The second generation of wireless technology debuted in the 90s and was the first one to apply digital technology to cell phones, boosting call quality and network capacity. Third-generation networks, with higher data speeds, started becoming widespread in the U.S. about six years ago. AT&T (News - Alert) is officially shutting down its second-generation (2G) wireless networks by 2017 as it continues to upgrade its systems to faster technology and better use its limited airwaves.

AT&T has already started making the transition away from 2G, as it no longer sells 2G handsets to contract or prepaid customers. It also started reallocating some 2G bandwidth to 3G and 4G networks in New York City earlier in May. It needed the higher-speed bandwidth to support the exploding growth of its smartphone- and tablet-toting subscriber base. The newer networks offer AT&T a more efficient use of its bandwidth, and eventually it intends to, however slowly, get everyone migrated over to data-share plans. 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.

The telecom giant said about 12 percent of its contract wireless customers, or 8.4 million people, were using 2G handsets at the end of June. 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.

The timeline for the 2G shutdown was made in a filing with the Securities and Exchange Commission on Friday.  Other companies are also "refarming" 2G spectrum. Sprint Nextel (News - Alert) is shutting down the Nextel 2G network and moving subscribers to Sprint 3G.

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.

On Thursday, AT&T agreed to buy NextWave Wireless Inc., 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 T-Mobile (News - Alert) 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.

AT&T's 4G strategy, including High Speed Packet Access (HSPA)+ with enhanced backhaul and LTE (News - Alert), delivers super fast broadband speeds. 4G HSPA+ with enhanced backhaul delivers speeds up to 4X faster than AT&T's already fast mobile broadband network. And as it is deployed, 4G LTE will deliver even faster speeds than 4G HSPA+. The combination of the two technologies provides the best option for your wireless work or entertainment.

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