Ethernet Mobile Backhaul Equipment Predicted to Spike in 2010 and Continue Growing (Infonetics and ABI Research)

 Introduction:

Mobile backhaul refers to the link(s) between the base station and the network carrier point of presence (POP).  This can include a variety of Radio Access Networks (RANs), microwave, fiber or even bonded copper subnetworks.  With bandwidth increasing exponentially to support many more mobile users and mobile broadband apps, the need for carriers to invest in backhaul infrastructure has to be balanced against the very small or even negligible revenue growth from all subscribers (voice and data). With almost all mobile apps being web based, legacy TDM is no longer an efficient backhaul solution.  This is driving the use of Ethernet and IP in newer backhaul technologies.  However, there are inherent characteristics of TDM, such as synchronization at cell sites, that need to be included in any Ethernet/IP backhaul solution.  One key issue is how to evolve from a predominantly TDM/ cellular voice backhaul environment to one that ALSO includes web based mobile data apps. In most cases, IETF Pseudowire based solutions will be used to carry TDM traffic over Ethernet.  

While bonded DS1s or even DSLs were previously sufficient to backhaul voice + 2G data or even 3G data, higher speed transport (microwave or fiber) will be necessary to backhaul 3G, 3G+ and 4G technologies like LTE.   Therefore, a dramatic change is occuring in the mobile backhaul infrastructure market.  For years, the big market for carrier Ethernet was to be for enterprise network customers- Ethernet private line, virtual private line and virtual private LAN/ Transparent LAN.  But now, that's all passe and the big market for carrier Ethernet is seen to be for mobile backhaul, especially 3G and 4G RANs.

But carrier Ethernet is not the only solution for mobile backaul.  Market research firm Infonetics considered the following technologies in their most recent mobile backhaul report: PDH and ATM over PDH, SONET/SDH and WDM, Ethernet copper and fiber, DSL, PON, coax cable, microwave, TDM, Ethernet, WiMAX, and satellite. A breakdown for IP mobile backhaul equipment (pseudowire-enabled vs. not pseudowire-enabled) is included in the company's latest report.

Market Forecast:

Infonetics Research released its updated Mobile Backhaul Equipment and Services market size, market share, and forecast report predicting a big ramp up in global sales.

"Last year Ethernet-based mobile backhaul equipment sales jumped 36% year-over-year, to $4.8 billion, representing 80% of total backhaul spend. We expect Ethernet spending to spike again in 2010 and growth to continue for many years, fueled by the ongoing HSPA/HSPA+ onslaught across the 3GPP world and early LTE deployments led by 3GPP2 players. We see no letup in the Ethernet market: improvements to backhaul solutions, such as packet timing and synchronization, have been made, and about 100 operators around the world are now actively deploying a single IP-Ethernet backhaul to carry all traffic," explains Michael Howard, principal analyst and co-founder of Infonetics Research.

Richard Webb, directing analyst for microwave at Infonetics and co-author of the report, adds: "Even with TDM microwave spending declining significantly every year from here on out as service providers move to packet technology, we expect the overall mobile backhaul equipment market to grow to $8.2 billion by 2014 based mainly on the strength of Ethernet equipment."

“We have seen a wholesale shift in backhaul strategies as operators try to reduce the costs associated with skyrocketing mobile data traffic. Six months ago when we surveyed operators around the world, most were taking a dual/hybrid backhaul approach (TDM plus IP/Ethernet). Just last month when we repeated the survey, most operators told us they plan to use a single IP/Ethernet backhaul, whether over microwave, fiber, or copper. Mobile operators and transport providers now trust IP/Ethernet to do the whole job, including the tricky timing and synchronization required for most of the world's mobile networks. We declared 2009 the Year of IP/Ethernet Backhaul, and we see no slowdown in the mobile backhaul equipment market,” explains Michael Howard, principal analyst and co-founder of Infonetics Research.

Richard Webb, states: “With operators increasingly recognizing Ethernet-based solutions as the best available means of accommodating backhaul traffic growth, and with microwave products now achieving 1Gbps in some scenarios, the Ethernet-only microwave segment is poised for rapid growth over the next few years, out-performing hybrid TDM/Ethernet solutions.”

ABI Research predicts that Canadian and Latin American regional mobile operators’ spending on backhaul services is expected to show moderate to strong growth to 2015. However with the exception of the Asia-Pacific region, capital expenditure on microwave backhaul infrastructure will decline—in some cases sharply—after 2010.  CAPEX peaked in Western Europe early this year at about $4.4 billion and is already heading to a $4 billion point by year’s end, after which it will drop precipitously to less than $2.5 billion in 2012. Spending will continue to increase in the Asia-Pacific area to something less than $2 billion in 2012, and will also decline after that.

