Providers need to plan their network roll-outs carefully in order to reduce their costs as they increase network capacity, according to the latest report from global telecoms, media and technology (TMT) adviser Analysys Mason (www.analysysmason.com).

The combination of rapid growth in network traffic and slow growth in revenue is squeezing mobile network operators’ profit margins. A well-designed radio access network reduces costs, which increases profit margins. This includes the backhaul network, which connects the base station to the core of the mobile operator’s network. As a result, backhaul design is becoming an important consideration in an operator’s radio access strategy.

“Growth in the take-up of devices and technologies that offer an improved user experience, such as smart phones and tablets, will increase the amount of data that customers consume,” says Terry Norman, Principal Analyst at Analysys Mason and author of the report The cost of capacity: mobile backhaul worldwide. “Operators will be able to keep up with their customers’ demand for data in the short term, but thirty-fold growth in data volumes by 2015 will drive most operators to increase their backhaul capacity. Operators can achieve this in 2 ways: by leasing dedicated lines from incumbent (and some alternative) operators, or by building their own fiber or microwave backhaul.”

Backhaul costs are forecast to increase by a factor of 10 by 2015, which could significantly reduce operators’ profit margins. Furthermore, capacity constraints in the backhaul network are threatening to constrict the flow of data to and from the customer.

These trends are driving operators to review their backhaul strategies and equipment suppliers to develop transmission network technologies that address these issues.

“There is no universally applicable backhaul solution. Operators must review their backhaul improvement strategies on a region-by-region and country-by-country basis to identify the optimal solution for each market,” says Terry Norman, who also leads Analysys Mason’s Wireless Networks research program. “The initial cost is not the only -- and often not even the overriding -- factor. Variables such as security, return-on-investment timescale, traffic growth rate, and the availability of local infrastructure must contribute to the overall backhaul strategy. Operators must calculate a fair and accurate ‘total cost of ownership’ model for backhaul costs.”

The report The cost of capacity: mobile backhaul worldwide offers a unique view of this issue by considering how regional variations will influence operators’ backhaul strategies.

Source: Analysys Mason, www.analysysmason.com

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