Quick Industry Facts

Quotes

• Today, backhaul spending among U.S. wireless carriers totals about $2.1 billion, or about 11 percent of carriers operating budgets. Estimates are with voice traffic increases alone it will move that mark toward 15 percent, and if data services are added, it could rise to 25 percent…
  
  Backhaul Overhaul By Karen Brown September 15, 2005 Wireless Week

• The number of wireless backhaul links in the US will grow threefold by 2010 as voice and data minutes per subscriber increases and mobile carriers strive to reduce operating costs. A Visant Strategies study says wireless backhaul now accounts for almost 20% of US backhaul capacity. This is expected to rise even more as the rollout of 3G and 4G networks in the US further boosts the need for backhaul services.
  
  US Mobile Backhaul: Growth Trends and Analysis 2005

• "HSDPA will give operators the bandwidth they need at the air interface, but the bottleneck will be in the backhaul," Zor said. "Any operator that wants to offer 14Mbit/s will have to put huge pipes into the ground - that is too expensive and their timetables don't allow for it."
  
  UK News 30 Sept. 05

• Barry West, CTO and president of Sprint's WiMAX division, summed up the notion of wireless backhaul the best: "If you have a 20 MHz channel, and you can get 4 bits per-hertz, you got 80 Mbps per-sector and 240 Mbps per site. If you're going to try to push that down T-1s you'll go broke."
  
  Alleviating Backhaul Pain
  Mobile Backhaul on the Rise, Says Infonetics Research, October 17, 2006

• Infonetics reports that worldwide mobile installed connections reached just fewer than 2 million in 2005 but will grow 69 percent to 3.3 million by 2009 due to accelerating numbers of subscribers, new 2G/4G base stations, and expanded coverage, including in-building micro base station solutions.
  
  Alleviating Backhaul Pain
  Mobile Backhaul on the Rise, Says Infonetics Research, October 17, 2006

• Up till now, the primary mode of wireless backhaul has been to rent costly T-1 circuits from an ILEC. Not only are these circuits expensive, they also lack the scale to support the growing set of next-generation wireless data-centric services such as e-mail, video and text messaging. Michael Howard, principal analyst, points out that there is light at the end of the tunnel, and the answer will be IP-based solutions and higher capacity microwave systems that can simultaneously carry both 2G/3G voice alongside 2G/3.5 G data services.
  
  Alleviating Backhaul Pain
  Mobile Backhaul on the Rise, Says Infonetics Research, October 17, 2006

• "North American wireless carriers are spending over $2B of their OpEx budget on cell tower back-haul, and that number is growing," says Frank Dzubeck, President of Communications Network Architects. "Video, Mobile broadband Service Assurance and Next-Gen IMS-based IP applications are significantly driving up the bandwidth and expandability requirements for cell tower back-haul. Back-haul using older generation T1-based systems are no longer good enough."
  
  Light Reading
  Hatteras Goes Mobile, March 8, 2006

• Regardless of whatever generation the radio access network has advanced to, the wireless broadband experience is only as good as the backhaul technology that supports it, and if backhaul bandwidth is limited or inefficient, then customers will not benefit from what 2.5G, 3G or 4G services have to offer. For wireless service providers eyeing innovative new applications like music and video as the answers to ongoing revenue challenges, encountering a bottleneck as traffic is backhauled through the network can be devastating.
  
  All of the ones and zeros in the air have to come back down to the ground somehow, said Ted Shields, president and CEO of engineering and market research firm GeoResults. According to Shields, there are 140,000 cellular tower sites in the U.S., and the number of sites nationwide is growing about 6% each year. According to various other sources, more than 90% of these towers are fed with backhaul based on traditional, copper-based TDM infrastructure. Only about 6% of the towers in the U.S. are fed with fiber-based backhaul.
  
  … leased lines have come at considerable expense, costing at least several hundred dollars per line and representing about 30% or more of the mobile carrier's bottom-line expense budget, according to many industry experts.
  
  …Regardless of the physical infrastructure involved, Ethernet seems to be the common goal among vendors with backhaul solutions. Michael O'Malley, group manager of portfolio marketing for Tellabs, said that most cell sites in 2G mobile networks have about five to seven T-1 connections each for backhaul capacity. Shields of GeoResults agreed with that numbers and said his research shows that average will grow to almost nine T-1s per cell site by 2010.
  
  You generally can count on adding a couple of T-1s per site for 2.5G services, and then, when you get to 3G, you want to look at adding more or migrating to something like Ethernet or Gigabit Ethernet, O'Malley said.
  
  Telephony September 23, 2006
  WIRELESS BACKHAUL'S INTELLIGENCE INJECTION

• Unlike Europe where the majority of backhaul is mobile, in the U.S. over 90% of the backhaul needs are addressed by installing T-1 lines that connect the cell site to the wired network. According to CTIA, there are approximately 180,000 cell sites in the U.S. which we estimate to grow 272,000 by 2010 assuming a wireless penetration rate of 86% ( to 275 million total subscribers compared to 202 million currently) and the addition of one cell site for every 800 new subscribers (the historical average). Assuming an average of 4 T-1s per site and an average T-1 cost of $200/month (includes both rural and metropolitan which averages approximately 8 T-1s/site), we estimate the current market to be $2 billion and grow to $7 billion by 2010 (assumes an average of 10 T-1s/site).
• … data ARPU has stabilized total ARPU for Cingular ($49-$51 range), which has over 54 million subscribers. Cingular currently reports approximately 24 million data customers (up 33% from the beginning of 2005) and we expect this trend to continue as subscribers are presented with options such as exclusive content from Yahoo and HBO and Live Ticker. It should be noted that during the same period, Cingular's operating income only increased 2.3% despite a 7.5% gain in subscribers and a 12.7% increase in service revenues. The operating income growth was primarily due to a 6.3% decrease in SG&A expense as service margins declined 220 basis points and handset subsidies increased. In our opinion, one of the primary methods for Cingular to increase profitability is to control and/or reduce operating expenses and… we estimate that approximately 30% of a carrier's operating expenses are related to backhaul….
• Specifically, during the past year, [Verizon's] total ARPU has remained in the $49 to $51 range as its data ARPU increase to $4.85 from $2.79 reflecting a 43% year over year increase in data customers (to 23.7 million in 4Q05 from 16.6 million in 4Q04). The carrier's 4Q05 data results were driven by 7.4 billion text messages, 134 million picture messages and 35 million Get It Now¨ downloads. The increase in demand for backhaul will, in our opinion, be driven by the growth of mobile data service and…North America is expected to report the largest increase given its low initial base. We expect this to be driven by the combination of subscriber growth, increasing MOUs and demand for mobile data and content.
  
  Punk, Ziegel & Co. FRNS Coverage, January 2006

Industry/Informational Links

• CTIA
• WCA
• FCC

Articles

• Wireless backhaul's intelligence injection
• Mobile backhaul exploding, imploding
• Study: US Backhaul Grows
• Nervous Breakdown: Cellular Backhaul on the Verge
• Backhaul Overhaul
• Bringing Business Brains to Wireless Backhaul
• Wireless links carry backhaul load