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Global Scenario: Microwave continues to dominate the backhaul space

May 23, 2018

The increase in the number of smartphone users has led to a surge in data consumption across the globe. According to Ericsson’s estimates, the total mobile data traffic is expected to grow at a compound annual growth rate (CAGR) of 42 per cent during 2017-23. Meanwhile, the monthly mobile data traffic is likely to exceed 100 exabytes by 2023. Market disruptions in larger markets like India have significantly contributed to the recent spike in global data consumption. Last year, India leapfrogged from the 150th position to the top rank in terms of mobile data consumption.

Further, with the commercial launch of 5G technologies round the corner, data volumes are only going to increase in the future. In order to manage such large volumes of data, it is imperative for operators to upgrade their backhaul networks to ensure a seamless user experience on their networks.

Backhaul technologies

Globally, backhaul networks are characterised by a mix of fibre and microwave. Operators worldwide are at different stages of the mobile broadband evolution. While a small minority of  advanced operators are gearing up for commercial 5G roll-outs, the majority of the operators are moving to expand and enhance their long term evolution (LTE) networks.

With widespread LTE deployments, microwave has emerged as a safe option for backhaul. It accounts for the majority share in the backhaul market. Microwave backhaul networks are cost-effective and easy to deploy, which makes them a preferred choice among service providers. Given the impending 5G roll-out, the share of microwave as a backhaul technology will continue to remain high. The Ericsson Mobility Report for the quarter-ended December 2017 estimates that 3.3 billion mobile broadband subscribers will be added over the next five years. Of this, a clear majority will be using LTE networks.

Initially, large-scale 5G deployments are expected in countries with high fibre penetration. These include China, Korea, Japan and the US. Operators in Western Europe, which deploy a combination of microwave and fibre, are also looking at introducing 5G technology.

As per Ericsson’s estimates, by 2022, the typical backhaul capacity for a high-capacity radio site will be in the 1 Gbps range. This would increase to 3–5 Gbps by 2025. The growing scale of LTE networks in India has led to a jump in the global estimates for the share of microwave in backhaul, which is expected to exceed 65 per cent by 2022 in all countries except China, Korea, Japan and Taiwan. A proof of its relevance is the fact that operators plan to introduce 5G with as much as 80 per cent microwave-based backhaul.

According to data gathered by the European Conference of Postal and Telecommunications Administrations, the number of microwave hops has registered an 8 per cent year-on-year growth over the past 20 years.

Satellite-based backhaul is being used in areas where the distance between the base station and the network is too large for microwave to be cost-effective. Advancements in the satellite industry have slashed the cost of bandwidth. High-throughput satellites offer increased capacity, reducing bandwidth costs by as much as 70 per cent. This breakthrough has helped position satellite communication as a cost-effective alternative for delivering broadband services while reducing operating expenses.

In a satellite backhaul link, bandwidth efficiency is crucial. The main objective is to reduce costs by optimising the consumption of bandwidth. According to Northern Sky Research’s Wireless Backhaul via Satellite report, 11th Edition, more than 11,000 sites will be installed by 2026, growing at a double digit CAGR . This growth will be driven by 3G, 4G and LTE technologies.

Regional variations

North America accounts for the lion’s share of the wireless backhaul market. The market is poised to grow significantly driven by the rising demand for data services, widespread LTE coverage and the growing small cells deployments. Technologically advanced countries such as the US and Canada will be frontrunners in advanced backhaul network deployment in the region.

In mature broadband markets such as Western Europe, large operators are planning to introduce 5G over 80 per cent microwave backhaul networks. The UK accounted for a considerable mobile wireless backhaul market share of 21.60 per cent as of 2016. Germany, on the other hand, is the fastest growing country in the European mobile wireless backhaul market. In Europe, fibre networks, which are best suited for backhaul, are mostly owned by incumbent players. Vodafone flagged this issue in 2014, stating that unless these fibre networks are shared among operators, the quality of service will slide. Despite this warning, the situation is not any better at present. Owing to the huge expenditure, building fibre networks from the ground up is not a feasible option, especially when operators are already burdened with the cost of rolling out 5G. As per the European Commission, in order to deploy 5G technologies across Europe, an investment of around $68 billion will be required. Therefore, until network sharing gains traction, the additional data traffic created by the launch of 5G will be managed by sub-optimal networks. This would lead to inefficiencies and impede the seamless roll-out and adoption of 5G networks.

In terms of 5G roll-out, Asia is expected to be at par with the rest of the world. The governments have already taken stock of the situation and a number of pilot projects are underway in several Asian countries. Small commercial launches are expected to take place in South Korea by 2019, followed by larger deployments in China and Japan in 2020. These countries have robust backhaul networks. Emerging markets such as Asia, including India, the Middle East, Africa and Latin America often lack a countrywide fixed infrastructure. In a number of these countries, mobile phones are the primary tool to access telecom services and the ARPU is relatively low. Operators need to focus on reducing the total cost of ownership and the time-to-market in order to gain an edge over competitors.

Fibre investments typically have a depreciation of around 25 years  as against five to eight years in the case of microwave. Thus, it is important to deploy fibre in core and aggregation networks, which have historically used long-haul microwave. At present, these long-haul microwave networks are being modernised to compensate for the lack of fibre. Indian operators, aided by the proactive stance of the government, have also begun exploring ways and use-cases to be prepared for 5G. However, most operators have just adopted LTE and are in the phase of expansion. Therefore, it will be a while before they launch 5G services. Apart from this, the lack of a robust backhaul network is likely to delay 5G roll-out in India.

Challenges and the way forward

5G will support a number of emerging technologies such as internet of things and machine-to-machine communication. This will lead to a massive surge in data traffic, thereby increasing backhauling requirements. As per industry estimates, no single backhaul solution will able to meet these requirements. Therefore, a dynamic and adaptive mix of technologies will have to be employed.  Going forward, microwave will primarily be used as last-mile access technology in urban areas, while a combination of last mile and aggregation links will be more suitable for suburban and rural areas. Moreover, it is important to upgrade the existing sites and deploy new ones, as mobile devices will primarily use higher-frequency bands to support 5G.

 
 

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