NEW YORK -- Wireless network operators are requesting fewer T1s and more Carrier Ethernet connections for mobile backhaul, and could stop ordering T1s entirely as soon as next year, Tower Cloud Inc. CEO Ron Mudry told attendees at the Backhaul Strategies and Core Convergence for Mobile Operators event here today.

Tower Cloud, which provides backhaul services in major cities in the Southeastern US, is today using pseudowire technology to provide T1 connections over its packet infrastructure for backhaul customers, but it's seeing fewer orders all the time.

"In Atlanta, our largest network, I would be surprised if we get even one T1 order next year," Mudry said. "Mobile operators take Ethernet from us, and do their own pseudowire conversions if necessary."

Even though the demand for mobile backhaul is exploding, companies like Tower Cloud must still be creative in building out their networks in order to be profitable. The cost of fiber trenching, electronics, and even rent to tower owners can drive the cost of individual cell sites up to $115,000 and more, although the average is closer to $50,000, Mudry said. In addition, the marketing and aggregation costs for each city can run between $1 million and $5 million, making the payback window for backhaul wider than that for typical enterprise services.

"You have to have the ability to put together a network with more creativity and to expand your fiber coverage -- those are the key differentiators."

In Atlanta, the most recent major market buildout for Tower Cloud, the company is using five different fiber providers, including a gas utility company and a railroad, he noted. By pushing its 693-mile fiber ring as close as possible to each of the 225 cell sites, Tower Cloud is able to minimize the cost of building fiber laterals. It will reach 179 of its cell sites with fiber, and the rest with microwave.

Each cell site will have 100 Mbit/s of capacity from day one, with plans to increase the bandwidth to 300 Mbit/s eventually.

Most wireless operators have their backhaul plans in place in the major markets, so most of the backhaul growth in the future will be in building out second- and third-tier markets for 3G and 4G coverage, according to Mudry.

— Carol Wilson, Chief Editor, Events, Light Reading