During transition to high-speed HSPA+ and 4G/LTE networks mobile backhauls often become the 'bottleneck’ of the network infrastructure. It is the reason why operators are actively upgrading their ‘transport’, preparing for a sharp increase in data traffic volume. J'son & Partners Consulting presents a summary of the research of the main trends and development prospects of backhaul networks in Russia and in the world.


Definition of Mobile Backhaul networks

Classic mobile operator’s backhaul network includes two main segments:


       backhaul networks, connecting base stations with controllers and mobile switching centers (MSC);
       backbone networks, ensuring high-speed transport between switching centers.


Backhaul networks occupy intermediate link (‘middle mile’) in the hierarchy of telecommunication networks between core network and small subnets on the ‘edge’ of the whole network (Fig. 1).



With the improvement of radio access technologies (from second and third generation networks to the fourth) network segments with small throughput capacity shift from radio interface traffic to backhaul distribution network. In the face of shift to new high-speed HSPA+ and LTE networks rapid growth of mobile broadband traffic represents one of the main incentives for operators to increase investment in Mobile Backhaul network. Thus, according to ‘MegaFon’ estimates, by the end of 2012 about 100 thousand subscribers of 4G operator (only 0.5% of the total number of mobile Internet users) generate 5% of the total data traffic in Russia. It is obvious that LTE-subscribers consume significantly more traffic than subscribers of 2G/3G. For example, in May, 2013 4G subscribers in Irkutsk region downloaded in average 4 GB of data per week, while 2G subscribers – 52 Mb and 3G subscribers – 387 Mb.


According to J’son & Partners Consulting estimates, in 2012 total increase in Russian mobile data transfer traffic comprised 123% and equaled 550 Pb . According to the forecasts for the period of 2011 – 2016 this rate will increase 12.8 time and reach the figure of 3 160 Pb (Fig. 2).



Size and technological structure of the market

According to Infonetics Research estimates, due to the active deployment of HSPA/HSPA+ and LTE networks in 2012 world Mobile Backhaul market of macrocells exceeded $ 8 billion, which represents 7% growth compared to 2011. For comparison: in 2008, analysts estimated the market to be approximately $ 5 billion (Fig. 3).



According to Infonetics, microwave equipment segment became the most capacious segment of the world Mobile Backhaul market in 2012. Regional specification should be taken into account in this respect. For example, the U.S. share of radio relay lines (RRL) comprises a small share (around 10%) and this figure is projected to increase by 2016 insignificantly. At the same time share of copper lines will decrease sharply primarily due to FOCL, which are most preferred for connection of 4G base stations (Fig. 4).


Major technological trend in the dominance of data traffic over voice traffic is switch from circuit-switched technologies (TDM) to packet-switched technologies (Carrier Ethernet, IP/MPLS).

In Russia ‘big three’ operators and ‘Rostelecom’ that construct 4G networks, also prefer fiber optics and are actively connecting base stations via IP.


Russian Mobile Backhaul market

In the face of rapid growth of mobile data traffic and development of 4G/LTE networks, largest Russian operators are working hard not only on improvement of quality of communication but also continue to actively upgrade its distribution backhaul networks. ‘VimpelCom’, in particular, replaces RRL with FOCL where it is possible. If such replacement is not possible old radio relay lines are substituted by modern high-speed RRL. In addition, along with equipment modernization the technology of provision of communication channels to the base stations is changing – there is a transition from traditional TDM-channels to allocated Ethernet-channels. It allows to use frequency passband of backhaul network more effectively and provides an opportunity for further network development (for example, the introduction of HSPA+ and LTE technology).


By the end of second quarter of 2013 63% of 3G ‘VimpelCom’ base stations were connected via high-speed optical and microwave radio channels; planned rate by the end of 2013 is 80-90%. 90% of MTS stations were connected via IP-channels by the end of 2012, 57% of urban and 12% of the remaining base stations of ‘MegaFon’ were connected via optics. The length of the fiber-optic Backhaul network of the operator in the end of the 3rd quarter of 2012 amounted to more than 27 thousand km. ‘Rostelecom’ constructs all of its 3G-networks based on LTE-Ready model. It will allow to deploy a full-fledged 4G with minimal reworks in future. The company also prefers fiber optic cables. The majority of Tele2 base stations in Russia are connected via microwave lines, at the same time, recently purchased modern radio relay equipment allows smooth transition from TDM-channels to IP-based channels.


