ADTRAN Press Event, Day 2: The Wireless Backhaul Dilemma

At the ADTRAN Inc. (ADTN) press event this morning, product manager Kurt Raaflaub gave a sharp presentation on the company’s solutions for wireless backhaul, followed by a deep explanation by Vijay Lewis, principal network architect at backhaul provider FiberTower (FTWR). The main takeaway for me centered on the formidable challenges faced by mobile operators in keeping up with bandwidth demand over the next five years.

Briefly, the transition from 3G to Long-Term Evolution (LTE) or 4G wireless broadband is going to vastly increase not only bandwidth requirements but what Lewis called “intelligence at the base station.” There’s only one way to satisfy those requirements, and that’s Ethernet; but because Ethernet to cell sites is far from ubiquitous, the industry is a long way from being able to handle the looming explosion in demand. Verizon Wireless (VZ) is arguably the only major carrier that’s being proactive about this, but it’s clear that a year or two down the road the industry is looking at a bottleneck.

What are the holdups? Lewis displayed a slide on the reasons for delayed Ethernet deployments that included the need for base station upgrades, slow acceptance of technology from veteran carrier engineers, implementation hurdles, and the shortage of trained technicians. The main obstacle, though, is “extremely cheap T1s,” Lewis said, most of which come with five- to seven-year lease terms.

There’s a great irony here: the carriers, whose policies on outrageous early termination fees have incurred the scrutiny of the courts, are looking at stiff termination fees of their own to transition away from existing T1 backhaul links to Ethernet systems.

“Their first reaction is, ‘You know what, I’ll stick with a T1,’” remarked Lewis. “But you can’t solve this problem by throwing T1s at it.”

Based on what I’ve seen this morning, ADTRAN has thought through these challenges as well as any supplier, and has plans to offer a set of equipment and software that will offer the wireless carriers a cost-effective way out of their backhaul dilemma. But, as Lewis put it, “T1s are not going away for five years at least.” Unfortunately, that signals the difficult transition ahead.