Mobile industry faces $9.2 billion backhaul-funding shortfall: Strategy Analytics

The mobile telecoms industry is facing a $9.2 billion shortfall in backhaul investments as operators continue to make access-network improvements while neglecting the other crucial part of their infrastructure.

Such is the finding of Strategy Analytics in a new report commissioned by Tellabs, which sells backhaul equipment to operators.

The market-research company says that operators will face a new “mobile capacity crunch” by 2017 as a result of growing internet traffic.

The mobile telecoms industry is facing a $9.2 billion shortfall in backhaul investments as operators continue to make access-network improvements while neglecting the other crucial part of their infrastructure.

Such is the finding of Strategy Analytics in a new report commissioned by Tellabs, which sells backhaul equipment to operators.

The market-research company says that operators will face a new “mobile capacity crunch” by 2017 as a result of growing internet traffic.

Mobile data traffic has already increased by 13 times in the last five years and Strategy Analytics expects it to grow another five or six times by 2017.

The $9.2 investment shortfall will equate to a capacity shortfall of 16 petabytes, according to the company.

The Asia-Pacific region will account for by far the biggest share of the shortfall, at a whopping $5.3 billion and 9.4 petabytes in terms of capacity.

Backhaul investments in the Middle East and Africa will fall short of requirements by $1 billion, the same as in Western Europe.

In North America, the shortfall will be $650 million, or 1.2 petabytes, while the Caribbean, Latin America and Central and Eastern Europe will account for the remaining $1.2 billion, or 2.1 petabytes.

Strategy Analytics that backhaul was an afterthought when mobile data traffic first surged in the late 2000s, leading to widespread customer dissatisfaction.

Operators currently allocate an average of 17.5% of the total cost of operations to backhaul investment, but at this level investments cannot meet user demand, according to Strategy Analytics.

“As many as 40% of mobile users list poor network performance as a reason for leaving an operator,” said Sue Rudd, the director service provider analysis for Strategy Analytics. “At today’s backhaul investment levels, operators could create a significant backhaul capacity shortage. This shortfall could diminish quality of service and, in turn, increase customer churn. Operators need to rethink their backhaul investments as they deploy small cells and LTE capacity.”