Cable ripe for 3G backhaul?

The long-awaited emergence of 3G mobile services has the telecom industry concerned that the T-1 circuits traditionally used to backhaul mobile traffic to the wireline network and mobile switching centers could become overloaded and cause a broadband bottleneck. A number of technology solutions, including Ethernet over copper or fiber, pseudo-wires, circuit bonding and fixed wireless, have been touted as potential solutions. And a variety of companies are lining up to attack the problem before it arises — as well as cash in on the growing need for greater backhaul bandwidth to support the 3G expansion.

Those solutions suggest a backhaul market shakeup could be in the offing, which would be bad news for major ILECs, which have had a virtual death grip on a market that was valued at $10 billion in 2005 by ABI Research, selling those T-1 leased lines. However, the biggest potential competitors to ILECs in the backhaul market have yet to make much noise.

Cable TV companies already have an abundance of bandwidth-rich fiber in their networks, facilities lying in close proximity to cellular towers and an increasing interest in participating in the wireless market, according Ted Shields, co-founder of Atlanta-based research firm GeoResults.

“To use a Southern term, they are in the catbird seat to be able to compete for this business,” Shields said. “They can move faster than anyone else to make a difference.”

Michael Arden, principal analyst of broadband for ABI Research, agrees the cable TV companies are in a strong position but believes they may not make much of a dent in ILECs' backhaul market share for several years. “We're seeing a big interest coming from cable TV companies in this market,” he said. “They already have the fiber in their networks and have more experience with Ethernet-based services. Still, we think they'll only represent about 10% of the backhaul market by 2011.”

What could help cable TV players succeed in backhaul is an increasing interest from mobile carriers in attaining service provider diversity among the companies supplying their backhaul capacity, Shields said. According to many experts, backhaul represents as much as 30% of a mobile carrier's total operational expenses so that diversity would seem to yield some competitive pricing advantages.

At the very least, as more cable TV companies begin to offer their own wireless services, Arden said they could use their existing fiber networks to provide backhaul for the wireless networks at a deep discount from what they would get from other backhaul providers.