Don't Fear the Future Plan a Scalable Long-Term Cellular Strategy for 2G

Don’t Fear the Future Plan a Scalable Long-Term Cellular Strategy for 2G, 3G, and 4G Technology Introduction

Second-generation (2G) cellular data services have served millions of users and devices for many years, and continue to be employed in virtually every market worldwide. The evolution of third-generation (3G) and fourth-generation (4G) cellular networks, however, has made the world of cellular services more complex. While operators in many markets will continue to invest in maintaining and upgrading 2G networks for the foreseeable future, operators in others have already begun to cap existing 2G services and are transitioning to 3G and 4G technologies.

Given these market realities, it is important for original equipment manufacturers (OEMs) and enterprises developing cellular machine-to-machine (M2M) applications to think carefully about how 2G, 3G and 4G ﬁ t into their long-term roadmaps. When developing new cellular products and M2M solutions, OEMs and enterprises should carefully weigh the pros and cons of the different air interfaces. To best plan ahead, they should adopt a scalable approach that will allow them to address all markets – 2G, 3G and 4G – as cost- effectively as possible.

There is no single right answer for all enterprises and all markets. The best option: build to scale. Focus on solutions that allow for reuse of development, testing and certiﬁ cation efforts in multiple markets and operator networks, regardless of wireless access technology.

Understanding the Current Market Landscape for 2G Services

When surveying the state of 2G cellular services worldwide, two things become immediately apparent. First, 2G networks on the whole are still going strong, supporting millions of customers and M2M devices – and likely will continue doing so for many years. Second, however, it is clear that 2G services have reached a transition point in certain markets.

In much of Europe, Latin America, Russia, the Middle East, Africa and Asia, mobile network operators (MNOs) continue to invest in and expand their 2G networks with no sign of slowing down anytime soon.

Several major industry segments—for example, European automotive companies rolling out eCall solutions—are building long-term M2M strategies around 2G technology. Additionally, EDGE services (a higher-speed 2G technology) continue to grow in several markets,

© 2014 Sierra Wireless Inc. 2 especially China and other Asian countries, due to the additional speed, lower latency, and higher network efﬁ ciency it provides, for a lower cost than 3G or 4G technologies.

In other important markets, however, especially in North America, Australia, South Korea and Japan, MNOs are reducing 2G services or ending them altogether as they expand LTE networks and shift customers and wireless spectrum to 3G and 4G technologies.

The upshot: even among markets investing heavily in 4G/LTE rollouts, there remains a great deal of variation. In some markets, 4G/LTE networks are mature and ubiquitous; in others, multiple network technologies—2G, 3G or 4G—remain viable options for OEMs, depending on their speciﬁ c deployment requirements.

On the whole, industry analysts expect 2G to remain a viable cellular technology globally for many years. But they expect 2G connections to shrink as a share of global mobile connections overall. The Global Mobile Suppliers Association (GSMA) forecasts over 1 billion LTE connections worldwide by 2020. And they project that 2G-only connections will make up just one third of total mobile connections at that time—compared to 60 percent in 2014. Ultimately, the question for OEMs and enterprises is not whether to think about migrating today’s 2G solutions to newer cellular technologies. It’s how to create a scalable long-term wireless strategy that will accommodate 3G and 4G technologies alongside 2G services in markets that have moved in that direction. Even in EMEA and other strong 2G markets, 2G will eventually give way to more modern services. LTE in particular is becoming the dominant cellular technology in some parts of the world.

The question enterprises need to answer then is how they should plan their wireless strategies to balance short-term and long-term costs, and how they can best position themselves to embrace newer technologies with minimal cost and effort.

Comparing 2G, 3G and 4G Technologies

OEMs and others developing M2M applications for today’s marketplace can choose between 2G, 3G, and 4G/LTE technologies.

• 2G: 22G services come in several varieties for GSM and CDMA networks, including General Packet Radio Services (GPRS) and Enhanced Data Rates for GSM Evolution (EDGE) technologies. They offer data rates from 56 kbps up to several hundred kbps, depending on the technology.

