Light Reading

Battling Mobile Backhaul Costs

Light Reading
3/22/2006
50%
50%

There are a lot of expectations surrounding the revenue-generating potential of new broadband cellular technologies such as 1xEV-DO for CDMA carriers and HSDPA for W-CDMA carriers. Can they deliver?

EV-DO is already delivering on those expectations, with more than 24 million subscribers worldwide. First launched by Cingular Wireless at the end of 2005, HSDPA will now be rolled out by W-CDMA carriers in a number of parts of Europe and Asia/Pacific over the course of this year. The revenue-generating potential is clear. In the U.S, for example, the major carriers have locked horns at a price point of $59.99 for "all you can eat" access to HSDPA and EV-DO services.

What's not so clear is the profit potential in deploying these capabilities. One critical factor that will determine what the numbers actually look like is the impact on the mobile carriers' backhaul networks. As discussed in Heavy Reading's latest report, Backhaul Strategies for Mobile Carriers, carriers are typically raising their backhaul spending by 15 to 25 percent to prepare their networks for the higher volumes of traffic that these air-interface enhancements are driving. This entails deploying more transport capacity at the cell sites, typically in the form of more E1/T1 leased lines or more point-to-point microwave links.

Scaling the backhaul network on the basis of this TDM-based network topology will do for now as a means of getting these services off the ground. But with data traffic volumes liable to increase two- or threefold within the next couple of years, relying on this same TDM model risks seeing the cost of carrying this traffic outweigh the new revenue potential.

The key to lowering the cost per bit of carrying data through the mobile network is the adoption of packet technology in the backhaul. While it runs counter to the trends of the wireline networking world, in the case of W-CDMA carriers, ATM is the key to reducing their backhaul costs. Many carriers have deployed ATM aggregation nodes in their backhaul networks. These serve to reduce the length -- and therefore the cost -- of leased lines or microwave links connecting the cell sites to the network.

Another approach is to terminate GSM traffic onto these ATM networks using Circuit Emulation. Within the radio access network (RAN) software, most vendors are only now starting to deploy the more data-oriented ATM QOS features that W-CDMA carriers consider the single most important tool for lowering backhaul costs.

The so-called IP RAN has already been deployed on a large scale by EV-DO carriers. Although W-CDMA base stations don't support IP interfaces yet, the world's first IP RAN for W-CDMA is already in live commercial service in Hong Kong using MPLS-based pseudowire technology. This encapsulates GSM and W-CDMA TDM and ATM traffic streams and transmits them as a pseudowire over lower-cost Ethernet backhaul. Several leading carriers are involved in trials, with the first significant commercial deployments expected in the next 12 months.

These solutions are promising but usually require additional optimization -- such as customized engineering of the Ethernet network, OAM, base station synchronization, and DSL CPE at the cell site -- in cases where carriers are looking to use DSL.

Carriers believe that the current spikes they are seeing in backhaul expenditure can be reined in again with the efficient deployment of such capabilities. The trouble is that data-savviness in mobile carrier circles is still in relatively short supply. They are pretty much on top of their packet core networks now -- their PDSNs in CDMA, their GGSNs and SGSNs in GPRS/UMTS. They are in the relatively early stages of rolling out softswitches in the voice core, with dedicated call servers separated out from media gateways.

Some carriers have deployed ATM for backhaul aggregation, but many of these continue to struggle with integrating this new layer with their SDH/Sonet networks, particularly from a network management and network provisioning perspective. For the most part, mobile carriers don't understand Layer 3 multiservice routers or Ethernet -- and certainly not enough to go running revenue-paying traffic over them with anything other than a lot of caution. And while the network planners continue to grapple with these challenges, EV-DO and HSDPA will be driving a relentless increase in traffic volumes while competition drives lower end-user prices.

The most data-savvy of the mobile carriers are probably right -- they probably can rein in these backhaul costs and make a positive contribution to sustaining current levels of profitability. The risk for others is that they will see their backhaul costs spike upwards and then stay there.

— Patrick Donegan, Senior Analyst, Heavy Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
The Swedish vendor has undergone a significant transformation during the past few years, adjusting to the demands of next-generation communications companies.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
LRTV Huawei Video Resource Center
Accounting for Better Solutions

4|10|15   |   02:31   |   (1) comment


Murad Yousuf, CTO at Saudi Arabia's Ministry of Finance (Dept. of Zakat & Income Tax), talks about the benefits of deploying router technology from Huawei.
LRTV Huawei Video Resource Center
What's in Store for Huawei & DataCore?

4|10|15   |   05:44   |   (0) comments


At the CeBIT trade show in Hannover, Germany, George Teixeira, CEO of software-defined storage (SDS) specialist DataCore Software, explains why he has just signed a partnership agreement with Huawei Technologies.
LRTV Huawei Video Resource Center
Du Puts Its Faith in Huawei's Routers

4|9|15   |   3:42   |   (0) comments


Adnan Masood, director of Enterprise MS Solutions Marketing at du, the United Arab Emirates (UAE) operator also known as Emirates Integrated Telecommunications Company, explains why his company chose to use Huawei's multifunctional AR routers as part of its managed enterprise services.
LRTV Huawei Video Resource Center
Huawei Gets Active in the Data Center

4|9|15   |   3:17   |   (0) comments


With enterprise users looking to maximize the use of their data center assets, Huawei’s Chief Architect & Technical Director of IT Data Center Solutions, Bruce Su, explains how the company's six-layer active-active data center solution is eradicating the need to deploy passive, redundant data center assets.
LRTV Huawei Video Resource Center
Blue Consult & Huawei for a Better Solution

4|8|15   |   4:01   |   (0) comments


Martin Rott, CEO, and Marc Metzler, head of sales virtualization, from Germany's Blue Consult discuss their collaboration with Huawei and TrendMicro to develop a secure, scalable IT platform that can meet the needs of the most demanding enterprise users.
LRTV Huawei Video Resource Center
Beach Petroleum on eLTE & Mining

4|8|15   |   3:09   |   (0) comments


Network systems integrator Jeremy Hamlyn explains how Huawei's secure packet-based trunking communications system, eLTE, can help remote communities and companies in the mining, oil and gas sectors, deploy efficient communications networks that are perfect for video and data as well as voice.
Upcoming Live Events
May 5, 2015, Hyatt McCormick Place, Chicago, IL
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
Network Instruments, a JDSU division, shares results from its 2015 State of the Network, a global survey on security.
Hot Topics
Verizon Scores New OTT Content Deals
Mari Silbey, Independent Technology Editor, 4/16/2015
Can WiFi Calling Find Its Voice?
Iain Morris, News Editor, 4/13/2015
Senator Proposes New 'Title X' for Net Neutrality
Carol Wilson, Editor-at-large, 4/13/2015
Nokia, Alcatel-Lucent in Merger Talks
Iain Morris, News Editor, 4/14/2015
Nokia & Alcatel-Lucent: What's Going On?
Ray Le Maistre, Editor-in-chief, 4/15/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Data Center Interconnect, or DCI, is one of the hottest sectors in telecom currently. Since coming back to Light Reading last year, prodigal-son style, I've ...
LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures.
Cats with Phones
Steve's Phone Click Here
Steve Saunders's personal phone.