Consider using 3G for M2M (it might cost less!)

M2M is fast becoming a topic of high interest in the European mobile industry as smart metering projects come under pressure from governments to deploy sooner than originally planned.

When smart metering is added to the other embedded systems market segments, from e-books to vehicle monitoring systems, the potential market starts to become very sizeable.

Currently, the majority--around 90 per cent--of embedded mobile devices use 2G modules due to a wide portfolio of products and, importantly, having a lower upfront cost than 3G technologies.

However, a study conducted on behalf of the GSMA by Analysys Mason is starting to question whether the established route of using 2G does lead to a lower total cost of ownership (TCO)?

The market research firm found that the embedded module contributed less than 15 per cent of the TCO, depending on the application. However, across all applications that could be supported by either 2G or 3G modules, the upfront costs of 3G modules were higher than 2G modules.

The research indicated that the cost of a 2G module for deployment in 2011 was around US$20, while a 3G module was over double at around US$47--accepting that this difference is set to reduce as 3G device volumes grow.

But the important finding by Analysys Mason was that the upfront costs of 3G modules were offset by lower ongoing network costs and enforced replacement charges.

The example provided by the company was for applications that generated significant traffic--such as in-car Internet-enabled entertainment systems--where the lower costs of 3G traffic over the lifetime of the device outweighed the higher upfront costs of 3G modules.

If the scenario is extended, where a mobile operator decommissions its 2G network to refarm the spectrum for 3G or 4G, the 2G-only devices would need to be replaced. Once these potential enforced replacement costs are taken into account, the TCO for 3G modules is lower than 2G for almost all applications.

Of course, the M2M and embedded module arguments are more complex than a simple consideration of 2G over 3G and TCO. But, with major deployments already under consideration over the next few years, the move towards adopting 3G could become the more obvious route. - Paul

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