Cox Sees a Big Future in Mobile Backhaul

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Btr Ftr Art Backhaul 8 14 12For cable operators, the last two decades have been a time of great change. Opportunities have appeared, and for the most part, MSOs have risen to the challenge and carved out lucrative niches. Even in such a fast-paced and entrepreneurial environment, mobile backhaul - the transport of cellular traffic from the towers to various places in the wireless carriers' network - is noteworthy for how quickly and deeply it has developed and the speed at which it likely will change.

Cox Business, though it now in absolute numbers has a smaller commercial services business than Comcast or Time Warner Cable, was a pioneer. Now it is planning its next move in the segment and, according to Jay Clark, the company's director of carrier sales and operations, mobile backhaul is a big part of that planning.

Erin Dunne, the director of research services for Vertical Systems Group, said the cable industry in general is well-positioned in the mobile backhaul sector because its fiber tends to be in the same residential neighborhoods as the cell towers that need help. Cox was one of the first off the mark in the mobile backhaul game. "They have about 3,000 Ethernet lines to cell towers," she said. "That's a very good amount. They are doing a good job on it. They focus very well on leveraging that overlay [between its fiber and mobile carriers' cell towers]."

Clark said Cox's commercial services business is divided into two groups. One group provides business services to organizations - businesses, educational facilities and so on - at the retail level. The wholesale side of the business, which provides fixed-line last-mile services to telephone companies and mobile backhaul, only is about 10% of the overall commercial services business.

But the mobile backhaul space could increase the size of the wholesale business and its slice of the pie relative to last-mile services. At the highest level, the driver is pure bandwidth hunger: Wireless carriers are rolling out 4G LTE services quickly. These networks - and the iPads, Android devices and assorted other gadgets that ride on their spectrum - increasingly are the way in which the public communicates and is entertained.

Cable operators are one of three groups vying for this lucrative business. The other two players are the incumbent local exchange carriers (ILECs) and the alternate access vendors (AAVs), which formerly were known as competitive local exchange carriers (CLECs). "In the near term, mobile backhaul will grow faster than the other segment," Clark said.

A focus on what has to be done to please exacting mobile carriers could empower the other arms of the commercial services business as well, Clark said. The idea is that wireless carriers are intensely demanding. If cable's backhaul technology and operational procedures pass muster with this finicky group, it will mean that operators are positioned to expand their retail offerings from the small to medium-sized businesses (SMBs) they focus on today to large enterprises. Put more simply: Getting up to speed for mobile backhaul means that operators also will have a story to tell other lucrative customers.

It's a moving target, however. Clark said the transition during the next 18 months will be from the buildout of fiber to macro towers - connecting existing facilities to the network to handle the initial onslaught of demand - to a next generation of cell sites and more sophisticated backhaul technology.

On the cell site side, the mobile industry is on the edge of an era in which macro towers of today give way to smaller cell sites that supplement coverage in a more flexible and efficient manner. Mobile backhaul providers - ILECs, AAVs or cable operators - will have to deal with this more heterogeneous environment. Likewise, the next generation of backhaul technology will feature such new techniques as the ability to balance loads between towers and provide more granular and real-time data in support of the service level agreements (SLAs) between the mobile carriers and their backhaul providers.

Getting this all right will require intense cooperation between the mobile carriers, their backhaul vendors and equipment makers. The bottom line is that the mobile backhaul industry is doing two things simultaneously: Struggling to support the massive demand that has built up or is soon to emerge and preparing for a future in which the technology will be far more advanced and efficient than the generation thrown into the breach today. Cox, Clark said, is aware of the parallel developments. "We are starting to have conversations around advanced topics in mobile backhaul," he said.

It is likely that the mobile backhaul sector, due to a high growth rate and its unique needs in terms of billing and ordering, will emerge as a significant revenue generator in the near future. Cox and other cable operators must prepare now because it will be a competitive and demanding business. "We're still in the early stages of ubiquitous data," Clark said. "There is a lot more to come."

Carl Weinschenk is the Senior Editor for Broadband Technology Report. He can be reached at carl@broadbandtechreport.com.
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