iGR Bullish on Carrier Ethernet Backhaul, but not Carrier Ethernet 2.0

CEN Feature (Apr 19 2012) Mobile Backhaul , Wholesale / Exchange , Other analysts

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   By now readers have become accustomed to seeing skyrocketing mobile backhaul forecasts driven by huge mobile data usage. Nevertheless, research firm iGR caused a bit of a stir recently when its “U.S. Mobile Backhaul Forecast 2011-2016” predicted a particularly ambitious compound annual growth rate for mobile backhaul of nearly 58% between 2011 and 2016 – and fiber backhaul CAGR of nearly 85% over the same period.

   This growth should be a boon for Carrier Ethernet because, as iGR President Iain Gillott noted on a phone call this week, “Ethernet over copper, fiber or microwave is where everybody ends up. It’s the most efficient way to do it.”

   In the U.S. the majority of Carrier Ethernet backhaul deployments will be over fiber, Gillott said. But he also sees specific niches where microwave and copper based solutions make the most sense.

   Gillott believes copper will have a place when it has already been extended to a cellsite but fiber hasn’t and the site doesn’t require the level of bandwidth that would dictate installing fiber. Microwave, he said, will have a place in remote rural areas. Citing the example of west Texas where cellsites are a couple of miles apart, he said, “Even running copper would be ridiculously expensive and there’s no one to complain about zoning and big ugly microwave equipment.”

   At the other end of the spectrum Gillott sees microwave playing a role in supporting small cells in densely populated areas to support pockets of unusually strong demand—such as the area around Chicago’s Millenium Park. “There will be a lot of small cells hanging off the side of buildings” or “on top of light poles,” Gillott predicted.

   Getting power to these small cells shouldn’t be a problem, but they may lack fiber or copper, in which case “microwave would make a lot of sense,” Gillott said.

   Skeptical of Carrier Ethernet 2.0

   Despite Gillott’s enthusiasm for carrier Ethernet’s role in mobile backhaul, he was decidedly not enthusiastic about the potential for the mobile backhaul provisioning profiles recently established in connection with the Carrier Ethernet 2.0 initiative.

   The idea behind those profiles is to give carriers a standard method of setting various service parameters to ensure greater consistency between networks, thereby enhancing carriers’ ability to interconnect with one another. But Gillott argued that even when standards exist, wireless carriers tend to implement products supporting those standards in different and incompatible manners. He cited the examples of self-optimizing networks and IP multimedia sub-system (IMS). Pointing to the example of IMS, he said, “You can’t take a box out of Verizon’s network and put it in AT&T’s network.”

   Ethernet, he predicted, is going to be the same way. “Verizon and AT&T are big enough to say ‘We don’t do it that way – and even the smaller operators, if they have roaming agreements with the big guys will follow what they say,” Gillott said.

   Advice for wholesalers

   Recognizing that backhaul networks often are provided by companies that don’t operate their own wireless networks, I asked Gillott what advice he would have for those wholesale carrier Ethernet operators.

   “Be flexible,” he said.

   He noted, for example, that wireless operators often want to outsource as much of the task of operating their backhaul network as they can. Yet some wholesale providers do not offer all types of transport media as a managed service, instead associating managed services primarily with fiber.

   And even for fiber services, wholesale providers may offer less than what wireless carriers want. “The carrier wants them to manage whole thing down to the cellphone,” said Gillott. But he noted that some wholesale operators say, “No, we just do fiber and you do the rest”—an attitude that Gillott likened to a tire dealer saying, “We’ve got the tires but we can’t balance them for you.”

   Gillott also argued that wholesale operators can use quality of service capabilities as a differentiator. He noted, for example, that if a wireless carrier installs a picocell at the home or office of a customer with a high-value monthly rate plan, it will be important to ensure that the customer’s service is not compromised by a neighbor with a low-cost plan who can also use the picocell.

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