Cellcos seek ways to cut backhaul cost

With 3G adoption and bandwidth-hungry applications such as mobile video on the rise, ABI Research estimates that mobile operators' spending on backhaul is expected to reach $23 billion by 2012, up 65% from over $14 billion this year.

While today the majority of cellular networks across the globe are still using expensive T1s and E1s for backhaul, the research firm predicts that there will be a significant migration toward Ethernet-based solutions.

In fact, this is what is happening in Asia, where operators like StarHub are turning to Ethernet as a cheaper and more efficient alternative to quickly meet the staggering growth of packet-switched data on the backhaul portion of their radio access networks.

Peter Cook, VP of networking planning at StarHub, said that demand for Ethernet services from its fixed-line enterprise customers and the goal of keeping network opex flat are the two key drivers pushing the company's Ethernet-based backhaul.

'TDM is expensive and inefficient, and what we need to do is use Ethernet overlay, IP and abandon expensive leased lines,' he told a conference in Hong Kong last month. 'Everyday we are reducing the number of E1s and increase the number of Ethernet [lines].'

He said a migration toward IP, during which TDM voice will remain on E1s and the more packet-intensive services will go over Ethernet first, will ultimately cut the company's transmission rental costs by 40% to 80%.

According to Cook, about 50% of StarHub's Node Bs run on Ethernet alone, without any E1 interfaces at all.

In addition to Ethernet, Cook said StarHub is using microwave (point-to-point) technology as a final drop.

While Ethernet is touted to be the most suitable long-term technology for wireless backhaul connectivity, Matt Walker, senior analyst at Ovum said E1/T1 will still be here for a while, given its extensive installed base and obstacles associated with Ethernet technology, including unsettled standards, synchronization, the need to exploit the installed base, the need to train field personnel with new boxes and test equipment, and interoperability.

'We expect global shipments of E1/T1 interfaces on OEDs to grow at an average annual rate of 8% from 2005 to 2011, and STM-1/OC3 client interfaces on OEDs to grow at 29% annually.'

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