According to J'son & Partners Consulting estimates, in 2012 Russian operators increased their investment in the distribution backhaul networks by 9% to 5.3 billion rubles. It represents about 2% of the global market for Mobile Backhaul equipment for macrocells. In the coming years, Russian operators will continue to invest in Backhaul, and by the end of 2015 the annual cost would amount to 7 billion rubles. The average annual growth rate of investment in Mobile Backhaul during the period of 2012 and 2015 will equal from 7% to 10%.


As can be seen from the estimates and forecasts of Infonetics Research, in 2012-2017 world Mobile Backhaul market for macrocells will grow and compound annual growth rate (CAGR) will equal 2.4%, by the end of the forecast period the market will exceed $ 9 billion (Fig. 5).



At the same time, despite the growing popularity of fiber optic, microwave equipment – the largest expense group of distribution backhaul networks for operators in 2012 – will continue to dominate. According to Infonetics forecasts, by 2017 microwave equipment will comprise 56% of total revenues of Mobile Backhaul market for macrocells. Thanks to the active deployment of LTE networks market of ultramicrowaves equipment market will also grow rapidly in both macro and small cells segment. It is expected to double in 2013 compared with 2012, and by 2017 will approach $ 600 million.


The share of Mobile Backhaul for small cells deployed outdoors (outdoor) in the total Mobile Backhaul market will continue to grow – for the next 5 years the total volume of sales of such equipment will equal $ 5 billion.


The market of fiber optic solutions for backhaul networks of small cells are also expected to grow during the period from 2012 to 2017. Its share is projected to increase from 7% in 2012 to 24% in 2017, primarily due to such large markets as China and North America, where the choice is made in favor of fiber in many cases.


At the same time, according to Strategy Analytics forecasts, made for Tellabs (large vendor of network infrastructure) by 2017 network operators will fail to invest $ 9,2 billion in Backhaul networks worldwide, while the deficit of Backhaul network capacity will equal 16 Pb. This problem will become most crucial in Asia-Pacific Region (APR), where the shortage of capacity by the end of the forecasted period will reach 9.4 Pb, and the lack of investments – $ 5.3 billion.

Detailed results of the research are presented in the full version of the report ‘Backhaul Networks for Broadband Mobile Communication: Tendencies and Perspectives of Development in Russia and in the World’ (87 pages)


Content of the report:
Main terms and abbreviations
1. Introduction to the market of mobile backhaul networks
       1.1. Definition of Mobile Backhaul
       1.2. Evolution and comparison of backhaul networks technologies
       1.3. Main tendencies on the Mobile Backhaul market
              1.3.1. Transition to the package IP-networks
            Carrier Ethernet
              1.3.2. Preferable use of fiber optics technologies
              1.3.3. Microwave backhaul networks (RRL)
              1.3.4. Other tendencies
            Satellite link
            LTE backhaul and small cells
       1.4. Main growth drivers of mobile backhaul equipment market
              1.4.1. Transition to high-speed LTE networks
              1.4.2. Rapid growth of mobile broadband traffic
              1.4.3. Increasing penetration of smartphones
              1.4.4. Increasing popularity of mobile applications
              1.4.5. Other factors
2. Current condition and forecasts of world market of equipment for Mobile Backhaul networks
       2.1. Market size and structure
       2.2. Forecasts of world Mobile Backhaul market
       2.3. International strategies and initiatives in the sphere of Backhaul networks
              2.3.1. USA
              2.3.2. Great Britain
              2.3.3. Australia
              2.3.4. Canada
3. Russian Mobile Backhaul networks market
       3.1. Current condition and strategies of main players
              3.1.1. VimpelCom
              3.1.2. MegaFon
              3.1.3. MTS
              3.1.4. Other operators
       3.2. Estimate of expenses of Russian mobile operators on Mobile Backhaul networks
       3.3. Main tendencies and perspectives of the market
4. SWOT-analysis of Mobile Backhaul technologies
5. Leading vendors on the mobile backhaul equipment market and their solutions
       5.1. Alcatel Lucent
       5.2. Alvarion
       5.3. BridgeWave
       5.4. Brocade
       5.5. Cisco
       5.6. Ericsson
       5.7. Fujitsu
       5.8. Huawei Technologies
       5.9. Juniper Networks
       5.10. NEC
       5.11. Nokia Siemens Networks
       5.12. Tellabs
       5.13. ZTE Corporation
       5.14. Other companies
              5.14.1. Extreme Networks
              5.14.2. Alpha Omega Wireless
              5.14.3. Ciena
       5.15. Mobile Bachaul networks for small cells
List of mentioned companies

