Market Insight

RESEARCH NOTE - 5G and LTE-A to Drive Long-Term Growth in Macrocell Mobile Backhaul Market

November 03, 2016

Richard Webb Richard Webb Director – Research and Analysis, Service Provider Technology

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Following is information and insight from IHS Markit about our H2 2016 Macrocell Mobile Backhaul Equipment Biannual Market Tracker

Bottom Line

  • IHS Markit projects the global macrocell mobile backhaul equipment market to be almost flat in 2016 from the prior year
  • The slow shift toward fiber connections and the use of IP edge routers for mobile backhaul continues
  • Microwave will be a vital, long-term contributor to the backhaul market; millimeter wave is anticipated to be very relevant in the 5G era

Our Analysis

While worldwide macrocell mobile backhaul equipment revenue was up by 5 percent in 2015 from 2014, it is expected to be nearly flat in 2016, declining just 1 percent year-over-year, to $8.3 billion. Demand remains solid from Long Term Evolution (LTE) deployments, outlying 3G network expansion and backhaul enhancements for existing connections; however, increasing pressure on equipment pricing continues to inhibit revenue growth.

Long-term growth in the market will be driven by 5G upgrades and LTE-Advanced (LTE-A) expansion, and as a result IHS Markit has slightly adjusted upward its extended mobile backhaul forecast. We are now projecting global mobile backhaul equipment revenue to total $8.76 billion in 2020. This is a 3 percent increase from our April 2016 forecast, to reflect increased demand as 5G takes root. IP edge routers shipping to the mobile backhaul market will gain traction as operators prepare their networks for 5G expansion with backhaul capacity upgrades.

Looking at backhaul technologies, fiber has been nibbling away at microwave’s share of revenue for a few years now—and the slow shift to a fiber-biased market is evident through our forecast period (2015–2020).

Still, microwave radio remains a significant part of the macrocell backhaul picture, and our early investigations into LTE-Advanced Pro and early 5G deployments suggest the continued demand for ever-increasing backhaul bandwidth will result in a boost for microwave—especially millimeter wave—that will contribute to revenue growth through the mid-to-long term. The small cell backhaul opportunity plays a part in this, as we expect many small cells to be aggregated to a macrocell site, driving increased macro backhaul capacity.

The revenue market share leaders in mobile backhaul gear in the first half of 2016 (H1 2016) were Huawei, Ericsson, NEC, Nokia and Ceragon.

Mobile Backhaul Report Synopsis

The biannual IHS Markit mobile backhaul equipment report tracks equipment used to transport mobile traffic. The report provides worldwide and regional market share, market size, forecasts through 2020, analysis and trends for macrocell mobile backhaul equipment, connections and installed cell sites by technology.

Geography
Global
Research by Market
Mobile & Telecom
Category
Mobile Networks
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