Because a small cell will likely handle less traffic than a macrocell it seems logical that small cell backhaul would cost less than macrocell backhaul. But apparently that is not the case if the backhaul mechanism is fiber.
Sprint Nextel (NYSE:S), which purchases a lot of its backhaul capacity from incumbent local exchange carriers and cable TV providers, revealed in an FCC filing that the company "has found that wired network operators are charging the same backhaul rates for microcells, covering small areas, as they charge for connections to macrocells with much wider coverage and generally much heavier use." This pricing scheme, Sprint noted, "makes network expansion through microcells much more difficult."
If Sprint's experience is indicative for the whole industry it could put a damper on the widespread deployment of small cells. Already backhaul is one of the biggest costs to wireless operators, and it's unlikely that they are going to relish the idea of their backhaul costs skyrocketing.
Of course, the main reason for Sprint's filing with the FCC was to point out concerns that it has with Verizon Wireless' (NYSE:VZ) proposed purchase of AWS spectrum from cable companies. Sprint said that while it hasn't publicly opposed the acquisition, it is concerned about the impact that the bilateral commercial agreements Verizon is drawing up with each cable firm may have on Sprint's business if regulatory restrictions are not mandated.
But analysts say that operators have choices when it comes to backhauling traffic from their small cells. In general, analysts agree that wireless backhaul--which analyst firm Infonetics defines as microwave, millimeter wave and licensed non-line of sight (NLOS)--may be the best option.
Michael Howard, co-founder and principal analyst at Infonetics, said that there are currently a number of request for proposals being circulated by large U.S. operators that are planning to use wireless technologies for their small cell backhaul. "The operators we have spoken with said that about 80 percent of their small cells will be connected using three types of wireless backhaul--microwave, millimeter wave and licensed non-line of sight," Howard said.
He added that this is a big change for U.S. operators. Currently, only about 10 percent of macrocells are using wireless backhaul to backhaul traffic. The vast majority of traffic from macrocells is currently backhauled over fiber.
Infonetics is not alone in its assessment. Analyst Monica Paolini with Senza-Fili Consulting noted in a recent column in sister publication FierceBroadbandWireless that while the cost of a fiber link to a macrocell and a small cell may be the same, the cost of the wireless backhaul link is lower in a small cell environment.
Paolini added that she expects only a small percentage of small cells to have fiber backhaul, and those sites will likely be in dense urban environments. She said that in urban areas where small cells will help operators make better use of their spectrum, there will likely be fiber connections. And depending upon the network configuration, operators could connect a local network of small cells to a macrocell or another aggregation point and then backhaul that traffic over fiber, which would be more cost effective.
Interestingly, Howard said that many small startups are pursuing these large operator RFPs for small cell backhaul because they have developed cost-effective wireless backhaul technologies.
After decades of relying on fiber for backhaul, it appears that wireless operators are finally turning to wireless backhaul to handle their small cell traffic. For wireless backhaul providers this business boom is long overdue--most have been trying to make inroads in the U.S. market for several years.
If you are interested in learning more about all aspects of backhaul, including small cell backhaul, check out the latest ebook from FierceWireless, "Making Backhaul Better." In this ebook we look at various challenges wireless operators' face when building their backhaul strategies. --Sue