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Global Backhaul Trends: Microwave dominates even as fibre and satellite gain ground

May 09, 2017

The proliferation of high speed, data-intensive next-generation services is driving the growth of telecom backhaul markets across the world. The ongoing 4G roll-out makes a compelling case for the upgradation of existing backhaul networks. According to the Global Mobile Suppliers Association (GSA), 581 operators across 186 countries have commercially launched 4G long term evolution (LTE) networks as of end-January 2017. Meanwhile, the number of LTE subscriptions has increased from 1.07 billion as of end-2015 to around 1.68 billion as of end-2016. Therefore, enhancing the backhaul capacity has become one of the top priorities for operators in order to meet the growing bandwidth requirements of data users. In fact, an overhaul of backhaul networks will become inevitable as operators across the world prepare to move to 5G.

A look at the current trends in the global backhaul market...

Regional variations

The backhaul market varies from region to region depending on the different LTE deployment scenarios, varying demand for mobile services, availability of infrastructure for mobile communication and prevailing subscriber trends.

At present, North America holds the largest share in the mobile and wireless backhaul market owing to the high demand for mobile services and smart devices, and growing operational LTE and small-cell deployments in the region. North America is followed by Europe, where LTE trials have been completed in most of the countries.

Going forward, the Asia-Pacific region is expected to witness strong growth in mobile backhaul deployments and surpass Europe by 2024. This may be attributed to growing industrialisation in the region, increasing use of smart technologies and government initiatives such as the Smart Cities Mission in India.

Variations in backhaul technologies

Microwave is the dominant backhaul technology, accounting for more than 50 per cent of the mobile data traffic. This is because it is relatively easy to deploy, is relatively inexpensive and consumes considerably less time, thereby providing a competitive edge to service providers. In addition, microwave can support several Gbps of bandwidth and can be scaled up in a cost-effective manner using aggregated link technologies. The backhaul networks in Europe and Asia are largely based on microwave technologies due to the high roll-out cost of wireline networks, and operators use spectrum in various high frequency bands. Moreover, the majority of operators in these regions are yet to fully migrate to LTE and therefore, most tower sites are not fiberised.

Operators have been reluctant to deploy fibre technology for backhaul support despite the fact that it is more scalable and reliable. This is because fibre deployment poses several challenges for operators. The high investments associated with fibre network roll-out have been the biggest impediment to its adoption. Moreover, operators are currently facing a decline in profitability. While data traffic has grown almost tenfold over the past few years, data service revenue has increased by 20-30 per cent only due to operators’ inability to monetise these services efficiently. Therefore, any investment in fibre-based backhaul will have to be justified to the investors. Meanwhile, setting up a fibre network is not feasible in several areas, especially in urban areas where securing right of way is a major challenge. Due to these reasons, fibre technology has gained significant market share only in mature markets such as the US and Japan, where several operators have upgraded their networks to HSPA and LTE technologies. Many of them have been leasing fibre infrastructure from local transport carriers instead of setting up their own network due to high upfront costs. According to equipment vendor Ericsson, going forward, regions such as the Middle East, sub-Saharan Africa and Southeast Asia will witness a slow transition to fibre technology as compared to the Western Europe and Latin American markets.

Meanwhile, satellite communications are used for mobile backhaul in areas where the distance between the base station equipment and the core of the network is too large for microwave to be economically viable. Satellites are also used for offloading microwave backhaul during peak hours and for backup of terrestrial broadband links. While satellite backhaul for 2G networks is focused on reducing the bandwidth required to transport voice, in the case of 3G/4G, the focus is on data transmission. Most telecom operators in Africa resort to satellites for their backhaul infrastructure. Developed countries are also turning to satellite backhaul for enhancing connectivity in unserved areas. For instance, US-based wireless carrier Sprint is combining traditional fibre backhaul with satellite solutions to both increase its network density and lower costs. To this end, the company has partnered with Gilat Satellite Networks to extend LTE services to remote and rural areas in the country.

Telecom operators are also increasingly deploying small cell sites to offer higher capacity and better data network coverage in high density areas. However, the deployment of small cells entails several backhaul issues. Since small cell sites are scattered, providing backhaul to each of them through the fibre network is costly and financially unviable. In fact, only service providers in Japan and South Korea have used the fibre cable network for providing backhaul to small cell sites. Several telecom firms deploying small cells are therefore inclined towards millimetre wave (mm-wave) solutions, which involve the transmission of information through radio waves having a wavelength in the range of 1 mm to 10 mm. These solutions work on the unlicensed E-band, licensed E-band and W-band, and offer higher bandwidth.

Backhaul for 5G

Commercial 5G services are expected to start globally by 2020. 5G is estimated to provide  thousand times more capacity and support hundred times more smart devices than the current cellular networks. To support this capacity growth, it is crucial to have a heterogeneous network (HetNet) comprising small cells and macrocells, which are connected to extend coverage in crowded environments. However, the densification of small cells leads to massive backhaul traffic in the core network, which inevitably becomes a severe bottleneck in the system. As mentioned before, employing fibre or cable in dense small cell backhaul results in prohibitively high costs and causes practical difficulties in implementation. Wireless backhaul too is unable to offer a scalable and cost-effective solution because of the existing spectrum crunch in the traditional microwave frequency bands (sub-5 GHz). Despite emerging mechanisms to enhance spectrum efficiency, it is difficult to achieve data rates exceeding 1 Gbps using low frequency bands. Moreover, signal interference becomes a limiting factor, especially in densely populated HetNets.

Mm-wave techniques ranging from 30 GHz to 300 GHz have emerged as a feasible and promising solution for overcoming the above-mentioned issues. Currently, the 28 GHz and 60 GHz bands and E-band seem to hold the maximum potential. These bands are unlicensed and help achieve gigabit data rates, thus solving the capacity problem in lower frequency backhaul systems.

In mm-wave networks, directional links are commonly established to compensate for the high signal transmission loss. The use of highly steerable antennas reduces interference and penetration losses in the network.

Traditional mm-wave techniques are mainly focused on direct single-user links. However, 5G networks will demand support for multi-stream and multi-user scenarios. Hence, the spatial reuse of directional communications will be necessary for backhauling 5G traffic.

The way forward

According to industry estimates, the mobile and wireless backhaul market is expected to grow from $17.85 billion in 2015 to $33.15 billion by 2020, at a compound annual growth rate of 13.18 per cent. This growth will be driven by an exponential increase in mobile data traffic due to the high penetration of data-capable devices and high-bandwidth services such as 4G and 5G, and proliferation of small cells.

In spite of microwave currently holding the largest share in the mobile and wireless backhaul equipment market, other equipment categories like fibre and satellite are expected to experience greater traction going forward, owing to the increasing need for non-line-of-sight connectivity in highly dense areas.


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