Executive Summary (Abridged)

This version of the Executive Summary from Pioneer Consulting’s new report, “Wireless Backhaul 2005: Worldwide Market Opportunities in Cellular Markets” is available as a free download from Pioneer’s web site.

It is an abridged version of the full Executive Summary contained within the report and provides information on the objectives and scope of the report, the methodology used, and the key issues discussed.

Further information can be obtained by e-mailing info@pioneerconsulting.com.

1. Report Aims

The purpose of this report is to investigate the adoption of wireless backhaul in cellular markets in order to evaluate and predict the market opportunity for wireless backhaul solutions during 2004-10.

The report comprises three core sections: Technology Overview, Market Overview and Market Opportunity Forecasts through 2010. 

2. What is Wireless Backhaul?

Backhaul is the network component that connects the subscriber access section of the network with its core switching and management elements. It accounts for about one-fifth of the overall mobile network cost.

Network operators can choose from a variety of backhaul technologies, such as wireless, leased wireline, fiber and satellite. The principal factors governing the choice of backhaul medium include the cost of the network, the capacity required, and other issues related to installation and maintenance.

The term ‘wireless backhaul’, as used in this report, refers to a microwave trunk circuit between a Base Transceiver Station (BTS) and a Base Station Controller (BSC) or a Mobile Switching Center.

Microwave network configurations include Point-to-Point (PTP) and Point-to-Multipoint (PMP) technologies. The choice of a network configuration depends on the network capacity required, geographical and topographical conditions and the expansion planned for the future.  

3. Comparative Analysis of Backhaul Technologies

3.1 Performance Analysis

The report compares the main wireless backhaul technologies, i.e. PTP, PMP, Leased Line, and Fiber, in terms of the following performance parameters :

3.2 Cost Analysis

Based on global average cost estimates across different frequency bands, Pioneer’s analysis shows that wireless backhaul technology generally proves to be more cost-effective than leased lines in the long run.

The report then goes on to compare capital and operating expenditures associated with PTP and PMP and finds that, even taking into account the additional initial capital cost of a PMP hub, a network only requires a handful of links before the PMP solution becomes more cost-effective.

4. Demand Drivers and Suppressants

The overall growth in the cellular market (primarily led by a rapid increase in the number of cellular subscribers in recent years and the growth in demand for data-intensive services) has been a principal driver for new infrastructure deployments. Wireless backhaul offers significant technological and commercial advantages over other backhaul technologies, which has prompted operators to replace leased line backhaul networks with microwave systems. However, certain technological and regulatory constraints may hamper the wider adoption of wireless backhaul technology by network operators.

Exhibit 1 : Deployment Strategies

Source : Pioneer Consulting, LLC

5. Market Opportunity

5.1 Methodology

The demand forecasts for market opportunity of wireless backhaul utilize Pioneer Consulting’s proprietary modeling procedures. It takes into account the qualitative factors that drive or suppress the growth of wireless backhaul in various regions and the differences in rate of adoption of technology. These factors are quantified using various curvilinear extrapolation techniques to produce estimates for market size.

For this forecast model, an estimate of cellular subscribers through 2010, using the Gompertz curve, is taken. The calculated cellular subscriber base is then used to estimate the total market for base stations. The market opportunity for wireless backhaul is calculated as a function of the total addressable BTS market and the penetration of wireless technology in this market.

5.2 Sources

The information contained in this report was collected through primary and secondary research. The primary research for this report includes personal interviews with vendor representatives, equipment suppliers, network operators and service providers in the mobile wireless industry.

The secondary research for this study draws upon a variety of sources, including the Federal Communications Commission (FCC), the International Telecommunication Union (ITU), the Securities and Exchange Commission (SEC), proceedings from a variety of international trade seminars and technology journals. Secondary research also included a review of current periodical research on international telecommunications and mobile wireless networks available in print and on the Internet.

5.3 Findings

This report assesses the global market opportunity for base stations in the period 2004-10 and finds that wireless backhaul installations are expected to increase at a compounded annual growth rate (CAGR) of 5%. The Asia Pacific region will lead the global BTS market, followed by Europe and North America. A full breakdown of the market opportunity by region, in terms of sales units and US dollar value, is provided within the report. Comparing the various technologies, Pioneer is forecasting significant growth in the number of PMP installations although its share of the overall market will remain fairly low.