© 2014 Sierra Wireless Inc. 3 • 3G: 3G services for both GSM and CDMA networks offer a higher-bandwidth, lower latency cellular broadband service, with data rates ranging from 200 kbps up to several Megabits per second.

• 4G/LTE: Services advertised as “4G” today encompass several different technologies, including 4G HSPA+ and 4G LTE. These technologies do not technically meet the original standards deﬁ ned for 4G services – between 100 Mbps and 1 Gbps – but they provide a signiﬁ cant boost in data rates and latency over 3G technologies, typically offering several Mbps at a minimum.

OEMs and enterprises developing M2M applications today can build their solutions around any of these technologies, and there are beneﬁ ts and drawbacks to each.

2G Technology

OEMs serving markets in many parts of the world may continue to ﬁ nd 2G technology advantageous as a mature, proven, reliable, and widely deployed cellular data format. It is also very inexpensive compared to 3G and especially newer multimode 4G/LTE modems.

While 3G and 4G/LTE solutions can provide much higher bandwidth and lower latency, 2G services are more than adequate for many M2M applications such as smart meters, personal healthcare devices, industrial equipment, vending machines, and other types of devices that transmit a very small amount of data.

However, many M2M applications – especially large metering, home security, and industrial applications – have very long life spans, with an expectation that deployments will operate in the ﬁ eld for 10 or 15 years or more.

Given the massive cost of upgrading devices in the ﬁ eld (for example, having to send maintenance personnel to upgrade hundreds of thousands of deployed smart meters), the longevity of any proposed cellular solution is a central consideration. OEMs and enterprises developing these types of M2M applications then may consider migrating to 3G or 4G technologies today, even if they do not need the additional bandwidth.

Today, 3G represents a mature and proven technology in its own right and offers a number of advantages over 2G services. First, 3G networks provide higher data rates and lower latency than 2G technologies, allowing them to support higher-bandwidth and time- sensitive applications that are less applicable to 2G. Applications like remote or mobile network connectivity, point-of-sale or ATM terminals, digital signage and mobile emergency services are all well suited to 3G networks.

3G networks also offer greater longevity, both as a result of being a newer technology than 2G and because 3G remains an important complement to newer LTE. Most LTE applications are designed to fall back to 3G coverage when LTE is not available. In addition, while some mobile operators in mature markets are implementing or expanding voice-over-LTE (VoLTE) services, many operators still rely on 3G networks to provide telephony for their LTE data customers.

Since 3G technology has been available for several years, 3G modules are also now relatively inexpensive, especially compared to LTE technology.

4G LTE Technology

MNOs use the term “4G” to refer to several different technologies that provide signiﬁ cantly better performance than previous-generation cellular services. AT&T, for example, offers both 4G HSPA+ service and 4G LTE service. In most markets around the world today, however, LTE has become the dominant 4G cellular standard.

LTE services offer substantially higher data rates (up to 100 Mbps) and a fraction of the latency of previous-generation cellular technologies. As a result, they can support M2M applications that were never possible before, including more demanding video surveillance, entertainment and networking applications. For these applications and others for which speed, responsiveness, and performance matter, LTE can provide a superior-quality user experience compared to previous-generation cellular technologies. As LTE network deployments continue to expand around the world, expect these types of M2M applications to grow as well.

© 2014 Sierra Wireless Inc. 5 As end-to-end IP technologies, LTE networks are also substantially more efﬁ cient for MNOs, and easier to integrate with IP-based core networks and IPv6 addressing schemes. Depending on the frequency band at which they are deployed, LTE services can also offer better penetration into buildings. This is particularly true for MNOs in North America and Australia who are “re-farming” their 2G spectrum, and shifting their lower spectrum bands to support LTE services.

For all of these reasons and others, MNOs around the world have made signiﬁ cant investments in building out LTE networks. As of May 2014, the Global Mobile Suppliers Association (GSA) reported 288 commercial networks operating in 104 countries, serving 240 million LTE subscribers, and noted that 497 MNOs have made ﬁ rm commitments to deploy LTE networks in the next several years.

