Global Backhaul Investment Gap Could Increase Customer Churn

March 8, 2013

Tellabs has released findings from the Strategy Analytics report “Future Backhaul Requirements for Complex Mobile Networks” and an associated article “Closing the Backhaul Gap,” which indicates a serious global backhaul investment gap.

The report predicts that as global mobile data traffic grows by another five to six times over the next five years, operators will face a new mobile capacity crunch by 2017 unless they increase traditional backhaul investment levels to match the anticipated growth in radio access networks (RAN) capacity and user traffic.

The potential 16-petabyte shortfall in backhaul capacity represents a $9.2 billion global mobile backhaul funding gap, which could lead to customer churn since up to half of network performance problems for mobile operators may stem from backhaul network congestion. Mobile operators have an opportunity to differentiate themselves from competitors by investing in smart backhaul.

“As many as 40 percent of mobile users list poor network performance as a key reason for leaving an operator,” noted Phil Kendall, director wireless operator strategies, in a company statement. He continued to state that “for each $1 that operators invest above the 17.5 percent of total cost of operations that is spent today, operators could recapture up to $4 in revenue that would otherwise be lost.”

According to Sue Rudd, director, service provider analysis, backhaul solutions that are smarter and more cost-effective are needed to optimize the required investment and handle the traffic throughput for new RAN. “New smart backhaul systems must incorporate upper layer service awareness to guarantee customer quality of experience (QoE) support for LTE signaling, synchronization for packet Ethernet and Cloud RAN control. These requirements can only be delivered cost efficiently by new proactive intelligent network management, self-organizing networks (SON) and software-defined networks (SDN) that optimize backhaul connectivity and services while simplifying operations of these increasingly complex mesh networks,” Rudd stated in a company release.

The full report and model projections will be issued by Strategy Analytics in two parts this month.