Forecasts for the wireless backhaul market in Asia remains strong, as demand in the region remains strong and new technology will help the market meet that demand.
An April release from ABI Research forecasts that despite a slow economy around the globe, revenues from backhaul leasing are expected to double by the end of 2012 and increase more than five times by the end of 2014,according to “Mobile Backhaul - Global Market Analysis and Forecast.” The main driver of the growth is the effort by mobile operators to prepare for an upgrade to Long Term Evolution (LTE) technologies, which will be needed to meet the bandwidth demands of smartphones, says ABI Research senior analyst Nadine Manjaro. “Operators might not deploy LTE immediately, but they know that before they do, they’ll have to upgrade their backhaul capacity,” she says.
A study released in July by NSR forecasts that the wireless backhaul market will generate $4.4 billion in revenue through 2018, according to “Wireless Backhaul via Satellite, 3rd Edition,” and new satellites will help the sector tap into that growth. The report concludes that, from an estimated $259.6 million in revenues for 2008, revenues for both equipment sales and transponder leases are expected to reach $544.5 million by 2018. The opportunities will be driven by the fulfillment of Universal Service Obligations (USO) and market dynamics in underserved areas given the attractive price and cost elements of high-throughput satellites, NSR says. “In the past, addressing rural demand has been left to government initiatives via USO legislation. With [high-throughput satellites], [capital expenditures] and [operating expenditures] considerations are beginning to make sense in terms of justifying [return on investment within select territories,” says Christopher Baugh, president of NSR and author of the report. Prohibitive space segment costs have limited development of underserved regions, but high-throughput satellites will help alleviate the problem. “Quite simply, [high-throughput satellites are] a game changer, for it not only lowers bandwidth costs, but it also enables the provisioning of premium data services that are essential in today’s wireless web,” says Baugh.
A separate NSR look says the Asia-Pacific region, driven by growth in China and India, says the region’s share of the global mobile market is expected to surpass 50 percent within the next two years. Rural implementations will be the next step in the wireless industry’s target market in the next decade, says Jose Del Rosario, senior analyst and regional director, Asia-Pacific, NSR, and the Asia-Pacific market can “be considered a potential goldmine for satellite backhaul services and equipment given the impetus to seriously tap thousands of rural villages representing hundreds of millions of wireless users.” Along with growth in the most populous countries, there are niche opportunities in countries such as the Philippines, Cambodia and others that favor players that develop satellite-based BTS solutions as well as provide space segment assets via C- and Ku-band transponders.
The one caution is that these rural markets will lead to steady, not explosive growth, as the main use of the capacity will be text messaging and SMS rather than high-capacity services that require more bandwidth, says Del Rosario. More importantly, given the potentially lucrative prospects presented by many rural markets, terrestrial wireless solutions are improving their technologies in order to tap into the market potential, and the satellite sector likely will fall prey to terrestrial technology competition in rural markets once rural opportunities begin to be fully realized. In order to maintain its value proposition in rural markets, satellite offerings need to improve on cost parameters. But if or when satellite solutions begin to be at par with their terrestrial counterparts, the advantages of reach, ubiquity and instant infrastructure may lead satellite platforms to become one of the first options in enabling wireless backhaul services in the region over the long term, he says.