When looking toward the future then – especially for applications where longevity is a primary concern – LTE technology must be considered. However, companies developing M2M solutions must weigh those beneﬁ ts against the higher costs and added complexity of LTE products that must support additional frequency bands. MNOs also must contend with the reality that, while LTE rollouts are proceeding at a brisk pace, LTE coverage today remains less widespread than other technologies.

Considerations for Scaling from 2G to 3G or 4G LTE Services

When does it make sense to begin planning to support newer 3G and 4G services?

For OEMs and enterprises looking to deploy GSM solutions in North America, Australia, South Korea or Japan, the time is right now. Many MNOs have already capped 2G services and begun re-farming that wireless spectrum, and GSMA reports that most advanced LTE operators in the United States and Australia will have entirely migrated their 2G-only connection bases to 3G or 4G by 2020. Even in markets like Europe and Latin America, where 2G services are still going strong, there will come a time at some point in the future when companies need to begin thinking about scaling beyond 2G-exclusive products.

© 2014 Sierra Wireless Inc. 6 Depending on the application – a connected vending machine solution expected to operate in the ﬁ eld for ﬁ ve years versus a connected home security system expected to operate for 10 – that time may come sooner rather than later.

OEMs and enterprises developing M2M applications, especially those building solutions for longer-term deployments, will need to weigh several important business questions:

• Should they continue using lower-cost 2G technology that meets their needs today?

• Should they begin migrating to 3G technology now?

• Or, if they are considering migrating, should they move directly to 4G LTE – paying a higher cost for LTE devices upfront, but gaining the peace of mind that those devices will not need to be upgraded for many years?

There is no single correct answer. Different approaches will make sense for different customers in different markets. There are, however, some important factors to consider when evaluating the possible approaches, especially for those weighing 2G versus 3G technology for their M2M solution.

Continuing to Use 2G Technology

For many businesses, especially in European, Latin American, Asian, African, and Middle East markets, it makes good business sense to continue using 2G technology today while it is still widely available and inexpensive. However, even these organizations should be designing new systems with scalability in mind.

For example, some wireless technology vendors offer pin-to-pin compatibility among 2G, 3G and 4G modules. So even if an OEM or enterprise does need to upgrade from 2G services in the future, they can just replace the wireless module rather than replacing the entire device. This may be a good option for businesses deploying M2M applications that will never need 4G data rates or latency such as smart meters or security alarms, but that still wish to extend the life of their connected devices. It can also be a sound business decision for OEMs serving multiple markets, as it allows them to use a single printed circuit board (PCB) and hardware footprint for all customers, and a single R&D and testing effort, even while some markets use 2G modems and others use 3G or 4G.

Another approach is for businesses to let backward compatibility work in their favor. Most 3G devices are designed to fall back on 2G service if 3G is not available, so they can operate on both 2G and 3G networks. As a result, OEMs and enterprises can take the approach of using a 3G module in their devices today, even when deployed over a 2G network.

This approach affords greater long-term ﬂ exibility, especially in regions that are actively moving low-bandwidth M2M customers to 3G, as businesses can switch from 2G to 3G in the future without having to upgrade hardware in the ﬁ eld. Effectively, it allows OEMs and enterprises to sidestep the question of 2G versus 3G entirely, since their solution will support both.

Building for Scalability Across All Access Technologies

In many cases, the best option may be to not commit to a single wireless access technology, but to reorient product design and testing to more readily accommodate all of them. New M2M platforms such as the AirPrime® HL Series from Sierra Wireless provide a single form factor across all cellular technologies—2G, 3G and 4G. By taking this approach, OEMs and enterprises can use the same PCB and hardware footprint—and a single R&D, design, and development process—across all the markets and customers they serve. As a result, they can build more longevity into their solutions, and expand to new markets and MNO partnerships faster and at a lower cost.

