Mobile Technology as an Interim Backhaul Solution

Cost is a decisive factor in choosing between mobile and fiber backhaul. Not only the short-run but the long-term impact of the type of backhaul model should be considered when making such an investment choice.


Fiber backhaul has been the industry standard despite its limitations. European operators traditionally rely on cables and fibers but are willing to use mobile backhaul for reasons other than cost. Almost 65% of network links run through mobile backhaul, according to Deutsche Bank. In Asia, Korea and Japan have the region's biggest network of mobile backhaul. Sixty percent of backhaul capacity in the Asia-Pacific region is mobile, whereas in North America, it is 15%. Unlike their European counterparts, American carriers are basing their mobile backhaul investment on cost parity relative to fiber. But things may change as new entrants like Clearwire embrace novel networking solutions.


In general, fiber capability is more preferable than mobile, but cost-effectiveness and the time-consuming process of deploying wired network limit fiber expansion. Mobile backhaul also has its own disadvantages like spectrum shortage, signal latency and line-of-sight (LOS) requirements.


Nevertheless, it fills a large gap in network capacity that wired technologies alone cannot address. Given the unique advantages of fiber, operators have good reasons to use mobile backhaul as an interim solution. Wireless technology not only saves millions of dollars in fiber capital expenditures, it also makes it less costly for operators to meet their medium and long-term demand as they develop fiber capacity. Cambridge Broadband Networks sponsored a study which showed how wireless backhaul can reduce capital and operating expenses when deployed in a 10-year transition period.


The estimates are based on current cost level and assumption that medium-term capacity requirements are met via wireless backhaul solution. Using a10 % annual mobile-to-fibre replacement schedule, with 90% completion rateachieved in year 10 , the estimated net present values (NPV) for phased transition to fiber turns out lower than those of pure fiber deployment.


If the transition is towards leased fiber capacity, savings on operational cost will offset mobile backhaul investment in the first year. And in a wireless-to-built fiber transition, savings mainly come from reduced pace of fiber investment, thus offsetting mobile backhaul investment at the start of the backhaul life-cycle. The NPV projections would be in favor of fiber investment if fiber link costs less than $30,000, which is far from reality in most markets. In such case, interim mobile backhaul provides a cost-efficient means to distribute fiber capital outlay.