Chapter 1 – Executive Summary

Cellular backhaul has been gaining importance over the last few years due to a paradigm

shift in the traffic usage over mobile networks. Apart from the growing cellular

subscriber population, which is expected to reach 3 billion worldwide in 2008, data

traffic has been witnessing a steady growth especially in developed mature markets. This

has led to cellular operators planning ahead and ensuring that their networks have enough

backhaul capacity to meet future demand. With advanced mobile standards like HSPA

preferring Ethernet/IP as their transport technology and with Ethernet interfaces being

introduced in base stations, operators are looking at ways to gradually transition from

their current TDM and ATM legacy equipment to backhaul equipment that can support

Ethernet/IP.

As the most widely used cellular backhaul technology, microwave needs to adapt to the

changing market demands and competitive pressures. Microwave is a wireless backhaul

technology which competes with its wireline rivals, copper leased line and fibre. This

report, “Wireless Backhaul 2007-12: Role and Significance in Cellular Markets” is an

update to the previous report, “Wireless Backhaul 2005: Worldwide Market

Opportunities in Cellular Markets”. However, market dynamics have changed. This

report features the changing role of backhaul transport technologies and describes the role

that microwave technology plays in the soon to be re-engineered cellular backhaul

network.

Taking into account the various competitive pressures, market demands and

technological shifts, Pioneer forecasts the worldwide and regional market opportunity for

wireless backhaul. It further breaks down the forecasts by the commonly used microwave

frequencies in each region.

The report also looks at the capex and opex costs of wireless versus wireline backhaul for

a typical 3G network across three different usage cases. These usage cases represent both

developed and developing markets, and differentiate between urban and rural

demographics.

1.1 Wireless Backhaul in Cellular Networks

Microwave backhaul can be differentiated based on architecture, frequencies and

multiplexing. Based on architecture, microwave can be differentiated into PTP and PMP.

LMDS and MMDS are used to differentiate microwave based on frequencies. SDH and

PDH are the two types of microwave based on multiplexing techniques. Exhibit 1-1

shows these differentiations.

Exhibit 1.1: Types of Microwave in Cellular Backhaul

Architecture Frequency Multiplexing

1.2 Backhaul: A Strategic Lever for Cellular Operators

The increase in data traffic, largely driven by 3G networks and the introduction of ‘flat

rate pricing’ for data services, is widening the gap between revenues and backhaul costs.

The increase in traffic has led to an increase in bandwidth requirements from 3-5 T1’s

supporting 2G networks, to 6-8 T1’s in 2.5G networks, to 10-12 T1’s in 3G networks.

For full details, please email michellen@cmsinfo.com

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