In addition to scalability, this new generation of single-form-factor solutions offers other beneﬁ ts to OEMs and enterprises. The HL Series features the smallest form-factor cellular module available across 2G, 3G and 4G services and is optimized for M2M applications. It is designed to withstand harsh environmental conditions, and provides built-in encryption and secure-access capabilities. It also includes native device-to-cloud integration with AirVantage Management Services (AVMS) to address the entire lifecycle of device ﬁ rmware, including installation, maintenance and upgrades over-the-air. Which is the right path?

The short answer is, it depends. But whichever approach OEMs and enterprises take, upgradability and scalability should be primary considerations in their solution designs. That means taking a longer-term view when making technology choices, but it also means making wise decisions in wireless technology partners.

© 2014 Sierra Wireless Inc. 8 OEMs and enterprises looking toward the future need to make sure they are working with wireless technology vendors that have expertise in 2G, 3G, and 4G LTE technologies; broad and deep product portfolios that can support a variety of possible migration paths; and industry expertise to navigate the unique requirements of different MNOs worldwide to quickly bring new products to market. When transitioning to 4G LTE services in particular, enterprises should strongly consider using LTE modules and working with a solid, established partner to provide this technology.

Design Considerations for Scalable Solutions

Recognizing that cellular markets around the world continue to evolve, what should OEMs and enterprises developing M2M applications think about as they seek to develop scalable, upgradable solutions? They should look for wireless ecosystem partners that can address the following considerations.

• Pre-certifi ed modules: To streamline development, expedite operator certifi cation and reduce time-to-market, use pre-certifi ed modules. For international deployments, seek out vendors that can offer pre-certifi ed modules for multiple networks and markets. This not only speeds the development process, it suggests a wireless partner with deep knowledge of various carrier networks and cellular markets.

• Form factor options: In order to simplify product design and reduce development costs and timelines, OEMs should look for solutions like the HL Series that allow them to use the same form factor across 2G, 3G and 4G networks. These solutions will enable them to address many different markets more cost-effectively, and more easily migrate solutions in the future from 2G to 3G or 3G to 4G.

• Industrial speciﬁ cations: Look for vendors that can support demanding M2M applications and provide long life spans, even in harsh outdoor conditions. Options should include modules that meet industrial-grade speciﬁ cations for extreme environmental conditions of shock, corrosion, temperature (-40C to +85C), vibration and humidity.

• Fast development and certifi cation: Choose wireless ecosystem partners that can provide assistance through every stage in the process of developing an M2M solution, including design, fi eld testing, certifi cation and beyond.

© 2014 Sierra Wireless Inc. 9 • M2M management platform: To simplify the deployment and ongoing operation of their application, businesses should seek out partners that have extensive experience remotely managing hundreds of thousands – if not millions – of M2M devices in the ﬁ eld. Look for partners that can offer a mature M2M management platform that includes:

- Comprehensive ﬁ rmware OTA management solutions like AVMS to address the full lifecycle of devices deployed in the ﬁ eld

- Remote conﬁ guration and management tools to set or change parameters and remotely troubleshoot potential connectivity issues

- Cloud-based service delivery to simplify adoption, reduce costs, and ensure that the latest security standards are implemented

- An operations portal to monitor M2M devices and automatically send alerts when problems are detected

- Application programming interfaces (APIs) to link data from the M2M management platform with an organization’s back-end applications and user interfaces

• Support for hardware best practices: Seek out technology vendors that provide the highest-quality, smallest form-factor cellular modules, designed according to accepted industry best practices, across 2G, 3G and 4G technologies. This includes sound RF and antenna design to assure reliable connectivity and performance, efﬁ cient power management and proper design for heat dissipation.

• Software ﬂ exibility (or portability): Look for partners that offer advanced M2M software development frameworks, with the ability to run sophisticated applications in the wireless module itself. A well-designed software framework should be based on standard development languages and provide easy-to-use development tools. It should also offer the possibility of software reuse when migrating to a new technology, allowing businesses in some cases to design an application once for a 2G solution and port it to a new 3G, multi-mode or 4G LTE module when they upgrade in the future.

