August 31, 2006
ABI Report: Cable Operators Will Reap Revenues from Mobile Traffic Backhaul
By Patrick Barnard, Group Managing Editor, TMCnet
A recent study from ABI Research predicts that cable operators will reap revenue in excess of $1 billion from leasing out their networks for mobile traffic backhaul by 2011. This rapid and substantial change in the cable companies’ business formula will coincide with the development of their own wireless services, which will be bundled into “quadruple play” packages for their customers.
The trend will be significant because, as of present, cable operators are reporting revenues of only about $57.6 million from leasing their networks for wireless backhaul. But they have the core infrastructure in place to do this, so it only makes sense for them to maximize revenue which can be generated by leasing out their pipes. The increase to about $1 billion represents a 75 percent compound annual growth rate (CAGR) over the forecast period.
The report points out, however, that as cable companies begin deploying their own wireless services and sign on wireless customers, they will need to begin backhauling their own wireless traffic, therefore reducing the amount of network bandwidth they have to lease out.
The study finds that in the United States, most MSOs are likely to partner with Sprint (News - Alert), using Sprint’s base stations and other mobile infrastructure. This is good for Sprint … that is unless the cable companies start to steal away all of Sprint’s customers. Meanwhile, the other big wireless carriers, including Verizon (News - Alert) Wireless and Cingular (News - Alert), are no doubt preparing themselves for the new cable offensive in the wireless arena.
The study points out that when mobile operators enter into such agreements, they don’t operate quite the same way as MVNOs “because the cable operators will use their own resources for backhaul to save costs.”
“This slightly unusual business model works for the cable operators because they have available network capacity, and they feel the need to offer wireless services to compete effectively with the satellite and telco operators in the ‘bundled services’ arena,” said ABI Principal Analyst Michael Arden in a press release.
The study also finds that if the cable operators establish mobile services that engage with the emerging VoIP market, they will be able to differentiate themselves by providing converged services, perhaps offering customers a single-number home and mobile package. These converged services, and their rapid rollout, is what will help the MSOs increase, or at least maintain, their market share in the years to come.
The study, entitled “Wireless Backhaul: Bandwidth Explosion and Emerging Alternatives,” assesses the backhaul solutions on the market as well as the cost of running and leasing these services. It forms part of three ABI Research Services: Wireless Infrastructure, Mobile Operators and IP Networking.
For information, visit www.abiresearch.com.
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Patrick Barnard is Associate Editor for TMCnet and a columnist covering the telecom industry. To see more of his articles, please visit Patrick Barnard’s columnist page.
The trend will be significant because, as of present, cable operators are reporting revenues of only about $57.6 million from leasing their networks for wireless backhaul. But they have the core infrastructure in place to do this, so it only makes sense for them to maximize revenue which can be generated by leasing out their pipes. The increase to about $1 billion represents a 75 percent compound annual growth rate (CAGR) over the forecast period.
The report points out, however, that as cable companies begin deploying their own wireless services and sign on wireless customers, they will need to begin backhauling their own wireless traffic, therefore reducing the amount of network bandwidth they have to lease out.
The study finds that in the United States, most MSOs are likely to partner with Sprint (News - Alert), using Sprint’s base stations and other mobile infrastructure. This is good for Sprint … that is unless the cable companies start to steal away all of Sprint’s customers. Meanwhile, the other big wireless carriers, including Verizon (News - Alert) Wireless and Cingular (News - Alert), are no doubt preparing themselves for the new cable offensive in the wireless arena.
The study points out that when mobile operators enter into such agreements, they don’t operate quite the same way as MVNOs “because the cable operators will use their own resources for backhaul to save costs.”
“This slightly unusual business model works for the cable operators because they have available network capacity, and they feel the need to offer wireless services to compete effectively with the satellite and telco operators in the ‘bundled services’ arena,” said ABI Principal Analyst Michael Arden in a press release.
The study also finds that if the cable operators establish mobile services that engage with the emerging VoIP market, they will be able to differentiate themselves by providing converged services, perhaps offering customers a single-number home and mobile package. These converged services, and their rapid rollout, is what will help the MSOs increase, or at least maintain, their market share in the years to come.
The study, entitled “Wireless Backhaul: Bandwidth Explosion and Emerging Alternatives,” assesses the backhaul solutions on the market as well as the cost of running and leasing these services. It forms part of three ABI Research Services: Wireless Infrastructure, Mobile Operators and IP Networking.
For information, visit www.abiresearch.com.
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Patrick Barnard is Associate Editor for TMCnet and a columnist covering the telecom industry. To see more of his articles, please visit Patrick Barnard’s columnist page.
