Carrying first mile mobile traffic away from base stations set to be an US$8bn-plus, increasingly Ethernet-oriented opportunity… 

Mobile operators and backhaul transport providers are expected to spend US$8.2bn on mobile first mile backhaul equipment in 2010, with Ethernet copper and fibre equipment growing the fastest, says Infonetics Research in its new ‘Mobile Backhaul Equipment, Installed Base, and Services’ report.

According to Infonetics, the top three drivers behind the rapidly increasing numbers of mobile backhaul base stations, cell sites, base stations per cell site, and required bandwidth include:
·         a fast-growing number of worldwide mobile subscribers, which is jumping from 2.6 billion in 2006 to 4.2bn in 2010
·         heavy competition, which is forcing operators to upgrade their equipment and network capacity to improve and add new subscriber services
·         an explosion in mobile data and video use, which requires providers to significantly increase the bandwidth they offer, from kbits/s to a few Mbits/s to tens of Mbits/s

“2008 will be the year of adoption for IP/Ethernet backhaul, and 2009 will kick off the Ethernet mobile backhaul revolution,” judges Michael Howard, principal analyst of Infonetics Research and lead analyst on the report. “Ethernet made up just 1% of total mobile backhaul equipment revenue in 2006, but will grow to 21% of the market by 2010. The Swisscom Mobile contract that Tellabs won recently for IP, Ethernet, and pseudowire cell site backhaul is the first of many we'll see over the next 18 months.”

More highlights from the Infonetics report include:
·         IP first mile mobile backhaul equipment sales are forecast to increase at a phenomenal 210% 5-year compound annual growth rate (CAGR) between 2006 and 2010
·         the number of mobile first mile backhaul connections is expected to double between 2005 and 2010
·         the use of Ethernet over copper, fibre, and microwave for installed and new mobile backhaul connections will accelerate in 2010 - very dramatically for new connections - while PDH wireline and PDH/SDH microwave connections sharply decrease
·         by 2010, service providers using PDH and ATM over PDH for their first mile mobile backhaul connections will be paying more than 5 times as much in service charges per connection as those using new wireline services (Ethernet copper and fibre, DSL, cable, PON)
·         many operators in Europe, and to a lesser extent in North America and Asia Pacific, are planning to use Ethernet packet backhaul over DSL due to DSL’s cheaper prices, wider availability, and reliance on copper-fed cell sites
·         EMEA - with Europe, Middle East, and Africa all contributing - accounts for 42% of worldwide mobile first mile backhaul equipment revenue in 2007; Asia Pacific for 37%, CALA 14%, and North America 6%

Base jumping
Infonetics’ take on the rapidly increasing numbers of base stations is backed up by other research from the IMS Research consultancy. In that company’s new report ‘The Worldwide Market for Cellular Infrastructure - 7th edition’ it’s estimated that for the first time, the number of active base stations worldwide is set to pass 3mn units by the end of 2007.

One of the main findings of this report is that GSM still accounts for the vast majority of base stations worldwide and is set to retain significant market share in the following years. The number of the GSM base stations is growing worldwide, with the exception being Europe where there is a greater migration from GSM to UMTS networks.

“The explosive growth in number of cellular users, especially in developing countries, is driving the growth in the number of cellular base stations being installed. Operators in these developing countries are choosing GSM because (among other reasons) of the availability of cheaper infrastructure equipment that the technology can offer,” ventures Matia Grossi, lead analyst for the IMS infrastructure practice. “On the other hand in developed countries, continuous technological innovation, increased competition in the market and ageing networks, means that the replacement market starts to play an increasingly determinant role.”

Ethernets it
As well as considerations such as better cost and scalability, the enlarged role of Ethernet in the future backhaul business as a whole will be due in part to the growth of data-heavy 3G services, and the emergence of mobile WiMAX and Ethernet-based 4G services. “The growth in 3G and WiMAX network deployments is overtaxing traditional backhaul infrastructure, driving high operational costs and damaging service performance,” points out Alan Solheim, vice president of product management at Canada’s DragonWave, a vendor which last month announced the general availability of AirPair Unite, a solution that converges Ethernet and Time Division Multiplexing (TDM) traffic across a single wireless IP stream.

Pseudowire and the DSL engine
DSL is also playing a bigger part in the mobile backhaul story. “Backhaul has typically accounted for up to 30% of the operational expenses involved in running a mobile network,” states Asaf Wachtel, product line manager at RAD Data Communications. “Since backhaul traffic is going to rise exponentially as new, bandwidth hungry technologies, such as HSDPA, are introduced, mobile service providers are desperate for innovative solutions that will lower costs. Given the huge installed base of DSLAMs, cellular backhaul over DSL has attracted widespread interest as a promising alternative for reducing both OpEx and CapEx.” RAD recently introduced the LA-130, claimed to be the market’s first gateway capable of aggregating 2G, 3G and HSDPA traffic from the cell site and transporting it over existing, cost-effective DSL infrastructure.
John Williamson