Canadian Vending

Features Payment Technology
Preparing for the end of 2G

November 24, 2014
By Mike Gron PayLab Networks


Nov. 24, 2014 – Many of the 2G modules that power card readers and remote
monitoring devices will potentially go dark as carriers begin to switch off
their 2G spectrum in favour of advanced 3G and 4G networks. What does this mean for vending

Nov. 24, 2014 – Many of the 2G modules that power card readers and remote
monitoring devices will potentially go dark as carriers begin to switch off
their 2G spectrum in favour of advanced 3G and 4G networks. What does this mean for vending


A decade ago mobile communications looked
much different. Smartphones were something executives carried to make phone calls
and check their email. The idea of connecting large networks of devices via the
Internet bordered on science fiction.

Fast-forward to 2014, when smartphones have become
commonplace with nearly 1.5 billion handsets in use globally. At the same time the
“Internet of things” now connects innumerable devices, transforming countless
industries: from health care to logistics to utilities, and, of course,

By any estimate, the global machine-to-machine, or M2M,
market is exploding, recently passing 200 million connected devices, and
growing at more than 40 per cent annually between 2010 and 2013. This
unprecedented growth in both voice and data connections has put significant
pressure on carriers to continue to update the infrastructure behind their
networks to help ensure they’re able to handle the growing tidal wave of market

So how do these changes impact the vending and unattended
retail industries? Likely the most pressing concern for operators who have
deployed cashless and/or remote machine monitoring devices over the past decade
is the end of the current 2G spectrum. First introduced in 1992, 2G was the
second generation of cellular connectivity in North America and it offered a
number of upgrades over its predecessors, including digital encryption and SMS
text messaging. Carriers were quick to
adopt 2G and they rapidly built out an extensive coverage footprint to
accommodate it. Not surprisingly, 2G also became the go-to choice for
manufacturers of connected devices, with roughly 90 per cent of all North
American M2M connections eventually operating on the 2G spectrum.

However, as technology has continued to evolve, and demand
for connectivity has grown exponentially, it’s become clear that the original 2G
spectrum that the carriers rolled out more than 20 years ago is no longer
capable of supporting the current and future demands placed on their networks by
both voice and, increasingly, data connections.

In an effort to improve network performance and contend with
the demand for additional spectrum capacity, virtually all major North American
carriers have begun the process of redeploying spectrum from 2G to the more
advanced 3G and 4G networks. AT&T, for example, intends to have its
transition completed by Jan. 1, 2017. 
For most consumers this transition should be relatively seamless as
almost all smartphones currently in circulation operate on 3G or 4G bands, with
reverse compatibility to also function on the 2G network. But unlike
smartphones, many of the 2G modules that power numerous card readers and remote
monitoring devices will potentially go dark as carriers begin to switch off
their 2G spectrum.

Awareness of this impending transition should be a key consideration for
vending operators as they review their technology deployment plans over the
next 18 to 24 months.   

In all likelihood, M2M solutions, and vending in particular,
will be disproportionally affected by 2G’s end-of-life transition because of
the significant number of devices currently operating with embedded 2G modems. Many
device manufacturers have already begun the transition by moving to 3G modems
in their current releases, while others continue to release devices with 2G
modems anticipating an 18- to 24-month lifespan. A recent report by Cisco
suggests that less than one-third of M2M connections will be operating on 2G by
2017, and those that do remain on the 2G spectrum at that point will likely
experience less reliable connections and slower speeds as the spectrum winds

For vending operators it is not only important to be aware of
the capabilities of the cashless solutions and remote-monitoring equipment
currently being offered, but also to put together a comprehensive plan to begin
replacing or updating legacy equipment currently deployed in the field, as this
can represent a significant commitment in time and labour. As an end user you
should be proactive. Call your hardware providers and find out what spectrum
and networks they’re currently operating on. If they’re still on 2G, what’s
their plan and timeline to transition towards 3G? Will there be fees associated
with upgrades or hardware trade-ins? These are all important factors to
understand now as you continue to build your technology roadmap.

Despite the potential inconvenience and interruption involved
with updating previously deployed field assets, the news is not all bad for
vending. In fact, the transition to 3G comes with some significant benefits. For
example, modern 3G networks are up to 10 times more data efficient than 2G,
while offering far superior speeds. The 3G network was actually designed with
today’s large concentrated mesh networks in mind, which translates to greater
ability to communicate with multiple machines in real time regardless of how
many devices are accessing a single tower at the same time. Further, 3G’s
greater data rates mean modern wireless devices can now begin expanding their
offering to include data-intensive solutions, including high-resolution video. The
end result will almost certainly be a more compelling user experience at the
point of sale, more reliable asset monitoring and management, and lower long-term
data costs.  

If you haven’t already done so, now is the perfect time to invest
in mobile. Costs are coming down and service is improving significantly. Just
make sure you know what you’re investing in and whether or not it fits with
your long-term strategy.

Mike Gron is CEO at PayLab Networks, manufacturers of a
mobile application and point-of-sale device that enables vending operators to
accept payment.