Fiber to the Tower - Top wireline technologies in 2013


What is it? Wireless backhaul may not be as sexy as Apple's iPhone 5 or the latest Android app, but without a backbone network to properly support all of the traffic customers will suffer from a poor quality of experience (QoE).

In a typical deployment scenario, the wholesale wireline operator or the wireline parent of the wireless operator will extend their fiber facilities to each cell tower.

With data becoming a bigger part of the wireless traffic mix, they will require a Fiber to the Tower (FTTT) connection coupled with Ethernet-based connectivity to support their current and future traffic growth.

A new report commissioned by Tellabs (Nasdaq: TLAB) in partnership with Strategy Analytics said that wireless operators in the United States are facing a funding gap of about $650 million. However, the ongoing growth of mobile data will make any underfunding of backhaul that much more acute in the years ahead.

Why is it important?
As wireless operators, even those that have wireline networks like AT&T (NYSE: T) and Verizon (NYSE: VZ), expand their 3G and 4G LTE footprints outside of their traditional territories, they are working with a host of independent ILECs, cable operators and fiber-centric providers like Level 3 Communications.

Case in point is Verizon Wireless.

When the operator announced its 4G LTE deployment in 25 markets in March 2010, it employed wireless backhaul services from eight service providers, including CenturyLink (NYSE: CTL) and various competitive providers like Tower Cloud and USCarrier, now Zayo. Later in 2011, the operator reiterated its need for Ethernet and fiber-based backhaul when it announced it would bring LTE to an additional 59 markets.

The desire for alternative backhaul sources spells opportunity for wireline operators, especially those that don't have a wireless business and are seeing their traditional PSTN revenues shrink every quarter.