By Thomas Gryta
AT&T Inc. (T) is shutting down its second-generation, or 2G, wireless networks by 2017 as it continues to upgrade its systems to faster technology and better use its limited airwaves.
The telecom giant said about 12% of its contract wireless customers were using 2G handsets at the end of June, but it will work "proactively" in coming years to move them to more advanced devices. Like the other major carriers, AT&T's customers mostly use phones with third-generation technology, and it is aggressively rolling out a nationwide fourth-generation network.
With every network generation, the technology becomes more efficient at carrying information. As a result, companies can get better and more profitable usage from shutting down older networks in favor of newer ones, something that AT&T has talked about.
The timeline for the 2G shutdown was made in a filing with the Securities and Exchange Commission on Friday.
An AT&T spokesman said the company no longer sells 2G handsets to contract or prepaid customers. Along with phones, the company does have some other devices connected to its 2G networks, but it also expects that they will transition to more modern technology in coming years.
As the carriers deal with ever increasing data usage on their networks, they also are facing a spectrum shortage to carry all the traffic. Shutting down legacy networks is one part of the plan, along with acquiring new spectrum and finding innovative ways to use unused airwaves.
Sprint Nextel Corp. (S) is in the process of shutting its 2G push-to-talk iDEN network by next June as it moves users to later generations and aims to free up spectrum. Officials from Verizon Wireless, a joint venture of Verizon Communications Inc. (VZ) and Vodafone Group Plc. (VOD.LN VOD), weren't immediately available to comment on plans for their 2G network.
On Thursday, AT&T agreed to buy NextWave Wireless Inc. (WAVE), in a deal valued at $600 million, as part of its strategy to open up a new band of spectrum for its mobile Internet services. AT&T's main spectrum strategy collapsed last year when a proposed $39 billion acquisition of Deutsche Telekom AG's (DTEGY, DTE.XE) T-Mobile USA fell apart amid regulatory concerns.
Verizon is pushing to get clearance for its own $3.9 billion spectrum acquisition from a group of cable companies.
AT&T said the transition away from Global System for Mobile Communications, or GSM, and Enhanced Data rates for GSM Evolution, or EDGE, will be on market-by-market basis. Service on the networks will be fully discontinued by about Jan. 1, 2017.
The company said it will "manage" the transition process to help minimize customer churn, or customers cancelling their service with the company. A spokesman said the company hasn't yet determined its strategy for the effort.
AT&T doesn't expect the move to hurt its operating results.
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