Packet-Optical Backhaul Revenues to Hit $1.5 Billion by 2014, New Report Finds

NEW YORK, May 20 /PRNewswire/ -- As mobile service providers roll out advanced 3G and 4G broadband technologies, mobile backhaul networks must evolve beyond today's multiservice Sonet/SDH-based technologies to accommodate packet capabilities, and packet-optical transport systems (P-OTS) will play a major role in these applications, according to a major new report from Heavy Reading (www.heavyreading.com), the research division of Light Reading (www.lightreading.com).

The Future of Packet-Optical Transport for Mobile Backhaul focuses specifically on the role of P-OTS in mobile backhaul applications. This relatively new class of equipment combines traditional Sonet/SDH functionality with high-capacity Ethernet switching and WDM transport to provide scaleability for network traffic growth while bridging the gap between TDM networks and Ethernet/IP networks. The report explores the key packet-optical transport equipment trends in mobile backhaul, highlighting both the opportunities for P-OTS and the challenges faced – particularly the rising competitive threat from carrier-class Layer 2/3 switching equipment.

This report provides five-year worldwide forecasts for P-OTS in mobile backhaul, broken out by access, aggregation, and metro core segments. It also examines the mobile backhaul plans of three leading network operators and profiles 14 leading suppliers of optical backhaul equipment.

For a list of technology suppliers analyzed in this report, please see:

http://img.lightreading.com/heavyreading/pdf/hr20100519_companies.pdf  

"Backhaul for mobile broadband is clearly the next big thing for optical suppliers in 2010, replacing the buzz provided by telco video over the past few years," says Sterling Perrin, Senior Analyst with Heavy Reading and author of the report. "Operators understand that 2G-era backhaul networks that rely on PDH, ATM, and Sonet/SDH cannot handle the capacity and scale for the future. They also understand that next-generation backhaul networks must be built with packet-centric transport and switching technologies, including Ethernet and MPLS."

Heavy Reading views P-OTS equipment as a viable option for operators building these new packet-centric backhaul networks. "P-OTS equipment presents a strong value proposition for mobile backhaul providers that, for some time to come, must accommodate both legacy TDM backhaul traffic and new Ethernet backhaul traffic. P-OTS equipment holds a strong advantage over Layer 2/3 switches – including carrier Ethernet switch/routers (CESRs) and carrier Ethernet access platforms (CEAPs) – in being able to transport TDM traffic as TDM."

Key findings of The Future of Packet-Optical Transport for Mobile Backhaul include the following:

Worldwide revenue from P-OTS for mobile backhaul will increase from an estimated $263 million in 2009 to $1.5 billion in 2014, representing a 40.8 percent CAGR over that span. Asia/Pacific is (and will remain) the largest revenue opportunity for P-OTS backhaul, accounting for 48 percent of worldwide revenue in 2014. Europe is (and will remain) the second largest contributor, though its share will decline to 27 percent by 2014. The rest of the world will grow the fastest and is set to surpass North America by 2014.

Multiservice Sonet/SDH equipment has had a good run in mobile backhaul applications, but we believe that run is coming to an end as early as this year. The MSPP has been the workhorse of 2G and early 3G backhaul networks, but network operators believe packet-based equipment will be needed to support the demands of mobile broadband moving forward. Although MSPPs will continue to support existing 2G/3G networks for years to come, new networks will require packet efficiency and scaleability that MSPPs cannot provide.

The packet side of P-OTS must evolve in line with CESRs and CEAPs to remain relevant for backhaul applications. Capacity is one aspect: The packet switching capacities of P-OTS must match those of CESRs and CEAPs, or they will not make the cut. Besides capacity, key Ethernet features must also be present, including ITU Synchronous Ethernet and IEEE 1588v2 support for timing and synchronization.

We see a near- to mid-term opportunity for P-OTS equipment deployed at cell sites for mobile backhaul. Vendors including Alcatel-Lucent, Ericsson, Fujitsu, and Huawei are building customer-premises versions of their P-OTS products to sit at cell sites and collect traffic from 2G, 3G, and 4G networks. We see a near-term boom in these types of products but expect demand to taper off as packet timing and synchronization standards mature. We expect competition between access P-OTS and CEAPs at the cell tower to increase from year to year.

The Future of Packet-Optical Transport for Mobile Backhaul is essential reading for a wide range of industry participants, including the following:

• Telecom service providers: How will the expected growth of mobile data traffic impact your network and business model going forward? What technology options are available to help evolve your mobile backhaul network to the new, packet-centric paradigm? What challenges can you expect to encounter when implementing P-OTS equipment in your network? Which technology suppliers are in the best position to help you prepare for your future backhaul needs?
• Telecom equipment vendors: How do your products and solutions stack up against those of your competitors in the P-OTS equipment arena? Is your current and anticipated product portfolio in line with service providers' needs in dealing with the growth of mobile backhaul traffic? What options are available for addressing the challenges of timing and synchronization in packet-based networks? Which technologies are service providers most interested in for managing their future backhaul networks?
• Investors: How is the global packet backhaul market expected to grow over the next five years? Which technology providers are likely to emerge as leading suppliers of packet-optical backhaul solutions? How is P-OTS equipment positioned to compete with CEAP, CESR, and PON equipment in the packet backhaul over fiber segment? How will new approaches to mobile backhaul technology influence winners and losers in this growing marketplace?

The Future of Packet-Optical Transport for Mobile Backhaul costs $3,995 and is published in PDF format. The price includes an enterprise license covering all of the employees at the purchaser's company.

About Heavy Reading

Heavy Reading is an independent market research organization offering quantitative analysis of telecom technology to service providers, vendors, and investors. Its mandate is to provide the comprehensive competitive analysis needed today for the deployment of profitable networks based on next-generation hardware and software.

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SOURCE Heavy Reading