Transfin.
HomeNewsGuidesReadsPodcastsVideosTech
  1. News
  2. Explained

Jio, Airtel and Vodafone Idea Disagree Over the Future of 2G Technology in India

Editor, TRANSFIN.
Aug 11, 2020 5:03 AM 5 min read
Editorial

Reliance Jio’s Mukesh Ambani ruffled some new feathers recently. Well let’s face it he’s been ruffling a lot of things lately.

At RIL’s Annual General Meeting, he called for a “2G-Mukt” India, arguing that it is necessary that “policy steps should be taken with utmost urgency to make 2G a part of history”.

Vodafone Idea MD Ravinder Takkar rejected this idea last week at their earnings call, saying it was “a completely wrong message”. Airtel’s Sunil Mittal had also spoken against switching off 2G networks last month.

But wait - Indian mobile phone users are overwhelmingly 4G users, no? And the world is on the cusp of the much-awaited 5G era - some markets have already unveiled next-generation smartphones. So why are we at loggerheads over 2G tech? Out with the old, in with the new, right?

The reality, however, is more complicated than that.

Let’s begin at the beginning…

 

A Brief History of 2G

Having been around 3G and 4G for so long, most of us may not comprehend just how revolutionary 2G was when it first came out in 1991. It was light years ahead of the previously-existing 1G analog networks and enabled technology to advance exponentially in the coming years.

Some of the smartphone features we take for granted these days were introduced over 2G networks. These include affordable data rates, smaller phones, headsets without antenna, emojis, instant text messaging, international roaming, camera apps, digitally encrypted conversations and so much more!

So, though 5G might be the future, the telecom world is built on a 2G foundation and owes a lot to the innovations of that era.

 

The 2G Sunset

As time progressed, new cellular networks emerged. 3G and 4G eclipsed their forerunner and conquered markets the world over. It seemed to many that 2G would wither away into oblivion just like 1G had. (FYI: as of 2018, a limited service in Russia was the only 1G cellular network still in operation.) 

But that’s just how technology works. New replaces the old. After all, most of us don’t use DVDs, typewriters or public telephone booths anymore.

Surely enough, pretty soon network operators and policymakers began thinking of whether it was prudent to phase out 2G devices altogether to make way for newer generations of technology.

Some countries put thought to action. Australia, Macau, Singapore, South Korea have already waved goodbye to 2G. Japan and Taiwan have moved on from both 2G and 3G!

In the US, some operators like AT&T and Verizon have already shut down 2G services. Others have committed to do the same, with all 2G likely to be phased out by 2021. 

But in most other countries, shutting down 2G is easier said than done. In fact, in some places like Europe, it is likely that 2G will outlive 3G!

Wait, what?

 

Why It’s Hard to Quit 2G

Something 2G abolitionists forget is that so many legacy services are reliant on 2G...simply because they were built that way. This includes machine-to-machine tech like vending machines and credit card machines, transport infrastructure like buses and train systems, and public projects such as smart electricity and gas meters.

Shutting down 2G would mean immobilising these vital services. So why don’t we just shift them to 3G or 4G and then shut down 2G? Because doing so is a costly affair, so many countries have opted to let 2G stay.

And because this tech is so intricately ingrained in our everyday lives, it is likely to outlast even 3G in some places like the UK, where 2G services will likely be necessary until 2039.

Moreover, because these old-but-gold networks are still so important, phasing them out is a delicate matter that can go dangerously offrail if not handled properly. Case in point: when AT&T terminated its 2G services in 2017, the San Francisco bus and train system devolved into utter chaos that lasted several weeks because train and bus schedules were calculated and displayed using 2G tech.

Not to forget that millions of people around the world still use 2G networks, especially the elderly population and those in rural areas. These users would have to be moved into 3G or 4G before pulling the plug on 2G. 

And they would have to be given ample time to transition - or you’d end up with a case like South Korea, which gave its 810,000 2G users only three months’ notice before shutting down the service, leading to a class-action lawsuit against Korea Telecom. In comparison, Japan’s switch was smoother because users were given a three years-long notice.

 

Indian Teleco and 2G

Now, coming back to Mr Ambani’s comments. He said:

We should accelerate the migration of 350 million Indians, who currently use a 2G feature phone to an affordable smartphone.

And as we have seen, Jio’s two private sector competitors in the three-player-led Indian telecom industry - Airtel and Vodafone Idea - have decried this idea, pitching instead that users should have the freedom to choose whichever network they prefer.

But why is Mukesh Ambani so decidedly not in favour of 2G?

Well, Jio is India’s only pure-play all-4G service provider. It has nothing to gain from a retention of 2G tech.

Jio may be making a play on India’s large chunk of 2G users, who may be tempted to finally upgrade thanks to falling smartphone prices and low data rates. Moreover, Jio has a goal of reaching 500 million users in three years. For this to happen, it needs to target the user base of its two main rivals, who between them have over 300 million 2G users. And in an era of low ARPU, discounted tariffs, mounting debts, AGR fines and sky-high competition in Indian telecom, every user counts.

Oh, and the fact that Jio recently signed a pact with Google to jointly develop affordable 4G and 5G smartphones doesn’t hurt either.

But despite the breathtaking pace of smartphone adoption in India, 2G has remained a force to reckon with, with hundreds of millions still relying on its services. Predictions of its demise have been proved wrong many times before - in fact, some studies opined that Jio and 4G would mean that there would be no 2G users in India by 2019. But 2G continues to survive.

However, there’s no escaping the fact that 2G is outdated tech. And with 5G ahead of us, it goes without saying that India will gradually move on from 2G - and even 3G. But for reasons we have seen above, this process won’t happen overnight: in fact, it is likely to be many years before the last 2G phone powers off.

FIN.

A Podcast a day can make you witty and wise. How about two former bankers bantering on all things Business and Finance? No jargon. Only substance. Subscribe to our Podcast Newsletter to receive them straight to your inbox.