It’s like a made-for-TV movie. The truck carrying high-cost cargo across the country disappears from the dashboard. The telematics device cannot transmit the data. The driver must call the dispatcher to share the location and schedule. The ELD doesn’t work either, so the driver is out of compliance and subject to hefty fines.
At the port of Los Angeles, the shipper’s long-awaited goods have probably arrived, but the carrier does not know for sure because no data is transmitted. After all, it’s 2023 and the container and truck are using 3G tracking devices.
This nightmare scenario is keeping some supply chain executives up at night. If all goes as planned, by the end of 2022, Verizon, AT&T, and T-Mobile will have phased out their 3G networks.
Companies that rely on internet-connected devices for tracking and visibility in the US have a relatively narrow window to make plans to upgrade to 4G devices. The end date of the first 3G provider is January 2022.
Add chip shortagesdelayed supply chains for other electronic components and the time required to physically locate and replace devices mounted on vehicles and containers and the timetable looks even tighter.
For those who miss the deadline, “it’s not like the light switch is going to go off, it’s going to go dark immediately,” said Anton Albrand, vice president of sales and chief revenue officer at SkyBitz, an industrial IoT solutions provider. Instead, service and coverage will be degraded. Carriers “will not send technicians to repair 2G and 3G towers. They will focus their capital resources on 4G and 5G.”
SkyBitz works with clients in transportation and transportation, serving oil, gas and chemical industries. These customers use sensors to measure fluid fill rates, sending alerts when it’s time for a refill. Customers also use IoT sensors to track assets and delivery services and orchestrate optimal routing and scheduling.
Why is 3G shutting down in the US?
IoT mobile devices receive and transmit signals globally, operating within modem-supported bands. Devices must be selected based on the bands used by the mobile operators in the countries in which the devices will operate, transmitting data on spectrum wavelengths.
“Spectrum is a finite, coveted resource,” Albrand said. Operators want to reallocate 2G and 3G spectrum to support 4G.
The 5 Gs
Generation | Main characteristics |
---|---|
1G | Eliminate the need for telephone cables |
2G | Digital replaces analog. enables encryption and exchange of multimedia messages |
3G | Mobile Internet access and video calls |
4G | Data speeds with support for gaming and video conferencing |
5G | Faster data rates and energy savings |
Source: Federal Communications Commission
While 4G will improve IoT quality and speed, 2G and 3G sunset timing is not optimal, he said Albrand.
“When looking at the industrial businesses that need to comply with 4G telemetry, trucking and transportation are at the highest risk,” he said. And with chip production delays, rising component costs and labor shortages, it’s the perfect storm.
It’s not just the 3G sunset, though. It is also 2G, which was introduced in 1991. 2G is used for applications such as sensors and infrastructure for water and gas metering. Devices configured for 4G networks seek 4G connectivity, but may fall back to 3G if needed or even drop to 2G.
“It guarantees data transmission,” said Don Miller, head of sales and marketing at Globe Tracker, which provides end-to-end remote refrigerator management. This feature is useful as their containers transit between developed and developing countries, not all of which have 4G networks.
The network depends on the country
Countries are not uniform in their use of network standards. This can make it difficult to buy detectors or determine which ones to use. In the UK, 2G is important as it is used for household smart electricity meters, said Gudmundur Oskarsson, vice president of operations at Controlant, which provides cold chain monitoring devices.
“The US is the most aggressive in shutting down the lower bands (2G and 3G) and is the only country to shut down both at the same time,” he said.
In the US, more than 90% of Verizon Wireless data uses the 4G network. More than 50% of mobile connections worldwide run on 4G, according to The State of Mobile Connectivity 2020 report by GSMAan organization representing mobile phone companies.
Of the 700,000 total IoT devices, Controlant needs to upgrade the 500,000 in use in the US. It will reuse 3G devices for use in other countries. Its customers, primarily pharmaceutical and food and beverage companies, typically ship within their region, making it easier to allocate devices to a specific market. Oskarsson said the company is growing, so the large number of devices currently in use in the US will still be useful elsewhere.
