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June 27, 2013

Mobile Video Drives Backhaul Bonanza, Part 1

What’s good for mobile backhaul is good for the networking industry, as video viewing on a growing sea of devices, faster networks and heavier usage are driving service providers to spend more on the connections between their cell towers and landline networks.

Keeping pace with the proliferation of video capable devices has operators racing to lease, buy or install higher-capacity links – be they microwave or fiber optic-based – from backhaul specialists old and new and an array of established bandwidth wholesalers.

All recent measurements show mobile traffic growing rapidly with no end in sight. Individual developments such as AT&T gradually rolling out Facetime video chat over wireless networks will drive higher traffic volume as does transmission of live and on-demand streaming of video programming to smartphones and tablets.

Image via Shutterstock

Traffic Report

Global mobile data traffic expanded at 69 percent in 2012 and is anticipated to grow at 72 percent in 2013 to reach 23,000 petabytes, according to report this month from ABI Research. By 2018, total mobile data traffic will likely eclipse 131,000 petabytes. “There has been much ‘doom-mongering’ about this growth in mobile data traffic but mobile carriers should not panic just yet. There are indications that mobile carriers have a number of options to handle the traffic loads,” said Jake Saunders, VP and practice director for core forecasting at ABI Research.

So where is all the traffic coming from? iGR, a market research and analysis firm specializing in wireless, explained that a connection corresponds to a device and connections can exceed subscribers as consumer in North America might have three devices – a smartphone, laptop and a tablet.

“Generally speaking, the larger the device, the more bandwidth is consumed on it,” IGR continued. “That is, a laptop connection will likely generate far more traffic than a smartphone primarily because a laptop is far more conducive to heavy usage than a smartphone and is typically used in a place where the user is stationary and disposed toward consuming/generating a great deal of data traffic.”

Streaming video and audio applications such as Netflix, HBO Go, Pandora and YouTube, make consuming “hundreds of megabytes on a smartphone quite easy. The key difference, of course is that the laptop user could be multitasking among several different high-traffic applications whereas the smartphone user is typically only engage in one, maybe two.”

Sunny Sales Forecasts

As a result, industry experts forecast a boost in sales for the equipment and services need to connect various sizes of cells – smaller ones popping up like flowers -- to landline networks.

“While its revenue growth rate is slowing, macrocell mobile backhaul equipment remains a huge market, with annual spending up in the $8 to $9 billion range over the next years. Just a few years ago in 2009, the market was worth under $5 billion,” notes Michael Howard, principal analyst for carrier networks and co-founder of Infonetics Research.

Howard adds: “When we add to the picture small cell backhaul equipment (which we track in another report), which we believe will total a cumulative $5 billion over 5 years, it becomes clear that the backhaul market is massive. The key drivers are the ongoing HSPA/HSPA+ onslaught across the 3GPP world and growing LTE deployments by 3GPP2 players. If you don’t have packet backhaul, there’s no way to handle HSPA and HSPA+. Ethernet and microwave backhaul spending are fueling the whole market.”

High-speed networking equipment vendors stand to cash in on the upward climb in backhaul spending. Companies tracked in its latest and comprehensive backhaul report include: Accedian, Actelis, ADTRAN, ADVA, Alcatel-Lucent, Aviat Networks, BridgeWave, Canoga Perkins, Celtro, Ceragon, Ciena, Cisco, DragonWave, ECI Telecom, Ericsson, FibroLAN, Huawei, Intracom, IPITEK, Juniper, MRV, NEC, Nokia Siemens Networks, Overture, Positron, RAD, Telco Systems, Tellabs, Telrad, Thomson, and ZTE.

Check out part 2 of this story here!

Edited by Rich Steeves

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