Report: Wireless carriers facing $9.2B backhaul funding shortfall

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Backhaul demands are going to increase in the years ahead and carriers worldwide are collectively underfunding investment in backhaul, according to a Strategy Analytics study commissioned by network vendor Tellabs. The result? A backhaul funding gap of around $9.2 billion by 2017.

According to the study, the Asia Pacific region is facing the largest investment shortfall--$5.3 billion by 2017. A recent Cisco report on mobile data traffic found that subscribers in the Asia-Pacific region will account for 47.1 percent of all mobile data traffic by 2017, up from 35 percent in 2012--making the Asia-Pacific region the largest in terms of data consumption.

In North America, the report found that carriers are facing a much smaller backhaul funding gap, of around $650 million. The report said rising mobile data demand will make any underfunding of backhaul that much more acute in the years ahead.

"Operators will struggle to support multi-frequency heterogeneous networks and new bursty usage patterns," Tellabs said in a release. "Current operator forecasts allocate an average of 17.5 percent of total cost of operations to backhaul investment, but investment at that level simply cannot meet user demand."

The Tellabs-commissioned study found that revenue lost to customer churn is forecast to be 4 times higher than the backhaul investment required to meet customer demand, and that globally, for each $1 spent on backhaul above 17.5 percent of total cost of operations, operators could protect $4 in revenues. The report also said that operating margins could improve by up to 5 percent if backhaul investment increases to meet traffic growth.

Obviously, as a provider of mobile backhaul, packet optical and other network solutions, Tellabs has an interest in promoting this narrative. But other studies have also focused on the growing need for backhaul. A March 2012 report from research firm iGR found that the demand for mobile backhaul in the U.S. market will increase 9.7 times between 2011 and 2016.

For more:
- see this release

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