3G will drive need for more robust connections to core network

March 22, 2006

Wireless network operators of all types are increasing their spending on technology to improve the backhaul connections that link their base stations to their core networks -- and this trend is likely to continue for the foreseeable future, according to a major new report from Heavy Reading, Light Reading's market research division.

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 business and technology case for a range of bandwidth optimization features in the RAN, as well as the planned transition to IP-based RAN over T1/E1 and Ethernet backhaul for W-CDMA and CDMA 1XEV-DO networks.

Drawing on the recent experiences and deployment plans of leading wireless carriers, 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. The 59-page report also analyzes the competitive strengths and weaknesses of the leading vendors in this critical market sector, including Alcatel, Cisco, Ericsson, Lucent, Nokia, Nortel, and Siemens.

"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 HSPA or EV-DO end-user experience," notes Patrick Donegan, Senior Analyst at Heavy Reading and author of the report. "Mobile carriers in mature markets are hoping that they can get backhaul spending back down again to previous levels within 18 months or so of launching HSPA or EV-DO, but that projected trend depends on developments that are far from assured."

Key findings of Backhaul Strategies for Mobile Carriers include the following:

Spending by wireless network operators on backhaul solutions is increasing across the board. Carriers in emerging markets are spending more on backhaul due to coverage requirements. In mature markets, operators are increasing their backhaul spending to cope with the launch of HSPA and EV-DO.

Of those carriers that have deployed a dedicated ATM multiservice aggregation network, only a minority have begun terminating GSM traffic onto it in large volumes. Potential factors explaining this apparently slow rate of 2G/3G convergence in the backhaul include organizational inertia and the challenge of integrating 2G and 3G management systems.

The market for multiservice aggregation solutions for the mobile backhaul network is becoming increasingly crowded, in terms of both the variety of product types and the number of vendors. New vendors have entered the Layer 2 MSS market and are targeting mobile backhaul; MSPPs are also being positioned for more distributed aggregation architectures, drawing in new product development from the likes of Cisco.

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.