Heavy Reading
EXECUTIVE SUMMARY

Backhaul Strategies for Mobile Carriers

The biggest cost challenge facing wireless service providers today is the backhaul network – the part of the network including the cellular base station at the edge, the base station controller or radio network controller, and all other Layer 1-3 transport, aggregation, and switching elements in the access and metro networks, excluding the core switching network. This infrastructure – whether it consists of leased lines or point-to-point microwave – is very expensive to maintain and difficult to scale. Today, for example, leased lines account for as much as 25 percent of some mobile operators’ operating expenses.

Worse, mobile operators built out their "2G" backhaul networks to provide extensive coverage of circuit-switched voice services using narrowband TDM backhaul. The resulting network architectures in place today are not optimized for handling increasing volumes of packet voice -- and particularly packet data – services. As a result, launches of CDMA 1x EV-DO and HSDPA services are forcing mobile operators to double the number of leased lines or microwave connections at some cell sites. These additional costs cast real doubt over whether there is a profitable business case behind deploying these enhanced, higher-throughput air interfaces.

In the last year, many mobile carrier executives have been approving hikes of 15 to 25 percent in annual backhaul expenditures to get enough capacity to their base stations for a high-quality HSDPA or EV-DO end-user experience. Carriers are typically basing their initial HSDPA/EV-DO deployment plans around four T1/E1 backhaul circuits per cell site; but as capacity expands, they are talking about having to support as many as ten such circuits. Despite the uplift that those new services are expected to provide to carriers' average revenue per user (ARPU), overall ARPU across the carriers’ total customer base is expected to remain flat, if not decline, over the next three years. Put simply, if backhaul costs can’t be reined in as more and more capacity is added to cope with increasing traffic volumes, the operating margins of cellular carriers are going to deteriorate further.

Backhaul Strategies for Mobile Carriers analyzes the current spike in mobile backhaul spending and assesses the steps that mobile operators are taking to implement cost-reduction technologies in the backhaul network, including the radio access network (RAN) itself. The report evaluates the case for a range of bandwidth-optimization features in the RAN, as well as the transition to IP RAN over T1/E1 and Ethernet for both W-CDMA and CDMA 1x EV-DO. It examines the dynamics of the multiservice aggregation market and outlines the value proposition for a new generation of MPLS-based pseudowires positioned to enable IP-based RANs, as well as early carrier perspectives on this new technology. It also considers various trends in “last-mile” connectivity, with particular emphasis on point-to-point microwave and WiMax.

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Drawing on the recent experiences and forward-looking dilemmas of leading carriers' network planners, Backhaul Strategies for Mobile Carriers examines the strategic fit between the array of products and solutions being positioned by vendors on the one hand, and the real-world readiness of mobile carriers to deploy them on the other. It also assesses the competitiveness of the leading vendors in this space.


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For a list of companies profiled and evaluated in this report, click here.

In addition to exclusive interviews with key industry participants and decision-makers, Backhaul Strategies for Mobile Carriers presents and analyzes results from new surveys and development efforts directly related to the backhaul sector, including relevant data from Heavy Reading’s March 2006 survey of network operator deployment plans for WiMax and the results of interoperability tests held at the February 2006 MPLS World Congress. Together, the quantitative data and in-depth interviews deliver unique and compelling insight into how the backhaul sector is changing and where those changes are likely to lead in the months and years ahead.


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The underlying methodology of this report was designed to gather information critical to equipment suppliers and service providers addressing backhaul migration strategies. This was done via one-one interviews with three categories of industry player:

Cellular operator employees generally at the director level, with overall responsibility for the backhaul network, including cell-site dimensioning, transmission paths, and aggregation points in the network.
Backhaul network equipment vendor employees ranging from product marketing managers to vice presidents of marketing or strategy, covering a wide range of products, including point-to-point microwave radio, WiMax, DSLAM, multiservice switches, multiservice provisioning platforms, and CDMA, GSM, and W-CDMA RAN equipment.
Other companies in fields such as synchronization, backhaul network optimization consultancy, and leased-line service provisioning.



Report Scope and Structure

Backhaul Strategies for Mobile Carriers is structured as follows:

Section I is an introduction to the report, with complete report key findings.

Section II describes the current state of backhaul networks. It defines "backhaul" and explains the differences in CDMA and GSM/W-CDMA architectures, as well as the differences in how backhaul networks are designed in different regions. It then details the flaws in current backhaul topologies as they relate to changes in the RAN and new backhaul technologies.

