Dear Executives

Telefocal is pleased to launch a series of Fibre Certification Programmes this month.

Along with this launch, we are pleased to enclose herewith an article on "Mobile Backhaul Challenges" contributed by our Vice President of Technology, David Rottmayer.

Also included in this issue of E-Newsletter is our upcoming courses at different regions for your perusal and participation. We would also appreciate your participation in Telefocal Online Survey to win a USD50 training voucher.

I will be happy to assist you in any queries you may have. Thank you, and we look forward to your active participation in our training programmes from March - June 2010.

Rifat Hossain (Mr)
Telecom Training Executive
Telefocal Asia Pte Ltd
M +65 9037 6621 / D +65 6848 7856
T +65 6848 7860 / F +65 6846 7920

MOBILE BACKHAUL CHALLENGES

Introduction
Leasing or self-building backhaul networks is a key strategic decision that mobile operators have to take - even more so in the mobile broadband era when EV-DO, HSPA, Mobile WiMAX and LTE promise to drive backhaul bandwidth demand at some urban cell sites up to 50Mbps. This article presents a brief overview of the mobile backhaul market, illustrating the unique challenges facing mobile operators and backhaul transport providers.

Mobile Backhaul
The mobile communications industry continues to grow at a significant pace. Industry sources report the following figures:

• The number of worldwide mobile subscribers hit 3.3 billion in 2007 and will grow to 5.2 billion by 2011ⁱ
• 2.9 million backhaul connections worldwide in 2006, growing to 4.8 million by 2009ⁱ
• Two of out every three towers already have more than one mobile operator on it
• Evolving backhaul requirements per cell site: 2 - 16 E1s in 2006; 2 - 8 E1s and 10 - 30 Mbps Ethernet in 2010
• Mobile operators pay incremental charges for 2x to 10x bandwidthⁱ
• Legacy backhaul networks are prohibitively expensive. In the US, mobile operators' transport costs are expected to skyrocket from US$2Billion in 2006 to US$16Billion in 2009
• Fierce competition is squeezing margins while new data and video applications such as Apple's iPhone & iPAD, Samsungs's Instinct, and LG's Voyager are driving demand for more bandwidth
• Growing dependence on mobile connectivity
• Exponential traffic growth in parallel to flat or low growth of average revenue per user (ARPU)
• The bandwidth increase will primarily be on Best Effort data user services and driven by ‘flat fee business models'ⁱⁱ
• More technologies need to be supported: 2G/GSM, 2G/CDMA, 3G/UMTS, 3G/EVDO, HSDPA, WiMAX, and LTE
• Evolution towards Ethernet and IP-based backhaul solutions

A closer look at these statistics reveals several warning signals. From 2006 to 2010, the number of mobile phone users is expected to grow by only 30%, while backhaul expenses will skyrocket due to an exponential increase in bandwidth required for video and multimedia applications as well as the need to support multiple technologies. Moreover, the average revenue per user (ARPU) is not likely to grow much, even for new data services, with competition for fixed line offerings keeping a lid on pricing. For example, AT&T charges US$10 a month more for the iPhone 3G's data plan than it did for the original 2G/EDGE iPhone's plan. On the other hand, a quick search on the Internet reveals that complaints are mounting about 3G data service speeds not meeting the promised performance and being inconsistent with inadequate coverage. If mobile operators are to reach profitability targets while providing untarnished performance, they must improve the efficiency of their networks by dropping the cost per Mbps of bandwidth. Because backhaul is one of the major contributors to the high costs of building out and running a mobile network - estimated to be about 25-30% of total operating expenses - it is critical that mobile carriers optimise their networks and or find lower costs and more scalable cell-site backhaul solutions. To ensure customer satisfaction, these optimised, scalable backhaul solutions must be in place as new wireless applications and multimedia services, such as music downloads, mobile video and gaming, are rolled out.

A detailed discussion on the technical and business challenges with focus on the key challenges faced by Mobile operators and transport providers can be found in the white paper [Mobile-Backhaul-Challenges].

It describes various strategies for commercially viable transport of multi-generation mobile technologies over fibre, fixed wireless and TDM/SDH infrastructures. In particular, the paper stresses the performance criteria that mobile operators expect if they are to trust their backhaul networks.

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