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NEWS
World Backhaul Market Sees Good Times
Andy Fuertes
Larry Swasey
Growth of mobile networks across the globe has forced operators to engage in aggressive backhaul upgrades due to changing traffic attributes, cost challenges and increasing capacity requirements, which means only good news to those participating in the backhaul industry.
Since 1996, we have been talking about third generation networks and seemingly forgetting the rest of the pieces will fall into place and, except for those engineering the networks, backhaul was often a forgotten component. But it has always been a vital part of any network and often backhaul costs and considerations can help make or break an operator.
Today we see the current
migration to faster data-oriented air interfaces such as HSDPA, EV-DO and even
WiMAX causing backhaul needs and costs to rise significantly as carriers must
support more capacity and greater complexity, and accordingly, enhance backhaul
capabilities greatly, a pattern that has already began and which will continue
through the coming years.
Over three quarters of all deployed base stations globally employ 6 Mbps or
less of backhaul capacity today, well within the capabilities of traditional
E1/T1 technology. But that will be a thing of the past as the majority of base
stations deployed in leading mobile markets will have much higher backhaul
capacity, increasing by a factor of from two to five through the next five years.
The greatest challenges for operators may be evident just outside of the urban
fiber rings within leading wireless economies. Sites in these areas typically
lack access to fiber but those same sites will see a large increase in capacity
requirements.
Another critical factor is the rising rate of collocation of base stations in tandem with the rise in capacity per base station. As collocation becomes more of a must each year during the next five years, those sites requiring 45 Mbps or more of total capacity will almost double each year during the same period.
Four Main Issues
There are four issues that carriers
generally face when it comes to backhaul. Those are a limited capacity in the
pipelines that connect base stations; the cost of supplying the RAN with
capacity; the overall cost of backhaul in both the RAN and core network; and
the increasing need to maintain IP and TDM based backhaul.
Mobile carriers made
significant upgrades to certain backhaul links during 2006 to enable them to
offer video and audio services. These upgrades were made prior to success of
these services but we have now hit an interesting point in time. Now the nature
and extent of future upgrades will be determined by anticipation of future
services and success of now deployed multimedia services. If the latter fail to
live up to carrier expectations then we might see lesser upgrades to backhaul
in the future and a more general approach.
Carriers in Japan, the United States, Korea, Western Europe, and parts of
Australia remain locked in their technology arms races and are on a quest to
reduce the impact of erosion in voice services. HSDPA, HSUPA, EV-DO Rev B, and
a host of intelligent antennas are tools that these carriers are deploying or
will deploy over the next 24 months.
The upgrades will be
continuous with the carriers' use of HSPA+, LTE, EV-DO Rev C, which is now
called Ultra Mobile Broadband or UMB, and WiMAX, with the aforementioned
air-interfaces expected to start influencing the backhaul market by 2010 or
2011. Carriers are, in some cases, maintaining individual backhaul for IP and
TDM oriented traffic. The resulting duplication in effort is considered
wasteful and carriers seek to replace such implementation with a single pipe
whenever possible. These difficulties have created opportunities for both service
providers and radio vendors.
Emerging Markets Remain Source of Network Growth
Emerging economies in Africa, Asia-Pacific, and Latin America remain the
key engines for base station growth and also a driver for wireless network
revenues.
Although there are now several attempts to address these emerging economies with WCDMA and other 3G networks we believe that carriers in these regions will continue to employ GSM/EDGE due to the low cost of equipment, particularly handsets, a widely installed base, proximity to GSM networks in neighboring nations, limitations in available capital and due to an established business model for voice with very basic data features.
This year has been business as usual for GSM vendors. That is not to say that there will be some success of WCDMA and CDMA2000 EV-DO in these emerging markets, because there will be. There will also still be a very good market for those second and third tier operators offering GSM/EDGE in many European nations as well as within India, China, Africa the Middle East, and parts of Latin America.
Backhaul Today and How
Wireless for Backhaul Will Play an Important Role
Air interface capacity has been the
main bottleneck in wireless networks since the inception of mobile wireless. This
will continue to be so for most networks through 2012. However, the network
bottleneck is expected to shift to backhaul, and, perhaps more specifically, to
backhaul costs as HSPA+, Ultra Mobile Broadband, the continuation of the 3GPP2
family, EV-DO Rev B and Rev C and LTE are deployed in Western Europe, North
America, and the leading
economies in Asia-Pacific.
Although wireless backhaul is prevalent in many of these markets, those links are typically from the RAN to the BSC; traffic proceeds via fixed networks after that point. Wireless links are capable of several hundred Mbps but unless bandwidth costs in the fixed networks falls substantially, carriers will face backhaul costs that are an order of magnitude higher than those experienced today.
All in all, this is good for the backhaul industry.
For a list of Visant Strategies backhaul reports follow the link below.
© 2008, Visant Strategies