Section III surveys the enhancements to the CDMA 1x and W-CDMA air interfaces and their implications for redesigning the backhaul network. It focuses on current and anticipated patterns of end-user behavior in using voice and data services; carrier experiences in deploying and pricing 1x EV-DO and HSDPA in lead markets such as the U.S and Japan; and the impact of a growing diversity of traffic types flowing through the network. This section also includes a case study of France Telecom and its plans for evolving to a converged Universal Access Node (UAN) for both its own wireline services traffic and the mobile traffic of its Orange affiliate.

Section IV explores a number of the TDM optimization solutions that can be deployed in the RAN. It reviews the state of demand for PDH and SDH transmission equipment and the positioning of MSPPs. It also considers ongoing product innovation and price competition in the point-to-point microwave market, along with trends in the market for Abis optimization solutions and the use of satellites for mobile backhaul.

Section V gauges the importance that W-CDMA carriers attach to ATM QOS features and the different approaches of some of the leading vendors to delivering optimal transport capabilities in their RAN software.

Section VI examines the different approaches taken to deploying multiservice aggregation networks, including integrated solutions provided by RAN vendors, dedicated multiservice aggregation networks, and distributed approaches enabled by MSPPs. This section also looks at some new entrants in the Layer 2 multiservice switching market that are targeting mobile backhaul and the positioning of multiservice routers for this opportunity.

Section VII considers the promise of the IP RAN. In particular, it weighs the near-term opportunity for leveraging IP transport in the RAN and the availability and suitability of Ethernet as a backhaul technology, including via Ethernet-ready technologies such as WiMax.

Section VIII assesses the multiprotocol RAN as enabled by MPLS-based pseudowire technology. It describes the maturing of pseudowires in wireline networks and the positioning of the same capabilities on the same vendor platforms for mobile backhaul. It also analyzes the strategies of the two leading vendors looking to implement pseudowires at the base station to enable an IP RAN before the IP capability is supported in the base stations themselves.

Section XI provides an update on the real-world status of IP RANs, appraising live deployments with EV-DO in the U.S. and Japan, as well as with GSM and W-CDMA in Hong Kong. It describes the roadmap for upgrading legacy base stations with IP interfaces, as well as plans for integration into next-generation products. It also looks at some RAN vendors' ideas for the next stage of IP RAN evolution, in which distributed intelligence nearer the edge of the network could enable partial bypassing of backhauling functions.

Section X profiles 15 key vendors addressing the mobile carrier backhaul sector, analyzing the primary strengths that each brings to this space.

The report is essential reading for a wide range of industry participants, including the following:

Backhaul technology suppliers: How will the ongoing shifts in mobile operator backhaul strategies affect your business? Where are the new opportunities for market growth? Are your products and marketing messages in line with customer plans and expectations? Are there significant gaps in your product line that need to be addressed to meet future demand for backhaul solutions?
Other equipment suppliers: Will demand for last-mile products be affected by new backhaul deployment plans? Which technologies are emerging as the most likely winners for tomorrow’s backhaul networks? Is your company positioned to take advantage of those anticipated changes?
Mobile network operators: How do your backhaul deployment plans compare with those of your competitors? Does your backhaul strategy deliver the best cost-control option for your network, or are there other alternatives that would be more efficient? Which technology suppliers are best positioned to deliver the opex-cutting solutions you need for your backhaul network?
Investors: Which technologies are emerging as the winning solutions for next-gen backhaul, and which companies are the leading providers of those solutions? How will backhaul affect profitability for the wireless service sector in the months and years ahead?

Backhaul Strategies for Mobile Carriers is published in PDF format.

LENGTH: 59 PAGES
PRICE: $3,795
PATRICK DONEGAN
Senior Analyst, Heavy Reading
Donegan has 15 years' experience as a telecom market journalist, analyst, and strategist. His in-depth knowledge of wireless technology...
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15 EQUIPMENT VENDORS ANALYZED
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DELIVERABLES
59 pages of analysis covering deployment of backhaul network technology by wireless service providers to accommodate traffic growth driven by the transition to packet-based services
Results of exclusive one-on-one interviews with key executives and decision makers from wireless service providers and technology suppliers
In-depth product and strategy analyses for leading vendors and technology suppliers in the backhaul sector
Full analysis of the likely role of pseudowire (PWE3) transport in the design and deployment of next-gen backhaul networks
Information and analysis on the current status of IP-based radio access network (RAN) deployments around the world
Relevant results from Heavy Reading’s exclusive survey of more than 260 network operators regarding deployment plans for WiMax technology
LENGTH: 59 PAGES
PRICE: $3,795
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