List of tables

Table 1. Main requirements to the functions of equipment for IP FOCL for ‘MegaFon’ Mobile Backhaul networks
Table 2. Main requirements to the RRL equipment of ‘MegaFon’
Table 3. Main indicators of Mobile Backhaul networks development of Russian mobile operators as at the end of 2012
Table 4. Allocation of base stations by urban areas and average length of fiber optic connection (backhaul)


List of illustrations

Fig. 1. Networks hierarchy: access network, backhaul network and core network
Fig. 2. Main Mobile Backhaul technologies on different levels
Fig. 3. Use of different Backhaul technologies for various generations of mobile networks
Fig. 4. Classic and alternative approach to tariff processing via Backhaul networks
Fig. 5. Evolution of backhaul networks based on different technologies
Fig. 6. Topology and architecture of typical implementation of package distribution network and LTE network
Fig. 7. Organization scheme of Mobile Backhaul via satellite networks with the use of femtocells
Fig. 8. Mobile data transfer traffic, Pb per month
Fig. 9. Dynamics of mobile data transfer traffic in Russia, 2010-2016
Fig. 10. Global market size of smartphones, 1st quarter of 2011 – 1st quarter of 2013, mln units
Fig. 11. Global market of mobile applications, $ billion
Fig. 12. Size and growth rate dynamics of the global market of mobile applications, billion USD
Fig. 13. Availability of high-speed wireless connection in different regions of the world
Fig. 14. Sales forecast of tablets, mln. units, 2013-2017
Fig. 15. Sales forecast of tablets by technologies, mln. units, 2012-2013
Fig. 16. Global Mobile Backhaul market of macrocells, 2008-2012
Fig. 17. Mobile Backhaul market structure in USA, 2011-2016
Fig. 18. Share of different technologies of microwave equipment, 2010 and 2015
Fig. 19. Forecast of Mobile Backhaul market for macrocells, 2013-2017
Fig. 20. Market structure of equipment for microwave backhaul networks for small cells: forecast for 2017 (income
            – $ billion; share/quality of connection - share),
Fig. 21. Investments deficit and Backhaul network capacity in different world regions: forecast for 2017
Fig. 22. Estimation of future range demands for microwave Backhaul networks in Canada, MHz, 2011-2017
Fig. 23. Dynamics of ‘MegaFon’ expenses for Backhaul network, mln. RUB, 2009-2012
Fig. 24. Share of base stations for mobile connection of different standards *, 1st quarter of 2012
Fig. 25. SWOT-analysis of TDM technology
Fig. 26. SWOT-analysis of Carrier Ethernet technology
Fig. 27. SWOT-analysis of IP/MPLS technology
Fig. 28. Top players on mobile backhaul market
Fig. 29. Top vendors of microwave equipment for Mobile Backhaul
Fig. 30. Mobile Backhaul networks of Alcatel Lucent for HetNet structure
Fig. 31. BridgeWave’s FlexPort platform
Fig. 32. Mobile Backhaul topology by Brocade company
Fig. 33. Migration process to the new architecture by Cisco
Fig. 34. Migration process to the new architecture (Full migration)
Fig. 35. Comparison of expenses for Backhaul
Fig. 36. Juniper Networks Advanced Mobile Backhaul solution
Fig. 37. Backhaul infrastructure, constructed based on Ciena equipment
Fig. 38. Backhaul solution based on LTE TDD by Huawei