A backhaul bonanza follows the mobile wireless broadband movement.
Cable operators, fiber providers and microwave radio vendors are benefiting from the continuing hard push by mobile wireless operators worldwide to build out both next-gen IP-based broadband and legacy networks. These mobile infrastructure build-outs have not only acted as a catalyst to better backhaul opportunities for those offering Ethernet services in urban and suburban areas – including cable operators – but also for those selling PTP microwave radios in markets without a cable or fiber presence.
Visant Strategies sees burgeoning LTE and HSPA Plus networks in leading markets, and the continuing use of GSM in lesser markets, continuing to fuel the backhaul market for years to come.
STILL GROWING
The mobile infrastructure industry has not suffered with down revenues as other industries have during recent years, although there has been quite a bit of consolidation. But with this consolidation, there has also been a steady flow of mobile infrastructure sales in all parts of the world, with leading economies realizing advanced 3G and 4G build-outs. These include LTE WCDMA and 3.5G HSPA Plus wireless networks, which offer speeds and capacity almost comparable to LTE, and high-end 3G mobile networks such as CDMA EVDO.
In other areas of the world, GSM is still being utilized, and in emerging economies – such as in India and China – build-outs are occurring at a fast rate. Mobile wireless has become a staple everywhere, and mobile infrastructure manufacturers reported more good news this past quarter.
Ericsson reported an increase in mobile infrastructure sales of 14 percent year-overyear. The vendor stated its lesser North American sales were simply the result of operators (read: U.S. operators) slowing down the evolution to 4G after upgrading heavily during the past few years. The company, like other mobile infrastructure vendors, still experienced stronger sales year-over-year in other regions of the world where 2G and 3G networks are still being enhanced and built out.
Alcatel-Lucent stated revenue growth in its wireless division, at constant currency exchange rates, increased almost 15 percent year-over-year. The company had strong wireless network sales, due mainly to CDMA EVDO growth in North and South America, as well as 2G and 3G network sales within the Asia Pacific region.
This mobile growth will continue, and Visant Strategies sees global mobile infrastructure sales rising 8 percent to 15 percent per year through 2015. We also believe the quicker advent of evensmaller cell sizes may raise the growth rate up a few percentage points.

SMARTPHONE/TABLET WORLD
While a shipment growth rate of 10 to 15 percent year-over-year does not seem sizable when discussing the billion-plus annual mobile phone market, the number looks pretty good when put into context with the world economy, particularly when it comes to high-end mobile devices.
Smartphones, by Visant Strategies’ estimates, have accounted for almost onethird of the more than 300 million units moved this past quarter and will continue to account for 35 percent to 45 percent of sales for at least the next three years. As these higher-end phones are shipped and the newest and latest spectrum-munching application, such as video calling, is pushed, the need for data and likewise backhaul will rise significantly.
Other application segments, such as private networks, government networks and long-haul networks, are also showing demand for wireless and wireline broadband links – and high-capacity backhaul.
HIGH-END BACKHAUL NEEDED
Like the infrastructure market itself, building for mobile backhaul is also growing in sophistication. Today, as the smartphones and wireless tablets increasingly resemble the personal computer when it comes to connecting to “the cloud,” both the uplink and downlink require highcapacity channels to allow applications to work effectively.
Wireless mobile operators in emerging markets, even those that are deploying low-cost 2G and 3G networks, seek insurance and long life from transport elements, particularly when they are addressing backhaul for the core and middle of the wireless networks. Newer 3G networks, in particular, are being deployed for broadband wireless applications, with advanced HSPA variants present in the first stage of the network build-out.
These investments are ultimately an endorsement of the successful mobile broadband wireless business model and its appeal to a wider audience beyond the initial high-value customers in the U.S., Japan, Western Europe and South Korea.
GREAT OPPORTUNITY
Seeing the need for backhaul spectrum in the U.S., the FCC released spectrum at 650 MHz this past August and deleted many obstacles to building backhaul services on this band in order to help alleviate the backhaul capacity need.
This need will continue to grow as more cell sites are deployed. Looking at mobile wireless cell sites in the U.S. today – and, more importantly, in the future when femtocells become widely deployed – well-priced backhaul will continue to become an important commodity for wireless operators. These operators will be working with smaller and smaller returns on their investments as mobile voice and data use becomes ubiquitous and mobile operators face increased price and features competition from the other domestic wireless carriers.
Mobile carriers in the United States are seeking an average of 100 Mbps to 300 Mbps per tower on 3.5G and 4G cell sites for backhaul. As wireless networks continue to grow and cell sizes become increasingly smaller, particularly in urban and heavy suburban areas, it is apparent that the need for backhaul capacity will continually grow in areas where cable operators have invested considerably in their plant.
In the U.S., cable operators have already shown success in meeting the growing backhaul of mobile wireless carriers. For example, Comcast announced Q2 2011 cable revenues increased from a year ago by 5.6 percent to $9.3 billion compared with $8.8 billion in Q2 2010. The company stated this increase was driven by a 10.3 percent increase in high-speed Internet revenue and a 41.7 percent increase in business services revenue, which includes backhaul services.
Coax plant reaches more than 80 percent of the base stations in the U.S., and Visant Strategies estimates that 75 percent of U.S. mobile base stations are within 4,000 feet of cable operator-owned fiberoptic plant. Cable operators are now, and have been for the past few years, in a good position to cherry pick attractive urban and dense suburban cell sites and base stations for fiber extension.
E-Mail: swasey@visantstrategies.com & fuertes@visantstrategies.com