Layer 2 Ethernet will account for over 80 percent of backhaul services revenue by 2015, according to Infonetics (News - Alert). Additionally, small cells shipments will increase from 261,000 in 2012 to five million in 2017.
Ethernet scales networks quickly while delivering the lowest cost-per-bit when compared to any other option. Carriers can expand their bandwidth to keep up with subscriber demand while the flexibility of Ethernet allows them to avoid the over-provisioning of work.
Powerhouses like Verizon and AT&T (News - Alert) have the largest share of Ethernet-based service backhaul deployments to large cell sites, but analysts suggest that third-party wholesale carriers will snag 35 percent of that market by the end of this year.
Additionally, carriers will deploy three to eight small cells for every macro cell within their urban core environments. The key for profitable growth will be to determine which cell sites are underserved. Companies should list their own profitability criteria including location, bandwidth demand and competitive environment and then expand their networks in areas that will deliver their needed return on investment.
Cable multiple service operators (MSO) serve seven percent of all large cell towers, or about 20,000 units. However, MSOs snagged about $500 million dollars in revenue during 2011. This haul means big opportunities for dollars because Ethernet-over-fiber networks are expected to expand at a 45 percent compound annual growth through 2015. If the prediction holds, then MSO fiber networks could easily branch out to cover 80 percent of all U.S. macro-cell sites.
In a 2012 survey of mobile operators, Metro Ethernet Forum called delivering the bandwidth required for LTE (News - Alert) backhaul to be the “single biggest challenge and operating cost within the industry.”
Surges in mobile data usage will continue to press companies to transition to today’s LTE standard. That is, if they want to deliver the speed and capacity that today’s customers are demanding.
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Edited by Jamie Epstein