Next-generation systems to power mobile backhaul solutions

19 Oct 2006

There's good news in store for mobile operators feeling the pain of expensive mobile backhaul costs, says market research firm Infonetics Research. IP, Ethernet, and next gen microwave technologies are allowing carriers to provide new mobile backhaul solutions to mobile operators that will help them reduce capex and opex and keep costs in line with subscriber ARPU and revenue--a problem that has been vexing mobile operators ever since data-rich features hit the cellular airwaves.

In addition to mobile phone bandwidth usage skyrocketing, the number of subscribers is also skyrocketing. According to Infonetics' new report, there were more than 2 billion mobile subscribers worldwide in 2005, and that number will jump to over 3 billion by 2009.

And mobile operators are paying through the nose to handle all the voice, video, and data traffic created by those billions of subscribers.

'Mobile operators spent $16 billion on mobile backhaul link services in 2005, and will spend double that in 2009,' said Michael Howard, principal analyst of Infonetics Research. 'Although that's a significant increase in charges, the good news is they'll be getting a lot more for their money in coming years, because the average annual charge per connection goes up only 18% between 2005 and 2009-- from $8,004 to $9,455--while the capacities grow from one to two T1/ E1s per connection to 10s of megabits/sec to even 100Mbps.'

'The reason for this is that new technology and product options are becoming available now, especially in next gen microwave and IP/ Ethernet products, where single products can efficiently handle 2G/3G voice simultaneously with 2.5G/3G/3.5G data and video traffic streams, ' Howard continued. 'These improvements will allow mobile operators to slowly increase their capital investment while rapidly adding more subscribers and higher capacity services.'

Infonetics' report shows that while the migration to IP-based backhaul is clearly underway, it will be a gradual process, because T1/T3 mobile backhaul provisioning is a multi-billion dollar business that carriers won't give up readily. Carriers also need time to gain trust with the new IP/Ethernet equipment. But the pressure to offer affordable mobile backhaul service links to mobile operators will eventually force carriers to make the shift, likely ramping between 2008and 2010.

The report also said worldwide sales of mobile cell site backhaul equipment hit $3.4 billion in 2005, and will decline 39% to $2.4 billion in 2009; the decline in revenue is due mainly to microwave equipment becoming significantly cheaper with much higher capacities.

IP mobile backhaul equipment comprised less than 1% of total mobile backhaul equipment sales in 2005; by 2009, it will comprise 45% of the total, or $1.1 billion , it added, while 99% of all IP mobile backhaul equipment will be pseudowire enabled by 2009.--

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