Ethernet Boosts Microwave Market

The microwave market is moving rapidly beyond cellular backhaul applications as operator demand increases for multi-service and Ethernet-oriented systems. (See Ethernet Spurs Microwave Innovation.)

More than 70 percent of the microwave market is in cellular backhaul, which means microwave vendor fortunes are tied to cellular infrastructure sales. Despite a slowdown in the infrastructure market, the microwave market has grown over the past four years and will be worth $4 billion in 2007, finds the latest Unstrung Insider report, Ethernet Microwave: Backhaul & Beyond, which examines the point-to-point (PTP) licensed microwave radio market.

The main drivers in this market are leased line replacements and cellular growth in emerging markets. Indonesia is cited as the most underexploited market for microwave, and cellular connectivity in general, while India and West Africa also present big growth opportunities.

In addition, the growth in 3G and WiMax has resulted in the need for higher-capacity and packet-based microwave equipment.

"The demand for packet microwave is growing even faster outside of the cellular space, as operators look to the technology as a cost-effective way to offer high-speed access services to enterprise buildings where they don't have fiber, or as a way to backhaul DSL traffic from unbundled local exchanges," states the report.

To meet the new network requirements, suppliers are busily building common platforms over which multiple access technologies can run including standard PDH, "Super PDH," Sonet/SDH, and Ethernet applications.

"These products are revolutionizing the microwave market," says chief analyst Gabriel Brown and author of the report. "Common platforms drive economies of scale, allowing suppliers to aggregate component purchasing, streamline manufacturing, delivery, and support, and optimize R&D investment."

Alcatel-Lucent (NYSE: ALU) is working on a new Ethernet system, called the 9500 Multi Service Switch (MSS), which will target applications where SDH/Sonet is used as well as emerging applications, such as enterprise access, EV-DO backhaul, or WiMax backhaul where packet traffic is prevalent. The new MSS will use pseudowire technology for TDM capability and will launch in the first half of 2008.

The big five microwave vendors are Alcatel-Lucent, Ericsson AB (Nasdaq: ERIC), NEC Corp. (Tokyo: 6701), Nokia Networks , and Harris Stratex Networks Inc. (Nasdaq: HSTX). Mid-sized suppliers Nera Networks AS and Ceragon Networks Ltd. (Nasdaq: CRNT) focus on higher performance, lower volume systems, while start-up DragonWave Inc. (AIM/Toronto: DWI; Nasdaq: DRWI) focuses on packet radio products.

— Michelle Donegan, European Editor, Unstrung

Interested in learning more on this topic? Then come to Backhaul Strategies for Mobile Operators USA, a conference and exhibition that will provide an exclusive and intensive education in how best to lower the cost per bit of transporting traffic across mobile operators' backhaul networks. To be staged in Atlanta, on April 26, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.

Interested in learning more on this topic? Then come to Ethernet Expo: Europe 2007, a conference and exhibition that will explore major carrier Ethernet networking and service trends. To be staged in London, on May 2 & 3, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.

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