Of Backhaul & Bean Counters

The rollout of high-speed 3G and WiMax data services might seem like all upside to Internet junkies, but accountants beware: With cell site transmission requirements set to double over the next few years, the cost of backhaul is turning into a real problem for mobile operators.

For all the technical achievement of being able to deliver multi-megabit wireless services to a laptop or cellphone, operators fear that these new data-oriented radio networks will not map directly to existing 2G backhaul architectures with the simple addition of extra leased lines in a way that scales operationally or financially, finds the latest paid research report from Unstrung Insider.

The report Mobile Backhaul & Cell Site Aggregation: State of the Art examines backhaul requirements over the coming years, looks at the effect this could have on operating expenses, and evaluates how operators can reduce the cost per bit of transmission using converged, packet-based access networks. Vital to the migration from time division multiplexer (TDM)-centric leased-lines to more efficient Ethernet and IP connectivity is the deployment of specialist cell site and hub site aggregation equipment.

Such equipment sits between radio base stations and the transmission network and is located at the cell site itself or at remote aggregation nodes. With a typical U.S. list price of between $2,000 and $5,000 per site, depending on configuration, and with well over two million cellular base stations deployed worldwide, demand for these devices is set to accelerate rapidly, finds the report.

Cell site aggregation gateways include features such as multiple types of traffic management and switching functions, including grooming, optimization, multiplexing, quality of service (QOS) marking, data offload, and pseudowire encapsulation. The form factor is typically a 1U pizza box with a mixture of TDM, asynchronous transfer mode (ATM), and Ethernet interfaces supported.

The idea is that operators need flexible low-cost equipment that enables them to take advantage of whatever connectivity options are available at the cell site now and in the future.

That may involve some form of circuit bonding over multiple T1/E1 lines. It may be a "split Iub" approach, where best-effort data traffic is separated from delay-sensitive voice and signaling traffic and sent over a DSL or Ethernet link, which is often referred to as a hybrid backhaul architecture. In the future, the same equipment should be able to the support migration of all TDM equipment and traffic onto a single, converged packet transport network, but is dependent on fiber to the cell site and the availability of Ethernet services able to support stringent synchronization requirements.

Suppliers profiled in the report include Carrier Access Corp. (Nasdaq: CACS), Celtro Inc. , Ceterus Networks Inc. , Kentrox LLC , NMS Communications Corp. , RAD Data Communications Ltd. , Sycamore Networks Inc. (Nasdaq: SCMR), and Verso Technologies Inc. (Nasdaq: VRSO). The presence of large, integrated, telecom vendors such as Cisco Systems Inc. (Nasdaq: CSCO) and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) also brings credibility to the market.

Other players from the next-gen Sonet side, such as Fujitsu Network Communications Inc. and ADC Telecommunications Inc. (Nasdaq: ADCT), are prepping optimized cell site boxes based on their micro multiservice provisioning platform (MSPP) products as well as beefing up their Ethernet and aggregation capabilities.

With microwave as the dominant form of cell site connectivity across the world, leading vendors such as Harris Stratex Networks Inc. (Nasdaq: HSTX) and NEC Corp. (Tokyo: 6701) are developing specialized aggregation equipment to extend the life of existing links and prepare carrier networks for the next big thing in microwave: adaptive modulation and wireless Ethernet transport.

Even if the accountants do win out, at least with this technology we will still get fast wireless Internet.

— Gabriel Brown, Chief Analyst, Unstrung Insider

The report, Mobile Backhaul & Cell Site Aggregation: State of the Art, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.