As operators invest in network capacity to satisfy consumers’ insatiable appetite for wireless broadband, operators have had to explore heterogeneous networks topologies (augmenting macrocell networks with small cells) to make-up for a lack of spectrum. The growth of small cells is so tremendous that virtually all of the growth in operator backhaul capital expenditures is coming from supporting small cells. While capital expenditures on macrocells will remain virtually flat from 2011 to 2015, CAPEX on small cells will grow almost nine-fold, exceeding US$31 billion in 2015.

“The future of backhaul is all about small cells, and it’s important to remember that all backhaul options are not created equal. Small cell backhaul has unique requirements,” says Chris Kissel, Senior Analyst. “While almost 70% of macrocell backhaul investment is fiber, small cells, due to the unique nature of each small cell deployment, has a much more even distribution among the backhaul technologies. In 2015, there will be almost US$1 billion spent on fiber, microwave, cable, millimeter microwave, and even sub-6GHz radios by operators to support small cell backhaul. The only technology that is seeing a decline in spending is copper (T1/T3, E1/DS3).”

Kissel continues, “There is also a strong geographic influence to small cell backhaul development. Asia, Japan, and Korea, which were early adapters of LTE, have all been able to leverage legacy fiber for small cell backhaul. Other regions, such as North America and Western Europe, are more balanced in small cell backhaul investment, with microwave expected to have the highest spending in the future. The Middle East and Africa will see the largest diversity in solutions. For example, the region will lead investment in 802.16e for small cell backhaul used for microcells in remote regions.”

Recent In-Stat research found the following:

  • The number of fiber-enabled backhaul macro base stations will approach 1.8 million in 2014.
  • China Mobile estimates that 96% of its base stations have fiber-optic access.
  • Cable operators can generate revenue by using all of their bandwidth in their hybrid fiber-coaxial (HFC) cable. Revenue would be derived from cable TV/data and mobile backhaul.
  • In the US, a point-to-point microwave license costs US$1,800 and expires in ten years. Licensees are entitled to 50MHz in the frequency band for which they apply.  
  • As it is with macrocells, fiber is the preferred backhaul medium for small cells.

This Market Alert is drawn from the In-Stat research, Last Mile Backhaul: The Essential Element for Successful Mobile Networking (#IN1104899GW), which identifies mobile backhaul expenditures and capacities. Backhaul opportunities include infrastructure equipment, as well as service opportunities for cable MSOs, satellite vendors, and wholesalers.

The research includes the following:

  • Five-year forecasts for last mile backhaul capacity by medium (microwave, millimeter microwave, T1/E1/DS3/E3 copper Lines, cable, fiber, copper over Ethernet). Capacity forecast by air interface—GSM, CDMA, HSPA, WiMAX, and LTE
  • Five-year forecasts for TDM and Ethernet in the last mile
  • All forecasts broken out into six regions—North America, CALA, APAC, Western Europe, Eastern Europe, and MEA
  • Companies mentioned in the report: ADTRAN, Alcatel-Lucent, American Movil, AT&T, Telekom Austria Group, Avea, Bharti Airtel, BridgeWave, British Telecom, Cambridge Broadband Networks, Ceragon Networks, China Mobile, Ciena, Cisco , Clearwire, Cox Communications, Deutsche Telekom, DragonWave, E-Band Communications, Entel, Ericsson, Exalt Communications, FairPoint, GigaBeam, Huawei, Indosat, KT Corp, LG Uplus, LightPointe, Metroweb, MTS (Russia), NEC, NTT DoCoMo, Samsung, Siklu, SK Telecom, Sprint, Taqua, Telefonica, Tellabs, Togo Cellulaire, Tower Cloud, VectaStar, Verizon, Virgin Media, Vodafone, Yota, Zain, and Zayo Group.

This research is part of In-Stat’s LTE & Cellular Infrastructure service, which provides analysis and forecasts of the market for wireless broadband and communication infrastructure equipment and components, including backhaul— macro, micro, pico, and femtocell basestations—and associated semiconductors.