Dark fiber, small cells represent the next stage of the wireless backhaul land grab

Sean Buckley, FierceTelecom

With much of the large-scale wireless backhaul networks built out to accommodate the growing 4G LTE service base, the question is: What's the next frontier for wholesale providers?

While all wholesale providers will continue to build out to more towers according to their current and near-term plans and Ethernet capacity for existing customers, many are seeing potential in the emerging small cell and dark fiber segments.

These issues will be addressed during the General Session: Wireless Backhaul panel, which I am moderating on Tuesday at 10:30 a.m. during the COMPTEL PLUS Fall 2014 Convention and EXPO in Dallas.

Our panel includes speakers representing three elements of the backhaul ecosystem, including an ILEC, a wireless backhaul specialist and an emerging competitor targeting both metro and rural markets, featuring FairPoint Communications, PEG Bandwidth and LSN. Joining me in this discussion will be Chris Alberding, VP of product marketing for FairPoint Communications; Jerry Cady, director of sales and marketing at LSN; and Greg Ortyl, senior VP of sales and marketing for PEG Bandwidth.

Despite all of the hype around small cells, industry analysts report that it is still an emerging market segment. According to Infonetics Research's recent Small Cell Equipment report, small cell revenues were only $771 million, much smaller than the $24 billion 2G/3G RAN market.

However, Richard Webb, directing analyst for mobile backhaul and small cells at Infonetics and co-author of the report, said that existing saturated macrocellular networks that are struggling to maintain a decent mobile broadband experience, as well as to add capacity to existing LTE networks, are "bringing some fuel to our forecast and, consequently, we expect the small cell market to grow 65% by year's end, when it will reach $1.3 billion."

This could be potentially good news for wholesale carriers that are looking to sell their Ethernet and fiber service wares to wireless operators deploying small cells.

One wholesale provider that is finding success in the small cell backhaul market is Tower Cloud. In September, the service provider announced that it was named as Verizon Wireless' (NYSE: VZ) backhaul partner for its 4G LTE small cell deployment in Atlanta's Centennial Olympic Park to handle over 5,500 simultaneous users. For that project, Tower Cloud built dark fiber into the park and to each of the 22 small cell nodes.

In tandem with small cell deployments, there has been a call by Verizon Wireless and other wireless operators for dark fiber solutions. Dark fiber allows a wireless operator to maintain complete control over their service experience, meaning if they want to increase capacity they can do it on their own timeline.

Service providers continue to remain divided on the dark fiber concept. Competitive providers like Wilcon and Tower Cloud remain happy to provide such solutions, while incumbent telcos like CenturyLink and Frontier are steadfastly holding to the idea of offering only managed Ethernet and optical wavelength services.  

Jon Deluca, president of Wilcon, which recently completed a major network upgrade in El Segundo, Calif., said that it continues to see interest in small cells and dark fiber requests from wireless operators and even large enterprises.

"We're big believers in dark fiber and it's a core product for us," Deluca said. "We see the market trending where high-end enterprise customers want greater security, want greater control over their network in terms of bandwidth increments and want to manage traffic flows as they see fit and dark fiber provides all of that."

But as service providers bring fiber to more cell sites, some of them are leveraging their existing fiber networks to deliver business services.

PEG Bandwidth, which was initially established as a wireless backhaul specialist, has made such a move over the past year by acquiring InLine last August, for example. More recently, PEG Bandwidth launched its PEGWave product to deepen its presence in rural markets, while Tower Cloud introduced its line of Ethernet Private Line services for enterprise customers.

Despite finding other revenue purposes for their wholesale and fiber networks, service providers like Lumos Networks are still hot on the wireless backhaul buildout trail. The service provider announced in September that it completed buildout of its Project Ark fiber-to-the-cell (FTTC) network initiative and is testing with one wireless customer. Looking forward, it expects to meet its target for installing 825 unique FTTC sites by the end of 2014.   

While it's clear that the wireless backhaul land grab may have calmed over the past year, the ongoing rollout of 4G LTE and the eventual 5G trend will keep wholesale providers busy for a long time to come.--Sean