Upgrading to 4G: the work and the cost
Given the time and cost involved in migrating devices, companies are reluctant to make the switch, especially if their current devices work well on 3G.
“I don’t think any of them want to go there if they don’t have to,” Albrandt said. It’s expensive, annoying and inconvenient. But the alternative is worse.
“If they don’t do that, they have to go back to manual processes, which is extremely inefficient.” Albrand said. Gas companies relying on IoT solutions don’t want their tanks to go dark as they use sensors to determine when to refill them. “If they don’t know the level, they can lose hundreds of thousands to millions of dollars on a vacation,” he said.
The silver lining to switching IoT sensors in tanks? They don’t have wheels. Trucking is overwhelmed with cargo, and switching devices means taking trailers off the road.
“They’re circulating. They’re not always where they’re supposed to be. It’s like herding cats,” Albrand said.
“If they don’t do that, they have to go back to manual processes, which is extremely inefficient.”
Anton Albrand
Sector VP of Sales and Chief Revenue Officer of SkyBitz
When customers convert their devices, they count all their trailers and consider which ones will be decommissioned in the next year. They then devise a project plan and schedule, accounting for installment positions. They specify where third-party approvals are needed to enter the site, such as a Walmart distribution center. They balance dates and times for facilities with orders and inventory levels for each location.
“They’re thinking about delivering goods and making it as efficient as possible. That’s a distraction,” Albrand said.
And it’s expensive. In addition to the device cost of $220 to $300 for a Globe Tracker device, add another $35 to $50 per device for removal and installation.
“If union labor is involved, it can be even more,” Miller said. Even a half-hour installation can take longer if equipment needs to be moved or set aside. A container in a warehouse can cost $25 to $50 to move.
Globe Tracker has 80,000 devices deployed in over 120 countries. Its biggest customer, Hapag-Lloyd, has 135,000 refrigerated containers, Miller said. Smaller companies might have 9,000, while mom-and-pop fleets might have 50. “Either way, those are big numbers,” and the costs add up when a company has to upgrade devices en masse.
Costs add up to upgrade devices
Estimated cost range for upgrading devices from 3G
Those who haven’t considered converting to 4G devices probably will soon, experts said. The shortage of chips in the electronics industry, as well as other electronic components, means delays for some devices. Miller expects shortages to continue through 2022.
Capital expenditure budgets may also need to be adjusted as this conversion comes sooner than expected. Many companies bought new 3G devices three years ago, expecting to get a seven to 10-year return on their investment, Miller said.
While some 3G sunset end dates were announced several years ago, they have been pushed forward by carriers with 2022 as the latest date. Several years ago, companies were not always able to get 4G devices that worked for their needs.
Is 4G being phased out to 5G?
The move to convert to 4G has been slow for many companies, and the pandemic may have pushed carriers to move earlier.
“Covid has had a much bigger impact on that than people realize,” said Michael Skurla, chief product officer at Radix IoT, a vendor-agnostic platform that provides access to IoT data. The pandemic has forced US carriers to invest more in 5G mobile broadband to provide more bandwidth.
That said, it will take longer to phase in 5G than the carriers’ advertising suggests.
“5G is in its infancy.”
Anton Albrand
Sector VP of Sales and Chief Revenue Officer of SkyBitz
“It’s more of a consumer game, not a commercial one,” Albrand said. He said he expects 5G to become more commercially significant in five to eight years. “5G is in its infancy.”
Consumers see a lot of ads for 5G, but for their phones, 5G offers a “marginal perceived improvement,” Skurla said. “Its promise is in industrial application, such as navigation.”
This navigation could include smart cars or delivery trucks that use low levels of latency to make operational decisions where milliseconds count.
As 3G has been around for about 20 years, Miller said he expects 4G to be around for the next 15 years. 5G devices are expensive and overkill for most supply chain applications, Miller said.
“It might be useful in some big data applications at ports and terminals, but that’s the extent of it, really.” Supply chain applications have small data requirements, which 4G easily meets. “They can invest [in 4G] with confidence. From a bandwidth standpoint, they don’t need more than that,” Miller said.