Tier 2 telcos hunt for new fortunes in wireless backhaul segment

Sean Buckley, FierceTelecomWholesale wireless backhaul services have become a growing revenue source for Tier 2 telcos, a number of which don't have a wireless operation and have spent much of their lives selling voice services.

In our new feature, Frontier, FairPoint, others find new wholesale life with wireless backhaul, we look at how the top seven Tier 2 telcos are attacking the wireless backhaul opportunity.

The timing to wire cell towers with fiber and Ethernet services comes as the largest wireless operators, including Verizon (NYSE: VZ) and Sprint (NYSE: S), are forecasting continued 4G LTE service growth.

Verizon Wireless said its LTE network is "substantially complete" with coverage in more than 500 markets and 298 million POPs nationwide, and that LTE traffic will grow six to seven times over the next two to three years. Meanwhile, Sprint, which is being purchased by Japan's Softbank, will receive a $16 billion cash infusion from its new parent to build out LTE base stations.

No less aggressive are T-Mobile and US Cellular. Outside of the traditional large markets they serve, these two providers are have been awarded grants from the FCC's Mobility Fund Phase I fund, which is designed to support the build out of 3G and 4G networks in rural markets.

Future wireless backhaul growth opportunities for Tier 2 players will center on three areas: upgrading existing sites with more capacity, serving multiple tenants, and small cells.

FairPoint Communications (Nasdaq: FRP), for instance, which is extending fiber and Ethernet services to over 1,300 towers in its New England footprint, is building its backhaul business to accommodate multiple tenants and is seeing interest for small cell backhaul in both secondary and higher density markets.  

And while the Tier 2 telcos face the typical challenges in proving out the business case for building out fiber to each tower, it's proving to be a new revenue source and driving other efficiencies for the other parts of their wireline networks.

Take a look at our new report,  Frontier, FairPoint, other Tier 2 telcos find new wholesale life with wireless backhaul.--Sean

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