As wireless operators expand their 4G LTE rollouts into secondary and tertiary markets, where they tend to have little, if any, wireline facilities, they have turned to a host of independent telcos for wireless backhaul services.
Take Verizon Wireless (NYSE: VZ). Nicola Palmer, chief network officer, said that its LTE network is "substantially complete" with coverage in more than 500 markets and 298 million POPs nationwide. It anticipates that LTE traffic will grow six to seven times in the next few years.
These buildouts have created a new wholesale service opportunity for Tier 2 and Tier 3 telcos, which are happy to provide the same fiber and Ethernet-based backhaul services that are typically only available in larger Tier 1 cities.
Like the top four wireline telcos, the differences between members of this segment vary widely in terms of size and focus.
The largest Tier 2 telcos, Frontier (Nasdaq: FTR) and FairPoint (Nasdaq: FRP), have launched aggressive wireless backhaul network expansions that span multiple states.
FairPoint announced it would bring fiber and Ethernet services to about 1,800 towers in its New England footprint, while simultaneously expanding its retail and wholesale Ethernet capabilities into other areas including Boston.
Likewise, Frontier provides backhaul services in the 27 states it serves. With the integration of the Verizon wireline assets it purchased in 2010 completed, the telco last year began expanding its backhaul capabilities to support 100 Mbps and future demands for 500 Mbps.
Then, there are smaller telcos such as Shenandoah Telecommunications (Nasdaq: SHEN) and Hawaiian Telcom (Nasdaq: HCOM). Shentel mainly provides backhaul to its own wireless network and other tower companies over its fiber network in Virginia and West Virginia, while Hawaiian Telcom provides services on the Hawaiian Islands.
In the second installment of our four-part FTTT series, we examine how the top seven independent ILECs are tackling the wireless backhaul opportunity and the unique challenges they face.
Also, check out the first report in our wireless backhaul series: AT&T, Verizon, others hone their wireless backhaul skills.