AT&T and Verizon Tackle the Wireless Backhaul Opportunity

by Istvan Fekete on June 12, 2013

The next opportunity for wireless operators — in this case I am referring to AT&T, Verizon, CenturyLink and Windstream — is FTTT (fiber to the tower) services for wireless operators that need higher-speed backhaul services to accommodate the growth of their existing 3G/4G LTE networks.

In the USA the FTTT opportunity means a $650 million funding gap that operators need to fill, while in Asia Pacific this could go up to $5.3 billion by 2017, according to a study written by Strategy Analytics for Tellabs. 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.

As users may have experienced, the actual speeds delivered vary by market, but the trend is to extend their fiber into existing cell towers. The explanation is pretty straightforward: for each $1 spent on backhaul above 17.5% of the total cost of operations, carriers are able to protect $4 in revenues, and operating margins could improve by up to 5%.

Looking at the four biggest wireless backhaul providers, here is what a Fierce Telecom study found out about how they are tackling the wireless backhaul opportunity: AT&T is known as the most aggressive provider of 4G LTE. It runs the largest 4G network, and its wholesale network connects into more than 600 wireless and wireline carriers in over 220 countries and territories. AT&T’s FTTT plan has a central piece: Ethernet, so it offers four Ethernet-based services through AT&T Wholesale.

“In the domestic wireless market, AT&T Wholesale competes for backhaul business, but AT&T Mobility also sells MVNO services,” wrote Paris Burstyn, senior analyst for wholesale at Ovum. “The two units must collaborate with each other to meet the needs of intermediaries that want to offer combined wireline and wireless packages.”

Verizon Global Wholesale: Because of its aggressive FTTH and network transport buildouts, fiber is within reach of about 85 percent of wireless operators’ cell sites. Burstyn belives that the next wave of growth will come from two sources: other large and Tier 2 wireless operators expanding their 4G networks, and the advent of microcells

CenturyLink plans to add fiber to 4,000 to 5,000 additional towers and expects to have a total of 19,000 towers in its footprint equipped with fiber.

Windstream has equipped about 3,000 tower sites with fiber and 1,600 others are in the process of being connected. About 60% are in-network and the remaining 40 percent are off-network, which the telco said is incremental revenue. Also the telco that its FTTT buildout will drop down over 2014 as its wireless operator customers complete their LTE roll outs, but there is an opportunity to sell services to multiple tenants and higher bandwidth speeds as wireless operators look to support the ongoing demand for higher wireless data speeds.  

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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