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Expansion for Wireless Backhaul Networks

Anticipated growth with data-intensive mobile multimedia applications is creating demand for increased network investment. Worldwide revenues from backhaul leasing are expected to double over the next 30 months, according to a new market study from ABI Research.

The growth curve even accelerates after 2012, resulting in a fivefold revenue increase between 2009 and 2014.

According to ABI Research senior analyst Nadine Manjaro, the main driver is the effort by mobile operators to prepare for an upgrade to LTE 4G technology. "Operators might not deploy LTE immediately," she says, "but they know that before they do, they'll have to upgrade their backhaul capacity."

Lack of backhaul capacity is the primary bottleneck that can prevent a satisfactory user experience. "AT&T Mobility has found that one iPhone user typically generates as much data traffic as 30 basic feature phone users," notes Manjaro.

Wireless network traffic will dramatically increase as smartphone devices becomes the norm and laptop PC card usage increases. Another indicator is the growing capital expenditure on microwave backhaul, which will exceed $8.5 billion in 2009.

ABI believes that fixed-line operators such as BT, Embarq, AT&T, and Verizon Communications will develop new revenue streams by providing leased backhaul services.

Even the business models for backhaul are in flux. "We have observed a movement towards backhaul as a managed service," says Manjaro. "This enables mobile operators to focus on their core business, while guaranteeing a backhaul capacity matched to their changing traffic demands."

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