For Operators, Cellular Backhaul is a Beautiful Thing

July 15, 2010
The cable industry spent the past half-century happily bouncing from one big thing to another - and the next big thing is here. Video was, of course, the first big thing and still is its signature service. Two decades ago, Internet access became a big mon...
The cable industry spent the past half-century happily bouncing from one big thing to another - and the next big thing is here.
Video was, of course, the first big thing and still is its signature service. Two decades ago, Internet access became a big money maker. Voice services soon followed. Broadband - which essentially makes voice and data work better and seamlessly adds video to the mix - is the most recent high profile item on the hit parade. Taken together, these services form a deep, solid and stable business.The next big item is well under way, though it perhaps is riding a bit under the radar. Bringing cellular signals from cell towers and base stations back to the switches or elsewhere in the network - cellular backhaul - is not sexy. But it can be very big.Operators are deeply into cellular backhaul, and will increase their activities. "Within our wholesale business there is no question wireless backhaul is the fastest growing segment," said Jay Clark, Cox's [] Director of Carrier Product and Sales Operations. "It is growing robustly."
Others were equally enthusiastic. "I think [cable operators] are in a very advantageous position in the market with their depth of fiber outside the urban market, mostly in suburban areas," said Taylor Salman, the Director of Global Marketing for Ciena. [] "One of the dynamics right now is that the mobile operators have to get off copper. There is not enough bandwidth and it is too expensive."The stars that are aligning involve growing demand and the fact that the competitors' copper approach to satisfying that demand is old and creaky. "This is just getting started," said Shirag Trivedi, the Vice President of Professional Services for Arris []. "In my opinion each operator has significant RFPs for a large number of towers. It's a huge and growing market."Like all good trends, cable's promising foray into cellular backhaul has more than one cause. The most important, however, clearly is exploding demand. A bookend driver is the transition of traffic from predominantly voice to a mix of IP-based voice, data and video, which cable's newer Ethernet-based infrastructure is better able to support.
Location may not be everything in the cellular backhaul game, but it is a lot. Cable's fiber infrastructure is concentrated in residential neighborhoods, where the most cellular action is. In many cases wireless carriers - who have become comfortable with cable's equipment and procedures - would rather buy capacity from them than from phone companies with whom their parent companies compete. Finally, cable operators are more likely to be aggressive in cellular backhaul because they recognize that investments are synergistic with their other commercial initiatives. Completing a ring around a city for a cellular company will enable the MSO to market services to SMBs who otherwise would not be within the operator's footprint.

It All Starts With Demand

That's quite an array of rationales. By far, however, the biggest driver is demand. Cable operators should smile at every introduction of a smartphone, every new bandwidth-eating service or application and every announcement of a Long Term Evolution (LTE) or WiMax 4G network buildout. Visant Strategies [], which recently did a study of cellular backhaul, suggests that during the next few years about 70 percent of existing backhaul links may need to be upgraded and as many as 146,000 base stations may be added.It is the nature, not just the volume, of this universal upgrade that puts cable operators in such a good position. Cell towers historically are served by T1 lines. This was fine in a bygone era, but the great increase in bandwidth demand makes cable and its fiber far preferable. Visant co-founder Larry Swasey credits the wireless industry with working hard to improve its backhaul capacities, but suggests that cable may be the key to weathering the storm of data - and a storm that will get worse as 3.5G and 4G rollout in earnest.
"The cable operators are now in the mix since the carriers are still moving fast on backhaul upgrades and the cable operators are there where and when needed at good price points," according to Swasey. "Wireless carriers are looking in some instances for readily available backhaul links and the cable operators are meeting that need with carrier grade services."Steve Hratko, the Product Marketing Manager for Mobility at Juniper Networks [], agrees. In big cities, he said, the appetite of each cell tower is increasing exponentially - and outgrowing T1s, both from capacity and cost points of view. "Now you are talking 100 to 200 Megabits per second," he said. "[Towers] need fiber for that, and not many people in this country have more fiber than cable. It's a match made in heaven. I think they will do very well, and the build will go on for a long time."

Moving to Ethernet

In addition to the raw capacity that fiber brings to the table, cable operators are in good shape because of the networking approach that they use works well with the mix of services that cellular carriers increasingly offer. "New carrier Ethernet protocols are more flexible in carrying this divergent type of application traffic than TDM," said Ciena's Salman.
Cellular operators have been slower to embrace Ethernet than cable operators, who don't have a legacy T-carrier business to protect, said Stuart Bennington, the Director of Global Portfolio Marketing for Tellabs []. "They are a little more unencumbered by the legacy," he said. "LTE and WiMax are heavily IP," he said. "The trajectory is to Ethernet as well as to fiber."With the need and the preference for (or at least openness to) cable's approach established, the next step is determining whether the industry's fiber is close at hand. The answer is that, indeed, it is. Cable operators and cellular carriers target the same consumer and small business customers and thus have a complementary geographic emphasis.Stu Lahti, Vice President Access Networks for network services provider CCI Systems [], said that his firm is likely to help prepare 40 or 50 proposals by cable operators this year, after only having done about 10 last year and one or two annually in earlier times. Cable operators are in the right places, and in many cases can reach the towers in a way that makes sense. "Their [fiber loops] go by the towers, or it takes only some tiny incremental built to tie it into the cell towers," Lahti said.

What's Old is New Again

Reini Florin, vendor Axerra's [] General Manager for the Americas, suggested that microwave will play a role in the wireless backhaul. "An MSO may go through an analysis and say the ROI models allow 80 percent of the towers [to be reached by fiber]," Florin said. "But the provider may say they need 100 percent covered, so the MSO may augment the other 20 percent with microwave."The bottom line is that cellular backhaul is a great opportunity for the cable industry. "Obviously it has huge growth potential," said Frank McCullough, the Vice President of Product Management and Procurement at TVC Communications []. "From all reports and indications, it's a $2.5 billion to $3 billion annual revenue opportunity for cable operators. Capex is increasing in this space, and they should have a good run for the next four to six years as the need for 3G and 4G bandwidth is required."In the final analysis, the wireless carriers may be hard pressed to keep up with the demand from iPhones, iPads, Android devices and other emerging gadgetry. This may mean that time to market - not the cost of the technology - may be the key, said Tom Huegerich, the Vice President of Global Fiber Engineering for ADC []. "This is going to be a horse race, and a real fun horse race to watch," he said. "Cost will be a factor, but not the entire ball game. A big issue will be who can get it out there faster."Carl Weinschenk is a freelance writer and the Features Editor for Broadband Gear Report. He can be reached at [email protected].