Analyst Angle: Cable MSOs could enjoy a nice piece of mobile backhaul pie

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.
During the recent capacity crisis suffered by AT&T Wireless it was expected the carrier would upgrade, as it was announced, in tough capacity urban markets such as New York and Los Angeles. What also should have been expected was that AT&T Wireless, like other carriers in the U.S., were looking to newer backhaul providers such as the local cable carrier in order to augment backhaul capacity to ensure infrastructure upgrades paid off.
As mobile carriers go forward with 3.5G and 4G upgrades these next years backhaul will also have to be increased substantially in order to allow users to experience mobile broadband on their new application-rich smart phone. Cable operators, by taking advantage of mobile carriers needing both short-term and long-term backhaul capacity increases, have a great opportunity to expand their almost negligible role in wireless backhaul during the next decade.
Progress marches on
From 2004 through 2010 migration to high bandwidth networks such as EV-DO and HSDPA/HSUPA and HSPA+ is forcing carriers in Western Europe, North America and parts of Asia to confront limitations in existing backhaul models. This will continue and the problem will grow exponentially as carriers throughout the world upgrade to 3.5G and 4G networks throughout the next decade.
While there has been a slight delay in some of the upcoming LTE (Long Term Evolution) deployments expected in the next half-decade, ultimately carriers throughout the world are upgrading wireless networks to 3G, 3.5G and eventually, 4G.
In the U.S., as usual, the wireless carriers are ahead of the pack.
For example, Verizon Wireless selected Ericsson and Alcatel-Lucent to spearhead a 700 MHz deployment of LTE that will cover 20 to 30 markets in the second half of 2010. Full nationwide coverage is expected to be achieved in 2013 or 2014 according to the company. Verizon Wireless claims that both it and its investor/parent company Vodafone have conducted tests of LTE that have consistently demonstrated 50-60 megabit per second download speeds. Verizon should offer 8-12 Mbps as average user speeds over LTE.
Mobile WiMAX has already been deployed in the United States by Clearwire in a joint venture with Sprint Nextel, with deployments ongoing.
AT&T Wireless has been going forward on its W-CDMA upgrade path with HSPA and is looking to HSPA+ with future sights on LTE, having already named Alcatel-Lucent and Ericsson as its LTE suppliers.
The problems
There are four issues that carriers are facing or will generally face during upgrades to 3G, 3.5G and 4G air-interfaces: limited capacity in the pipelines that connect base stations; cost of supplying the RAN (radio access network) with capacity; overall cost of backhaul (in both the RAN and core network); and increasing need to maintain both IP and TDM based backhaul.
Operators who are deploying 3.5G and 4G are also faced with the additional hurdle of supplying 1 gigabit per second or more of capacity at an attractive price point to the RNC/BSC and to the LTE access gateway switching apparatus in the middle of the network.
A host of wireless, wired and aggregation technologies are being sought to improve capacity and economics of wireless backhaul solutions. These include updated traditional PTP radios, 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.
Leased lines
Leased lines already account for approximately 70% of all backhaul connections in the United States and for about 30% of backhaul connections in Western Europe.
In many cases, fiber optics and coaxial cables are accessible to a portion of base stations that are located in and around urban and other highly populated residential or industrial zones. Many of these same locations can be serviced via high-speed symmetrical DSL technologies due to their proximity to switching centers.
However, Visant Strategies believes that during the next half-decade roughly 50% of existing base stations will exceed the capacity of the copper wire that currently provides them with backhaul links in the U.S. and Western Europe, once this base station backhaul capacity approaches fractional DS3.
At this point fiber backhaul represents a considerable extravagance for mobile base stations and although we do see carriers looking to this alternative to connect the base station controllers and mobile switching centers.
Why cable
Mobile wireless carriers will turn, out of both will and necessity, to backhaul technologies that are competitive in cost and provided by a reliable carrier. The cable MSO fits this description in many ways.
Many MSOs have proven to be carrier class already in the transport of voice and data and backhaul would merely be an extension of these services. Some MSOs have already been supplying backhaul on a small scale.
Large MSOs are already present in most of the attractive wireless markets in the United States, and very close to the actual points of presence in most cases. Cable operators have been investing in infrastructure and bringing fiber closer to the curb for residents and in the cases of businesses, fiber to the business place.
Looking at cell siting today and more importantly in the future when femtocells become widely deployed, MSOs will continue to see their fiber builds match up more often with wireless cell sites. And with wireless carriers in the U.S., for example, seeking an average of from 100 Mbps to 300 Mbps per carrier per tower for backhaul in the future, it is apparent the need will continue to grow.
MSOs know their competition in this space and once again can look forward to competing with RBOCs in offering backhaul services, adding to the list of their common customer calls. This may begin a price war that would make much of the wired backhaul more attractive to wireless carriers in many more instances.
The potential
There should be close to 500,000 backhaul links for base stations and switching elements, not including femtocell backhaul, in use by mobile carriers in the United States at the end of 2015. Estimating that a little over half of these links will be wireline in nature gives one an idea of how large the market could be for forward-thinking cable MSOs.
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: [email protected].
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: [email protected].