Customer migration 'going fine' as AT&T prepares for 2G network shutdown by year-end 2016

AT&T Mobility (NYSE: T) is roughly halfway through its efforts to migrate its 2G network customers off that network before it shuts that network down at the end of 2016.  

Mobeen Khan, AT&T's executive director of M2M product management, said the carrier developed a migration plan two years ago when it announced it would shutter its 2G network by the end of 2016. And today he said the carrier is meeting its migration targets as it works to move those 2G customers onto AT&T's 3G and 4G networks.

"We have an operational team that is engaged with these customers," Khan said. "It's a closely watched process."

The bulk of AT&T's customers will naturally migrate to the carrier's newer networks as they buy new HSPA and LTE smartphones. However, a small chunk of the carrier's customers still carry 2G GSM phones, and to retain those customers AT&T will have to get them to purchase newer, 3G and 4G phones. AT&T plans to refarm the spectrum it uses for its 2G network for its 3G and 4G networks, thereby providing faster speeds and more capacity to 3G and 4G users.

The situation becomes trickier with AT&T's machine-to-machine customers. Unlike phone users, who purchase new phones every year or two, M2M customers often keep the same equipment in place for a decade or more. Khan said AT&T counts around 17 million M2M customers across its 2G, 3G and 4G networks. And though he wouldn't provide the exact number of M2M customers that are on AT&T's 2G network, he said that "a large number of those are on 2G."

Indeed, other carriers see AT&T's 2G 2016 shutdown as an opportunity to skim off some of the carrier's M2M customers. For example, Sprint (NYSE: S) last year inked a deal with module provider u-blox to be Sprint's preferred module provider for its 2G (1xRTT) CDMA network, an announcement geared toward winning away M2M business from AT&T with the promise of a more permanent network. In general, 3G and 4G M2M devices are more expensive than 2G devices.

Notably, AT&T has been successful in the M2M business, partially thanks to the carrier's GSM-based network--which is more common internationally. Indeed, AT&T won General Motors' OnStar business away from rival Verizon Wireless (NYSE: VZ) last year.

Khan said that AT&T continues to work with its 2G M2M customers to get them to upgrade their devices to HSPA and LTE in advance of the carrier's 2016 shutdown date. Khan declined to provide figures around AT&T's retention rate for its 2G customers, saying only that the carrier is moving along as expected.

AT&T isn't the first carrier to shut down a wireless network. Sprint last year shut down its 800 MHz iDEN network, and for years prior to the move the carrier worked feverishly to transition iDEN customers off that network and onto Sprint's CDMA and LTE networks. In the final few months before the carrier shut down its iDEN network, Sprint was able to recapture around 60 percent of departing iDEN customers.