A decade ago mobile communications looked much different. Smartphones were something executives carried to make phone calls or check their email and the idea of connecting large networks of devices via the Internet bordered on science fiction. Fast forward to 2014 and smartphones have become commonplace with 1.5 billion handsets in use around the world. The “Internet of Things” now connects countless devices, transforming industries, like healthcare, logistics, utilities and vending.
By any estimate, the global machine-to-machine (M2M) market is exploding, recently passing 200 million connected devices, and growing at more than 40% annually between 2010 and 2013. This unprecedented growth in both voice and data connections has put significant pressure on carriers. They must continue to update the infrastructure behind their networks to help ensure they’re able to handle the growing tidal wave of market demand.
So how do these changes impact the vending and unattended retail industries? The most pressing concern for operators who have deployed cashless and/or remote machine monitoring devices is the end of the current 2G spectrum. 2G, first introduced in 1992, 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. 2G also became the go-to choice for manufacturers of connected devices with 90% of all North American M2M connections operating on the 2G spectrum. As technology has continued to evolve, and demand for connectivity has grown exponentially, it’s become clear that the original 2G spectrum rolled out by carriers 20 years ago is no longer capable of supporting the current and future demands placed on their networks by voice and increasing data connections.
To improve network performance and contend with the demand for additional capacity, North American carriers have begun the process of redeploying from 2G to the more advanced 3G and 4G networks. AT&T, for example, intends to have their transition completed by January 1, 2017. For most consumers this transition will be seamless; almost all smartphones currently in circulation operate on 3G or 4G bands, with reverse compatibility to function on the 2G network. But unlike smartphones, many of the 2G modules that power numerous card readers and remote monitoring devices will 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.
M2M solutions, and vending in particular, will be disproportionally affected by 2G’s end-of-life transition because of the significant number of currently deployed devices 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 device with 2G modems anticipating an 18-24 month lifespan. A recent report by Cisco suggest 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 down.
For vending operators it’s 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 labor. 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 upside. For example, modern 3G networks are up to 10 times more data efficient than 2G, while offering far superior speeds. 3G was 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. 3G’s greater data rates means modern wireless devices can now begin expanding their offering to high resolution video or real time audience engagement. The end result will be a more compelling user experience at the point of sale, more reliable asset monitoring and lower long term data costs.
If you haven’t already done so, now is the perfect time to invest in mobile. Costs are decreasing and service is significantly improving. Make sure you know what you’re investing in and make sure it fits with your long term strategy.
About PayLab
As part of the design process PayLab didn’t just create a new product, they’ve designed a new process. One that captures the imagination of the user in ways that a traditional mag stripe card reader simply can’t. PayLab’s offering leverages internal hardware and location services on the users smartphone and couples it with data captured via cameras and sensors embedded in their hardware to create a frictionless, secure and compelling vend transaction that turns traffic into customers and customers into repeat customers. You can follow PayLab on Twitter @paylabnet.
