ABI: Cellular Backhaul Capital Expenditure to Reach $23B in 2012
October 31, 2007 // Published as a news service by IHS
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Cellular backhaul, which today accounts for a capital expenditure (CAPEX) in excess of $14 billion, is expected to reach $23 billion by 2012, according to recent analysis from ABI Research.
By then, Eastern Europe will have replaced Western Europe as the leading backhaul spender, followed by the Asia-Pacific region.
"The persistently high cost of backhaul - in both capital investment and operating expenditure - is a top-of-mind issue for mobile operators," said ABI Research senior analyst Nadine Manjaro.
"Today, most networks across the globe are still using T1 [T-carrier 1] for backhaul, but in the next five years there will be a significant migration to Ethernet-based solutions and microwave."
Manjaro said microwave will be the dominant backhaul technology in four of the five regions they studied. "However, North America will migrate to Ethernet-based solutions and Latin America will continue to depend on T1," she said.
"In North America, the high cost of real estate to mount antennas and the high cost per megabit [Mb] will impact microwave deployments. Service providers should start shaping their strategies based on that assumption."
One trend that will help reduce microwave cost significantly is a move away from point-to-point architectures toward point-to-multipoint designs. "Customers are going to be looking for point-to-multipoint solutions," said Manjaro. "Equipment vendors should take note, and focus their efforts accordingly."
Analysts said vendors that have been alert to this trend include Cambridge Broadband, Alvarion and, although more focused on worldwide interoperability for microwave access (WiMAX), Redline Communications.
Certain predictions about the direction of this market seem unlikely to be fulfilled in the short term. Some predictions said cable would play a major backhaul role, but it has not turned out to be very significant. Others have been touting Internet protocol (IP)-based solutions, but analysts said there is not much movement in that direction as of yet.
"Applying some of the techniques that are common in wireless infrastructure to backhaul solutions will help to drive down costs - that's where the innovation is coming from," Manjaro said. "Software-defined radio (SDR) and discrete multitone (DMT) are just two of the emerging technologies being used to improve network performance, while reducing cost."
Source: ABI Research.