IHS Markit: 5G drives improvement in macrocell mobile backhaul market
Worldwide revenue for macrocell mobile backhaul equipment declined 1.4% percent from 2015 to 2016, which saw backhaul equipment revenue of $8.2 billion, writes Richard Webb, associate director, research and analysis, mobile backhaul and small cells, IHS Markit. However, backhaul preparation for 5G is anticipated to provide steady growth in the macrocell mobile backhaul equipment market. A cumulative $44 billion will be spent on macrocell backhaul gear from 2017 to 2021, he reports.
Webb notes that LTE deployments, outlying 3G network expansion, and backhaul enhancements for existing connections continue to drive demand, but equipment pricing pressures are tamping down revenue growth.
He writes that the 5G picture for backhaul is unclear, but in the long run, fiber will be needed close to cells due to the very high capacity spectrum required for high-capacity service delivery with low latency requirements. Consequently, he writes, “…there will always be backhaul, even if it is in a form that’s different from that of today, potentially incorporating fronthaul as 5G network evolution drives both distributed radio access network (RAN) and centralized RAN architectures.
He cites as examples, tier-1 mobile network operators (MNOs) such as Vodafone, China Unicom, and China Mobile who have long-term fiber-density strategies that will be used as fixed mobile convergence (FMC) solutions. Already the Chinese carriers have been deploying massive fiber to the home (FTTH) via passive optical network (PON), and their aggregation networks are planned for dual uses, serving both fixed access and wireless backhaul. Millimeter wave will also play a stronger role in both of these markets, he adds.
Webb writes that Ethernet access devices (EADs) and IP edge routers represented 46% of macrocell backhaul revenue in 2016, up 1% percent from the prior year. Revenue for EADs for macrocell backhaul is anticipated to decline slightly in the midterm due to a tail-off in LTE deployment and then bounce back to grow steadily through 2021 as 5G demand kicks in.
Microwave radio accounted for 39% of worldwide mobile backhaul equipment revenue in 2016, he notes. Revenue in this segment is expected to decline on a year-over-year basis for the next few years as a proportion of the overall mobile backhaul market as more fiber and wireline Ethernet IP edge routers and EADs come into play. However, the segment will gain new impetus toward 2021 when LTE-Advanced Pro and early-stage 5G backhaul demand starts to drive the market, pushing microwave revenue back to modest year-over-year growth.
Looking ahead, backhaul capacity upgrades for LTE-Advanced Pro in the midterm and backhaul preparation for 5G in the long term are anticipated to provide steady growth in the macrocell backhaul equipment market through 2021, when worldwide revenue is forecast to top $9 billion, he adds. These factors will result in an accumulation of nearly $44 billion in spending over the five-year period from 2017 to 2021.
The biannual IHS Markit macrocell mobile backhaul equipment report tracks equipment used to transport mobile traffic. The report provides worldwide and regional market share, market size, forecasts through 2021, analysis, and trends for macrocell mobile backhaul equipment, connections, and installed cell sites by technology.