revenue growth will depend largely on the maturity of the
wireless market in an area. As he summed up the situation,
“Where they’ve substantially built out, that revenue goes down,
and where they’re still building, revenues will go up.” l
Masha Zager is a freelance writer. Contact her at mashazager@
Network in Kansas and Spirit Communications in the
Carolinas and Georgia, the RFPs are usually funneled
through those networks, which alert their member telcos
to nearby backhaul opportunities. The middle-mile networks handle the contracting process and often the ser-vice-level management during the contract term. Rural
telcos that do not belong to such networks are unlikely to
win any new backhaul bids, several telco managers said.
Finally, backhaul revenues are eroding for
reasons that have little to do with carrier decisions but simply reflect network evolution. A
prime example is the shift from time-division
multiplexing to packet-based technologies. As
DS-1 and DS- 3 circuits are replaced by Ethernet,
a less expensive technology, bandwidth prices are
falling dramatically. This price decrease largely
offsets the increase in bandwidth capacity.
Further, as networks are built out, wireless
data doesn’t need to be backhauled quite so far
anymore. “Points of presence (POPs) for mobile
networks have gotten a whole lot closer,”
Cramer said. “If the POPs for circuits are within
our switch, we lose half the backhaul opportunity because we’re providing only local loops
The Net Result
Given these countervailing forces, what is the
future for wireless backhaul revenue? The
answer will differ for each telco. Cramer is pessimistic, saying the erosion of backhaul revenue has already begun and will continue. He
sees this shift as part of a larger threat to telco
viability caused by both policy changes and
economic realities, and he advises telcos to
proactively seek efficiencies of scale through
mergers and collaboration.
McGuire is optimistic, trusting that the
growth in demand for wireless data will create
new opportunities for backhaul revenues,
though most of the opportunities for ETC are
outside its traditional service area. “I’m very
bullish on the future of backhaul as it pertains
to our business,” he said.
Todd expects Nex-Tech’s backhaul revenue
to hold steady, with little or no growth, but
believes the revenue stream should be stable
enough to help compensate for any decline in
Bulawa, who similarly foresees little or no
growth in BEK’s area, offered an explanation for
the disparity among these forecasts: Backhaul
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“Points of presence (POPs) for mobile networks have gotten a whole lot
closer. If the POPs for circuits are within our switch, we lose half the backhaul
opportunity because we’re providing only local loops and not transport.”
CEO, Wilkes Communications