Backhaul for small cells: A 1.5 billion dollar market opportunity

The market for small cells has begun, with millions of consumer femtocells shipping this year.    The market will explode over the next five years, with heterogeneous networks (HetNet) and self organizing networks (SON) products coming out to address new kinds of small-cell applications.   For example, the emphasis of the market has shifted from coverage enhancement to capacity enhancement, and many of the new femtocells and picocells in development today are intended to augment the ability of urban networks to handle dense mobile data traffic.    

There is strong demand for urban small cells.   Mobile data traffic demand nearly doubles every year, and the 3G infrastructure currently in the field has begun to hit capacity limitations, especially in key urban areas.  In the strategic plans of leading major network operators, handling dense data traffic loads has become more critical than voice coverage in every corner.

The difficulty arises when the mobile operators consider where to place their femtocells and picocells.   To achieve the highest possible mobile data density, an underlay of small cells (mounted to a street light, utility pole or other “street furniture”) is ideal.   Some of those locations have power available, but do not have available backhaul.    

In fact, the lack of adequate backhaul currently seems to be the one missing link which is holding the market back from sweeping adoption of small cell technology.    The operators desperately need to improve data capacity, but do not have all of the tools necessary to deploy a solution.


Source:  Mobile Experts Small Cell and Het-Net Forecast. Click figure to download hi-res PDF.

Taking a look at the small-cell landscape, it’s clear that there are several different options, ranging from consumer femtocells to highly coordinated picocells.    The backhaul needs of each option are very different:

• Consumer femtocells will almost always use a form of “best effort” backhaul, with DSL or cable modems providing broadband coverage in most homes.   Because most operators will never expect consumer femtocells to reach the high levels of service quality achieved in a traditional telecom network, this arrangement seems to work out fine.
• Enterprises have the option of using “best effort” solutions, or purchasing T1/E1/fiber connections to service their femtocells.  Some enterprises may choose to use these higher-quality options, but the femtocells themselves will continue to have issues for a few years in terms of handoff statistics and other QoS metrics.   Overall, the most logical option for many enterprises will be to remain with “best effort” backhaul solutions such as DSL to save money.
• Carrier-deployed femtocells that are mounted indoors are likely to use fiber or T1/E1 lines.   In this case, the mobile operator would not consider “carrier grade backhaul” to be an additional expense; it is simply the baseline.
• Outdoor Carrier Femtocells are the most likely candidates for non-line-of-sight backhaul.  With throughput requirements in the range of 20-100 Mbps, these small cells are most likely to be mounted in difficult locations such as parking garages, and ground-floor walls which do not have a direct RF path to the central backhaul hub.
• Picocells are likely to have higher capacity requirements than Carrier Femtocells, with throughput requirements in the 20-500 Mbps range.   Where enough TDD spectrum is available, a NLOS radio may work in this application.   If not, then line-of-sight (LOS) mm-wave radios may be more suitable.  In particular, 60 GHz radios may be an ideal way to aggregate capacity in a series of short hops.   If the picocells are mounted on streetlights, for example, the LOS links may “zigzag” down the street to a central hub, where fiber is available.

The explosive growth of small cells coupled with the performance advantages and cost-effectiveness of wireless backhaul will ignite the mobile backhaul market.  Mobile Experts forecast that shipments of both NLOS and mm-wave backhaul equipment will exceed 1.8 million units in 2016, representing more than $1.5 billion annual revenue.

Despite this, wireless backhaul faces many challenges.  One not often discussed is the sophisticated coordination required by future picocells.  For example, a network can triple its capacity (and achieve as much as 12x data rate for users at the cell edge) through the use of Coordinated MultiPoint (CoMP) and Interference Rejection Combining (IRC) approaches.    These techniques require low-latency backhaul, as well as very high throughput levels so that a central bank of baseband processors may combine signals and reject interference.    These small cells will likely rely on fiber.  As fiber increasingly reaches the macro cells and becomes available at the street installations, the number of small cell sites services by wireless backhaul will drop.


Source:  Mobile Experts Backhaul for Small Cells Forecast

Overall, small cells are exciting because they will bring very high data rates to locations which are far from any cell tower.    Consumer broadband services have been a good way to start, but DSL and cable modems cannot provide the QoS necessary for happy subscribers.  Mobile operators will need several years to bring fiber to all possible small cell locations...but the industry does not have time to wait.    The tsunami of mobile data demand is on us.   The industry needs to embrace wireless backhaul techniques to stay ahead of the wave.

More Information
RF & Microwave Designline Blog on this, head here.
For more information on small cell and het-net report, head here.
For more information on the backhaul report, head here.

About the Author
Dr. Jonathan Wells is Principal Analyst at Mobile Experts.   He is author of a new report titled Backhaul for Small Cells, which includes five-year forecasts for femtocells, picocells, and backhaul unit shipments and expenditures, available at www.mobile-experts.net.


If you liked this article...

• Head to the RF and Microwave Designline homepage for the latest updates in RF and microwave.
• Sign up for the weekly RF and Microwave Designline Newsletter to be delivered to your mailbox with the latest highlights from the site.