent of its PCS spectrum will support hundreds of millions of [M2M] subscribers,” Horn said. “Not millions, not tens of millions, but hundreds of millions of connections.”

While the big ticket items like tablets and cars get all of the attention, Horn said, 90 percent of M2M devices consumer only the most miniscule amounts of data – smart meters, vehicle tracking modules, field sensors, etc. For the most part, those connected car and tablet computing platforms are moving to 3G and LTE networks, which have the capacity to support their applications, while all of that low-capacity traffic is staying on 2G.

Photo courtesy of Shutterstock user Maitree Laipitaksin

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