As mobile operators invest heavily in 4G networks, they face the difficult task of choosing solutions that will allow them to seamlessly maintain their businesses during the transition to pure packet networks with microwave solutions. These solutions must be able to maintain enough capacity to ensure superb Quality of Experience (QoE) for end users as the demand for data consumption continues to grow.
During 2011, the microwave mobile backhaul industry managed to absorb the economic and financial crises across the different regions fairly well. Operators experienced the usual pressures from regulators and from shareholder expectations of growth but also from companies like Apple operating a mobile cloud that will very soon push the data networks to their limits. Operators also had to handle different types of traffic and flow and manage both the transport and application level at the same time. In addition to that balancing act, since customers are backhauled in the same networks with telecom operators, both capacity and security issues must be addressed.
The microwave vendors went through a rearming phase during 2011 with new or updated microwave products, trying to respond to operators' needs and different cases. Stiff competition continues among the big vendors, with Ericsson maintaining global market leadership but Huawei not far behind. Ericsson is taking advantage of its strong roots in the industry with no restrictions in the ANSI and ETSI market. The Chinese giant Huawei is competing in cost and packetized solutions, but unlike Ericsson, it is restricted in some regions, such as North America, when it comes to national or public safety projects. Alcatel-Lucent continues to offer the MPR 9500 platform, which combined with its advanced Lightradio solution, is still an attractive solution for some mobile operators for End to End (E2E) integration.
Most vendors have followed the trend that emerged in 2010 of supplying full outdoor solutions, incorporating small cells and E-Band frequency bands. Several vendors, including NEC, Aviat, Ceragon, Exalt and Intracom Telecom, have renewed their product portfolios to become more competitive in a number of areas. These include new frequency bands, adding 28 and 42 Ghz, 70/80Ghz and full outdoor solutions in 60Ghz for small cells. Carriers have a strong interest in higher modulation up to 2048 QAM and support of symmetric (FDD) as well as asymmetric (TDD) traffic in the E-band products. Huawei is planning to offer its E-band solution commercially by the end of 2012. NEC is still in the process of developing product lines to compete in cost and features with currently leading vendors such as E-Band Communication and Siklu.
With respect to small cells, there is no "‘one size fits all'' technology expected to cover those cell sites. Rules and guidelines that should govern interference in neighboring small cells is still a hot topic discussed in the NGMN forum (Next Generation Mobile Networks). Opinions vary widely on the minimum distance necessary between small cells to avoid interference from as little as 50 to as much as 300 meters, though a consensus seems to be forming around 200 meters as a generally safe standard."
Point-to-Point is a choice where spectrum is available, sub 6 Ghz and 60Ghz with E-band. The number of 60 GHz links that will backhaul small cells is estimated to grow by a CAGR of 70% between 2011 and 2016, based on Maravedis' analysis and findings. WiFi will not be used for backhaul but rather for services. 2012 is the critical year for operators since most will be testing and shaping small cells solutions in anticipation of massive deployment by mid-2013. Small cells may not be deployed everywhere, but instead largely limited to high-density urban areas as an extension of macrocells to assist in peak hour data demand. However, all-outdoor microwave radios tend to be in one very compact, pole-mountable integrated unit with a small form factor. Almost all microwave vendors either are offering this already or are working towards it.
In Maravedis' recent report, the third edition of Wireless Backhaul Market from an All-IP Perspective, the analysis concluded that during 2011, the PtP microwave backhaul market remained flat compared with 2010 at $4.72 billion, although vendors experienced changes in market shares. However, over the next five years, the Ethernet microwave market will continue to grow, mainly driven by the need for operators to deploy new base stations to provide good quality of experience over LTE networks.
Going forward, 2012 should continue to exhibit positive growth over 2011, with a likely 10-15 percent increase of the total industry's revenue growth two digit increase. The year began quite well for many vendors such as E-Band Communications and Bridgewave, either with new projects or new rounds of funding, promising growth throughout the year. Dragonwave will very soon increase its market share, streamlining its microwave gear after acquiring the NSN mobile backhaul division. As soon as this deal clarifies and becomes official, Dragonwave will be able to combine its pure packet with new hydrid products and create more appealing solutions for large mobile operators. As in 2011, the vendors will try to pitch the operators before they even put together an RFI for backhaul, trying to promote their full networking portfolios and solutions.
Microwave tends to be a good and reasonably priced alternative solution to support demand for capacity where fiber is not available. Most products are becoming more efficient and innovative, supporting the latest Ethernet features and capabilities, including OAM and synchronization, proving that product roadmaps will continue to enhance the hardware and equipment. Some vendors prefer to use their own chipsets (system on a chip) in order to control unit cost and avoid supplier dependence and related headaches.
Zero-footprint microwave radios will be the main market driver, with demand remaining for hybrid traffic, but shipments of pure packet radios are expected to grow close to a double rate per year. Higher modulation is expected to maintain a network's robustness, targeting not that much on the connection's availability but on the service's capacity. From 256 QAM to 1024 QAM, the gain is 25 percent in capacity. Likewise, as the modulation goes higher with NEC's recent announcement of 2048 QAM, the gain is 10 percent in capacity per step, but that modulation is not the industry's average or the operators' demand. Operators mostly seem to be satisfied with 1024 QAM, depending on the channel's size (56MHz) or the distance they are trying to cover in that modulation (short haul).
The microwave radio's capacity, footprint, and management capabilities will continue to play a major role not only in winning large deployments, as Ceragon recently did, but also in controlling and managing data expansion. Mobile backhaul will receive more investment and attention as more LTE deployments evolve and small cells start early deployments, resulting into a more than $11 billion total market by 2016.
Elias Aravantinos is a senior analyst specializing in Backhaul at Maravedis.