According to ABI Research analyst Xavier Ortiz, “Asia’s backhaul CAPEX is lower than one might expect, lacking demand from China where the government has mandated fiber deployments. Africa ranks a somewhat surprising third due to heavy reliance on microwave backhaul.”  Mobile networks practice director Aditya Kaul adds, “To adapt to these changing market conditions and the shift to all-IP networks, backhaul vendors should keep an eye open for Tier 2 and Tier 3 service providers. Developing countries also present good opportunities. While they may be a tough sell due to limited budgets, underserved regions often need government-mandated upgrades and may have access to helpful government incentives.”  The Indian 3G market is one of the most significant of these developing opportunities.

ABI Research’s “Mobile Network Backhaul” study describes and analyzes these issues, profiles key players, and examines some of the most innovative solutions. Forecasts include CAPEX and OPEX for different access technologies, data traffic forecasts by region, OPEX on leased backhaul services, mobile data services by region, microwave infrastructure vendor market share, and microwave CAPEX for new base station installs by region.

MOBILE BACKHAUL EQUIPMENT MARKET HIGHLIGHTS (Infonetics):

• Ericsson continues to lead in worldwide mobile backhaul microwave radio revenue market share, followin closely by Huawei, Nokia Siemens, and NEC
• Alcatel-Lucent holds the #1 spot in the first half of 2010 for worldwide revenue in the fast-growing Ethernet cell site routers and gateways segment, ahead of Tellabs, Cisco, and Huawei
• Between 2010 and 2014, service providers are expected to spend a cumulative $36 billion worldwide on mobile backhaul equipment
• Infonetics expects revenue from microwave Ethernet mobile backhaul equipment to jump 367% in 2010 over 2009
• Ethernet cell site routers and gateways posted double- and triple-digit percent revenue increases in 2009 and are expected to continue growing year-over-year at least through 2014.  Ethernet cell site router revenue jumped 136% in 2009, nearly doubling its share of worldwide mobile backhaul equipment spending
• Microwave mobile backhaul equipment, both TDM-based and Ethernet and dual Ethernet/TDM-based, made up 81% of all mobile backhaul equipment sales in 2009, with the dual and pure Ethernet microwave equipment revenue increasing rapidly. 
• Infonetics expects almost 1.5 billion new mobile subscribers and about 1.2 billion new mobile broadband subscribers between 2010 and 2014, which will require more base stations, more cell site connections, higher backhaul capacities, and equipment for each cell site connection
• Asia Pacific leads in mobile backhaul equipment revenue growth due to more users, led by China and India, and higher bandwidth per user in other countries

Reference:

IP Ethernet in Mobile Backhaul Infrastructure, Michael Howard of Infonetics at IEEE ComSocSCV- TiE-SV June 2010 Workshop on Mobile Applications and Infrastructure 

 Oct 2010 IEEE Communications Magazine:  Special Topic papers on Carrier Ethernet for Mobile Bakhaul+

Carrier Ethernet for Mobile Backhaul
The wide adoption of mobile broadband services by users of smartphones and other mobile terminals is being enabled by radio access technologies with better performance than many fixed residential broadband lines.
Peter Briggs, Ericsson UK; Rajesh Chundury, Ericsson USA; Jonathan Olsson, Ericsson Sweden

Mobile Broadband Backhaul Network Migration from TDM to Carrier Ethernet
The authors discuss different migration scenarios from the circuit-switched legacy backhaul networks toward packet-based networks.
Zere Ghebretensaé, Ericsson Sweden; Janos Harmatos, Ericsson Hungary; Kåre Gustafsson, Ericsson Sweden

Synchronization in Next-Generation Mobile Backhaul Networks
The author explores key technology topics highlighting challenges to be considered in rolling out mobile backhaul synchronization solutions.
Anthony Magee, ADVA Optical Networking

Development of the First IEEE 1588 Telecom Profile to Address Mobile Backhaul Needs
The authors describe the work performed by ITU-T SG15Q13 for defining the first telecom profile based on the use of IEEE 1588-2008.
Jean-Loup Ferrant, Calnex; Mike Gilson, BT Innovation & Design; Sebastien Jobert, France Telecom; Michael Mayer, Ciena Corporation; Laurent Montini, Cisco Systems; Michel Ouellette, Huawei; Silvana Rodrigues, IDT; Stefano Ruffini, Ericsson

Shortest Path Bridging: Efficient Control of Larger Ethernet Networks
The authors provide an overview of IEEE 802.1aq shortest path bridging and outline some application scenarios that will benefit from the new capabilities SPB offers.
David Allan, Ericsson; Peter Ashwood-Smith, Huawei; Nigel Bragg, Ciena; János Farkas, Ericsson; Don Fedyk, Alcatel-Lucent; Michel Ouellete, Huawei; Mick Seaman, Consultant; Paul Unbehagen, Alcatel-Lucent

+ The entire IEEE Communications Oct 2010 issue (and all others) may be accessed on-line if you are an IEEE ComSoc member or if you have an IEEE Xplore account