Global costs of mobile backhaul technology, or mobile network technology needed to meet new capacity demands and demands of smart broadband data applications and 3G and 4G networks, will more than quadruple between 2011 and 2016, according to a September 2011 white paper from Juniper Research. Data from “Better Backhaul for Mobile” indicates mobile backhaul costs will total $60 million this year and jump to $257 billion in 2016.
Far East/China Will Produce Most Backhaul Cost
Looking at how much of the total $257 billion mobile backhaul cost in 2016 that each of the eight major global regions analyzed by Juniper will produce, the Far East/China will produce roughly one-third. Following Far East/China in share of cost will be North America, Western Europe and the Indian Subcontinent with roughly equal portions.
The rest of Asia/Pacific and Africa/Middle East will produce slightly smaller portions of the total mobile backhaul cost, with Latin America generating the smallest share. This assumed cost model includes leasing charges, including site and link leasing, installation and maintenance, spectrum and other capital costs; as well as copper fiber, microwave and satellite costs.
Different Markets Have Different Backhaul Preferences
Juniper analysis indicates different markets prefer different types of backhaul transport. For example, although the majority of backhaul in North America is via copper, fiber will be the most preferred option. Juniper also advises microwave will increase in popularity.
Meanwhile, in Europe, due to availability of the spectrum, microwave will account for the majority of the market. Juniper further expects Africa and the Middle East to make use of very small aperture terminal (VSAT) satellite technology during the next five years and beyond.
Access Technologies Have Advantages, Disadvantages
Mobile backhaul can be based on wired or wireless technology. Backhaul links were initially based on wired technology, usually copper (although fiber optics are becoming more common), and wired backhaul solutions are usually leased-line connections. However, Juniper advises the costs are significant compared to wireless backhaul options.
Meanwhile, wireless backhaul technologies comprise microwave and satellite backhaul, and Juniper says the wireless backhaul market is gaining momentum. Currently, microwave, fiber and copper backhaul are being offered as the primary technologies, with satellite technology only used in limited areas due to its high cost.
Mobile Network Operators Face Cost Crunch
Mobile network operators are facing a scenario where their capital (capex) and operating (opex) expenses will surpass their revenues by about 2014, according to a June 2010 white paper from Juniper Research. Estimates from “Crunch Time For Mobile Operators” indicate that typical 15-20% margins on operator-billed revenues, which are currently above capex/opex, will meet capex/opex in 2014, fall slightly below expenses in 2015, and begin substantially falling below them in 2016.
Juniper is actually predicting slight growth in revenues for the next several years, but the expected growth curve in expenses is substantially sharper.