Increase in backhaul supply expected to lower telco costs

Industry Canada's plan to make more spectrum available for backhaul services is expected to lower wireless carriers’ costs related to expanding their networks' footprints and capacities, industry insiders and experts said. Industry Minister Christian Paradis said at a conference in Ottawa Tuesday that the federal government will “soon” launch a consultation on opening up additional spectrum for backhaul services. Those services, which typically run over wireline cables and wireless transmissions, serve as the “middle mile” connections between a carriers’ core network and its “last mile” infrastructure that extend to customers' homes using cellular towers, wires, or antennas. Carly Suppa-Clark, a spokeswoman for Rogers Communications Inc. said in an emailed statement that there is a general industry need for additional backhaul spectrum. “Using backhaul spectrum allows Rogers to expand our network and services more quickly and economically than with fiber or leased lines,” Suppa-Clark said. “Additional backhaul spectrum is required for wider backhaul pipes to support mobile broadband (LTE) and for mid-range distance pipes between cell sites.” Simon Lockie, chief regulatory officer for new entrant carrier Wind Mobile, over which telco VimpelCom Ltd. plans to take ownership through a share conversion, said in an interview that building wireless backhaul infrastructure is typically cheaper than running backhaul over wireline cables. He said that cost should come down further if additional spectrum is made available for backhaul services. “Anything that you can do to increase supply and therefore drive down the price of backhaul is good,” he said. Lockie said rural areas of the country will see the most benefit from a rise in backhaul spectrum due to the higher costs of running wireline backhaul networks from remote towers. He said he believes additional backhaul spectrum could “speed up” carriers’ network deployments in rural areas. “Building out in any market, whether its rural or urban, is a function of deploying capital,” he said. “If it’s cheaper to build, then obviously the business case for building just got better.” During his speech Tuesday at a conference hosted by the International Institute of Communications, Paradis said more backhaul spectrum is needed to “help ensure that capacity keeps up with the exponential growth of broadband networks.” Telecom consultant Adrian Foster, a partner with McLean Foster and Co., said in an interview that the need for backhaul spectrum will increase as wireless carriers roll out fourth-generation LTE networks on 700 MHz spectrum in the years to come. The government plans to licence that spectrum in an auction in the first half of 2013. Foster said those LTE networks will be tasked with carrying “heaps of data” and that carriers will need more backhaul capacity to ensure that data reaches their core networks. “Traffic requirements are increasing dramatically. Access networks can handle it—they’re designed to handle it—but existing backhaul networks … that’s where the demand is also going to rise,” he said. Foster said there is a “general move” by regulators around the world to push wireless backhaul into less-used, higher spectrum bands, to improve spectral efficiency. He said those higher bands are incapable of carrying spectrum across long distances and are not ideal for rural backhaul services. “The higher the band, the shorter the propagation, so if you’re trying to implement rural broadband spectrum in the absence of fibre, it becomes a little more difficult,” Foster said. “Pushing into higher bands is not exactly cost effective.” Bruce Kirby, vice-president of strategy and business development at new entrant carrier Public Mobile, said it would be much easier for the government to find spectrum for backhaul services than for wireless delivery to end users because carriers would not need to wait for manufacturers to build antennas and chipsets for handheld devices to work on the frequencies. Kirby said Public Mobile, which uses a combination of microwave and wireline backhaul for its Toronto and Montreal service areas, has never had an issue securing backhaul spectrum. “I don’t think there’s a shortage of spectrum in that area,” he said. In a report released in June entitled “Study for Future Demand for Radio Spectrum in Canada 2011-2015,” Industry Canada said it identified spectrum available for backhaul in lower spectrum bands, including the 7975-8025 MHz and 3700-4200 MHz bands. The report said upper bands available for additional backhaul spectrum include the 12.7-13.2 GHz and 28 GHz bands. The report said the 11GHz, 14 GHz, 18 GHz and 23 GHz bands are most frequently used for backhaul now, and that the demand for backhaul spectrum is expected to increase “by a factor of about three” between 2011 and 2015. “Results suggest that the prime microwave backhaul bands (i.e. 11/14/18/23 GHz) bands will see an increase in their demand for spectrum over the period of 2010-15, as HSPA and LTE networks drive growth in cellular traffic, and as fixed networks increase their appetite for high-capacity microwave backhaul links,” the study said. Lockie said the impacts of an increase in backhaul capacity will be muted if new entrant carriers cannot get enough spectrum. “Our hope would be that, while these things continue, the government take a much broader look at the spectrum issues in this country and how to resolve them in a way that promotes and enables a level playing field and true cost efficiencies over the long term,” he said. Suppa-Clark said Rogers would like to see a “backhaul spectrum fee structure that will make the use of wider pipes more feasible, and will bring Canada more in-line with the fees charged in other countries.” Foster said this reflects Rogers' view that there is not enough competition in the backhaul service market and that imposing a fee structure could bring down backhaul costs. nkyonka@thewirereport.ca

Increase in backhaul supply expected to lower telco costs

News | 11/01/2012 9:10 pm EDT

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