• Software upgradability: Choose cellular modules like the HL series that offer secure ﬁ rmware upgrades over the air to assure that products always have the latest features and capabilities, without having to physically touch deployed devices. Look for remote ﬁ rmware capabilities like those provided with AVMS, which simplify the management of thousands or millions of devices over the air with the ability to select sets of devices or

© 2014 Sierra Wireless Inc. 10 fi rmware versions and apply batch updates, instead of having to go series by series or device by device. Cellular modules should support patch updates rather than requiring the device to replace the entire fi rmware package for each update (which can represent a huge cost savings for large-scale deployments such as smart meters). Firmware management capabilities should also integrate directly with a larger cloud service, such as the Sierra Wireless AirVantage Cloud platform, and allow operators to access new fi rmware versions from the same centralized interface they use to manage devices, instead of having to manually download and install updates.

Most important, a long-term wireless technology partner should offer comprehensive device to cloud solutions. As the M2M market matures and applications become more advanced and widespread, it will become more critical to work with partners focused on the entire lifecycle of deploying, managing, and upgrading M2M devices in the ﬁ eld, rather than just supplying M2M technology. How Sierra Wireless Can Help

When it comes to determining when and how a business should migrate from 2G to newer cellular technologies, there is no one right answer. Each organization must make that assessment itself; ROI for any technology decision depends on the speciﬁ c application.

However, the choices that OEMs and enterprises developing M2M applications make in selecting their wireless ecosystem partners can make a major difference in their ability to develop scalable long-term solutions and transition to new cellular technologies.

Sierra Wireless is uniquely positioned to help customers navigate the path from today’s 2G M2M technologies to tomorrow’s solutions, whatever those solutions may be. Whether OEMs are considering 2G, 3G or 4G/LTE technologies, operating over any cellular network in any market or markets, Sierra Wireless can provide expert guidance and solutions to support a seamless migration path.

Sierra Wireless provides expert professional support and services through every stage of the development, certifi cation and deployment of new M2M solutions to speed customers’ time to market. Sierra Wireless offers unparalleled experience certifying new products on carrier networks worldwide, with products currently certifi ed on more than 84 networks in over 40 countries, and growing. Sierra Wireless has also invested millions in certifi cation laboratories, as well as cellular and OTA management testing equipment, to support pre- certifi cation efforts and provide expert certifi cation resources to customers. This level of

In addition to this development and certiﬁ cation support, Sierra Wireless provides:

• Pre-certiﬁ ed modules for cellular networks in virtually every market

• A wide array of 2G, 3G, 4G/4G LTE and modules and intelligent gateways to support customers deploying solutions in multiple markets, or migrating their solutions from one technology to another over time

• Continuity from product to product and cellular standard to cellular standard, making it easier and less expensive to evolve M2M solutions

• Solutions that allow OEMs to use a single form factor and development process across all wireless technologies and markets

• Option to use application frameworks designed speciﬁ cally for M2M, which provide native support for advanced application and communication capabilities and enhanced software portability when migrating from 2G, 3G and 4G LTE in the future

• Comprehensive OTA ﬁ rmware capabilities with AVMS, allowing OEMs and enterprises to cost-effectively manage and update thousands or millions of deployed devices

• Long-term peace of mind as customers migrate to 3G and ultimately LTE, through the remote management and updating capabilities of the comprehensive Sierra Wireless AirVantage® M2M Cloud Platform

• More than a decade of leadership in M2M and over 20 years of experience in wireless technology

To ﬁ nd out more about how Sierra Wireless can help you plan the right long-term cellular strategy for your business, visit: www.sierrawireless.com.

About Sierra Wireless Sierra Wireless is the global leader in machine-to-machine (M2M) devices and cloud services, delivering intelligent wireless solutions that simplify the connected world. Our solutions are simple, scalable, and secure, and enable customers to get their connected products and services to market faster. For further company and product information, please visit www.sierrawireless.com.