Ups and downs in backhaul market

According to research firm IHS Markit, worldwide macrocell mobile backhaul equipment revenue was up by 5% in 2015 from 2014 but is expected to be nearly flat in 2016, declining just 1% year-over-year to US$8.3 billion.

The company said demand remains solid for LTE deployments, outlying 3G network expansion and backhaul enhancements for existing connections; however, “increasing pressure on equipment pricing continues to inhibit revenue growth”.

The researchers said long-term growth in the market will be driven by 5G upgrades and LTE-Advanced (LTE-A) expansion.

“We are now projecting global mobile backhaul equipment revenue to total $8.76 billion in 2020,” said Richard Webb, research director, mobile backhaul and small cells.

“This is a 3% increase from our April 2016 forecast, to reflect increased demand as 5G takes root. IP edge routers shipping to the mobile backhaul market will gain traction as operators prepare their networks for 5G expansion with backhaul capacity upgrades.”

For backhaul technologies, fibre has been “nibbling away at microwave’s share of revenue for a few years now”, said Webb, “and the slow shift to a fibre-biased market is evident through our forecast period (2015–2020)”.

Nevertheless, Webb said that microwave remains a significant part of the macrocell backhaul picture, and IHS Markit’s “early investigations into LTE-Advanced Pro and early 5G deployments suggest the continued demand for ever-increasing backhaul bandwidth will result in a boost for microwave — especially millimetre wave — that will contribute to revenue growth through the mid-to-long term”.

“The small cell backhaul opportunity plays a part in this, as we expect many small cells to be aggregated to a macrocell site, driving increased macro backhaul capacity,” added Webb.

The revenue share leaders in mobile backhaul gear in the first half of 2016 were Huawei, Ericsson, NEC, Nokia and Ceragon.

Image courtesy Ericsson.