Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
As wireless operators utilize 3G and march toward 3.5G and 4G, collectively they face a large hurdle to broadband-on-the-go at reasonable prices. In order for this to occur, the backhaul capacity within the wireless network has to become just as capable as 3G, 3.5G and 4G air interfaces employed to deliver the latest in mobile wireless applications. Not only are wireless operators facing large upgrades to backhaul capacity at the edge of the network, or to the base station, but also within the middle of the wireless network, or rather to network aggregation points and switches.
Carriers realize there is work to be done. From 2004 through 2009, the migration to high-bandwidth networks such as EV-DO and HSPA Evolved has forced carriers in Western Europe, North America and parts of Asia to confront limitations in existing backhaul models.
Market growth for backhaul and those providing backhaul gear
Growing mobile networks worldwide have had a substantial impact upon those already feeding the need for mobile backhaul, primarily point-to-point microwave vendors, as well as those providing fiber, particularly in urban areas.
For example, the PTP microwave industry has experienced unprecedented growth in both units shipped and in sales, averaging an increase for both of more than 20% per year since 2006. This resulted in an $8.5 billion market in 2008 and a projected $10.7 billion market in 2009.
The PTP industry has done a good job in meeting the increasing need for better backhaul speeds, range and capacity in mobile networks as flavors of HSPA and EV-DO Version A are currently being utilized or introduced into mobile network hierarchies throughout the world.
In addition to updated PTP radios to meet the current need for increased backhaul capacity, mobile operators have also turned to upper millimeter point-to-point radios, more potent digital subscriber line technologies, deeper fiber installations and use of hybrid fiber coaxial cable infrastructure. Developments in free-space optics are also leading to a reassessment of that technology.
However, as we start 2010, we are seeing many of the edge of network backhaul needs being increased beyond the capabilities of the existing solutions employed for this application.
Low-capacity PDH radios providing from 4 to 8 T1/E1s of capacity have historically been the bread and butter of the PTP microwave industry and what has been used to connect the network to the base station. Today these same edge-of-network backhaul capacity requirements are rapidly moving upward and yielding demands of from 20 Mbps to 50 Mbps per base station for HSPA Evolved and variants of CDMA 2000 EV-DO. By 2016, Visant Strategies sees the number of base stations utilizing backhaul links of 18 Mbps or more growing to over 270,000 worldwide.
LTE and mobile WiMAX (802.16e) will push edge of cell site backhaul capacity requirements to between 100 Mbps and 300 Mbps in the 2011-2013 timeframe. These figures all assume support for legacy services.
In the middle of the wireless network, operators who are deploying 3.5G and 4G are faced with supplying 1 Gbps or more of capacity at an attractive price point to the radio network controller (RNC) in W-CDMA-based networks and to the base station controller (BSC) in non-WCDMA wireless networks. There is also a lack of backhaul capacity from the BSC/RNC or collector points in the wireless network to the mobile switching center (MSC).
When LTE is deployed this shortage of backhaul capacity will be realized at the LTE access gateway switching apparatus in the middle of the network, with many middle-network functions being incorporated into the LTE base station.
Wireless vs. wireline backhaul
These higher backhaul capacity needs are resulting in a replacement of radio links with fiber, in some cases, but mostly in the addition of wireless capacity for backhaul and replacement of wireline with wireless backhaul in the United States and Europe. These trends have been evident during the past few years and are largely the reason the wireless backhaul industry and PTP ,microwave vendors have been doing so well lately.
Emerging wireless markets mainly using low-cost TDM microwave radios to backhaul GSM/GPRS networks today will also provide substantial growth for backhaul vendors. Next decade, either mid-decade or later, these same markets will undergo the same 3.5G/4G transition carriers in Western Europe and North America are undergoing currently.
While U.S. wireless operators utilize a high percentage of fiber for backhaul and are an exception to this rule, fiber is not a choice for wireless operators at many of their sites throughout the world as fiber builds are not available extensively outside metro areas in less-developed mobile markets. Many will have to turn to wireless backhaul for base station and network aggregation point backhaul.
However, copper will remain relevant even in mature wireless markets, such as the United States and Western Europe and other selected markets, due to bonded copper technology. Higher-speed DSL will be made possible by deeper fiber and hence shorter copper distances. Fiber backhaul will make some inroads in middle-of-network backhaul and lesser gains in edge-of-network backhaul.
Everyone wins
Backhaul and backhaul providers will remain at the forefront of the wireless network conversions to 3G, 3.5G and 4G. While wireless backhaul providers and equipment vendors will certainly see great growth in the oncoming years, wireline carriers will also do well and those offering newer technologies will also find their niche. But no matter what part of the backhaul industry one is working for, you are now the life of the party.
As it stands in 2009, there are close to 2 million base stations utilizing wireless backhaul, according to our figures, and this will almost double by 2016.
The number of wireline backhaul links to base stations will almost double worldwide during the next decade as well. This increase could be greater due to demand, but high capacity wireline technologies are not available to many base stations outside of metro areas in mature wireless markets and they are often completely unavailable regardless of capacity in emerging markets.
Larry Swasey is co-founder of Visant Strategies. He has been covering wireless, network and component technologies for twenty years. In addition to managing the company and authoring studies for Visant he also frequently contributes articles to related newsletters and trade magazines, speaks at technology trade shows and is quoted by journalists. Swasey can be reached at: swasey@visantstrategies.com.
Andy Fuertes is Sr. Analyst and co-founder of Visant Strategies. Fuertes has worked in the high-tech research industry for ten years. He started his career at Information Gatekeepers in 1992 and was employed by Allied Business Intelligence from 1993 to 2002. During his tenure at ABI Research, Fuertes was promoted from the title of Analyst to Vice President of Research. He authored studies on broadband access, wireless broadband, RF semiconductors, mobile telephony, antennas, crystal oscillators, and satellite technologies. Fuentes can be reached at: fuertes@visantstrategies.com.
