Microwave mobile backhaul in 2011 weathered the economic storm fairly well, even here in North America. The market should remain relatively flat, compared to 2010 with growth occurring in 2012. Manufacturers reaping the rewards of microwave deals include Alcatel-Lucent, Aviat Networks, and more recently, Ericsson. Ericsson's recent wins with large North American operators have strategically positioned the company to become a leading mobile equipment vendor in the region--including microwave. Alcatel-Lucent's strong MPR 9500 platform combined with its advanced Lightradio solution, continues to gain the attention of several mobile operators.
The North American market is a bit unique, as other global markets compete with ultra-price competitive Chinese vendors ZTE and Huawei. Given that these vendors are not allowed to compete in the USA, traditional microwave equipment vendors dominate the market. Historically, Alcatel-Lucent and Aviat have jockeyed for the region's number one spot, however, in the first nine months 2011, Alcatel-Lucent pulled ahead with a sizeable gap. This is expected to continue as Alcatel-Lucent's traditionally strong fourth quarter should solidify the lead for 2011.
Going forward, 2012 should see positive growth, despite operators' plans to either slow or restructure capital expenditure. Most of the major mobile operators have hinted at slower capital expenditures in at least the first half of 2012. Despite the warnings, Sky Light Research believes that backhaul is one area in the network that will continue to receive funding, due to the critical role backhaul plays in the network. Insufficient backhaul capacity can lead to network outages. Network outages create a domino effect of angry customers, public relation headaches, fodder for competitors, and possibly subscriber churn, which requires more opex to fix than the capex to prevent.
The competitive landscape in 2012 should remain similar to 2011, with possibly more visibility from Ceragon and Dragonwave. Ceragon's recent acquisition of Nera, gives the company a solid long haul radio; which when combined with the Ceragon's current short haul packet and TDM solutions, serves the North American market well. North America generates much of the demand for trunking radios. There are several reasons for this. One, in the U.S., employment safety regulations make it very expensive for employees to climb towers; two, there are a lot of rural areas creating the need for long distance, high capacity radios; and three, harsh winters in many areas of the region, make it difficult to climb towers. Although mobile operators do not often use trunk radios, secondary verticals do take advantage of these radios, making trunk radios an important part of a microwave vendor's North American portfolio.
Dragonwave briefly lead the North America microwave market during Clearwire's network build out in 2009 and 2010. Dragonwave's leading packet radio portfolio serves the 4G/LTE network well, however, the company's Achilles heel was its lack of end-to-end networking gear. Dragonwave took steps to remedy this with the acquisition of Nokia Siemens Network's microwave group, buying itself not only a complementary full suite of microwave equipment, but also a spot as the preferred microwave provider for NSN. Over the next few months, Dragonwave will streamline its microwave gear to work with NSN's overall network management system, creating a more appealing solution for large mobile operators.
More and more, mobile operators tend to choose microwave vendors that have a full suite of network equipment--from the RAN to the core, along with a strong network management software offering. Besides the obvious benefit of bundled pricing that the operator receives when making a network-wide deal, operators also prefer the insurance of knowing the equipment will efficiently work together, creating fewer real-world internetworking headaches. In addition, the variable nature of mobile data creates unpredictable traffic flows in the network which requires a strong network-wide management tool. Piecemealing the network together from several different vendors can prevent even the best management software from working at its prime. From the microwave vendors' point of view, having a full networking portfolio is beneficial, in that often times, they are able to bid on a large integrated network deal before the operator has even put together a RFI for just backhaul.
The year ahead also will bring zero-footprint microwave radios to the forefront. As small cells continue to proliferate with the rollout of 4G mobile data, real-estate at the cell site will continue to shrink, creating a real demand for zero footprint backhaul solutions. All-outdoor microwave radios meet this need, with the entire microwave radio being completely housed in one integrated unit, and mounted on the pole. Almost all microwave vendors either have this available or are working towards this offering.
As mobile data advances in both content and coverage, microwave radio's capacity, footprint, and management capabilities will become increasingly more important in winning large deals with mobile operators. Although microwave is not the main backhaul technology North American operators choose, it will play an important part in the network in 2012 and beyond.
Emmy Johnson is the founder of Sky Light Research. Sky Light Research has been tracking the microwave market on a quarterly basis since 2001. For more information on Sky Light Research's Microwave Research, contact Emmy at [email protected].