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(By John C. Tanner – June 12, 2009) For some time, the mobile industry has known that the next wave of growth was going to come not just from emerging markets, but the rural areas beyond the reach of any telecom infrastructure or even the electrical grid. It’s not just a huge untapped market, it’s also a growing one, according to satellite market research firm NSR. It estimates that while urbanization in many key Asia-Pacific countries is growing, drawing rural denizens to the cities, the rate of population growth in rural areas is offsetting that to the point where the total rural population base in Asia will grow from 2.43 billion in 2007 to 2.68 billion by the end of 2017.
One of the many challenges in deploying cellular services to remote villages has been the backhaul link from the base station to the network. And for many year, satellite has been touted as an ideal solution, primarily because it covers a wide footprint and can connect thousands of base stations in one go. Just about every major satellite player offers cellular backhaul services in one form or another, and equipment vendors such as Gilat, Hughes, iDirect and others sell equipment to enable it on the ground.
NSR has projected that cellular backhaul revenues from equipment and transponder leases will grow from an estimated $227.1 million in 2007 to almost $573 million by 2017.
However, takeup of cellular satellite backhaul has overall been slow. Cellcos in sub-Saharan Africa have been the most enthusiastic, but in Asia, despite hundreds of thousands of unconnected villages and a number of satellite operators willing to provide the backhaul link, cellcos have been approaching satellite-based cellular backhaul with caution.
By most accounts, that’s largely to do with the tendencies of cellcos to focus on dense urban markets first before stretching out to the rural areas. The reason for that is that, regardless of backhaul technique, rural cellular has typically been a problem of too much equipment cost for too little return. And that was just for the base station. Satellite equipment and bandwidth, while cheaper than rolling out fiber or microwave, were also expensive.
But that’s changing. With many urban markets now sufficiently covered, many cellcos are prepared to focus on rural coverage – especially since mobile equipment vendors have spent the last couple of years designing base stations for rural deployments with a heavy focus on cost-effectiveness and alternate power. That leaves the backhaul – the most expensive opex cost of any mobile network – and satellite players are getting attention again. In the first half of 2009 a number of vendors announced cellular satellite backhaul trials and contract wins in markets like Malaysia, Nepal, Inner Mongolia and Fiji.
Equipment costs lower
Part of the renewed interest in cellular satellite backhaul can be chalked up to maturity, says Doron Elinav, marketing VP of Gilat.
“It’s really mainstream now compared to five years ago when it was really a new technology,” Elinav says. “Now the market is maturing. It’s also growing. Five years ago, it was mostly used for remote towns with relatively fixed links, now we’re looking at the next billion users, who are in even more remote areas.”
Another factor, says Mike Fitzgerald, CEO of GSM/VSAT software provider Altobridge, is that mobile operators tended to see VSAT as a competitor for remote enterprises, and decided they were better off focusing on their urban buildouts and leave the rural connectivity to the VSAT players.
“But now GSM operators look at a VSAT coverage map where they’ve already deployed, and the synergies become much more obvious,” he says. “We describe the VSAT as a transmission line with an existing power source and site location. When you have those three things, life becomes easier for the GSM operator, which only has to put in a pico and combine them together.”
Also, he adds, the cost of VSAT equipment has come down sharply in the last few years, so that cellcos have the option of installing their own VSAT along with the base station. “So either way, we’ve reached the point where everything’s ready to accelerate.”
It helps as well that rural base station solutions are now available as pico cells rather than macro-cells covering huge areas – not ideal for covering areas with populations above 5,000, but ideal for a small village of 500 or less.
“A growing trend we’re seeing is pico base stations with one or two TRXs that can handle less than 20 calls simultaneously,” says Elinav. “That means an order of magnitude less in the cost of the solution. If you think of where the next billion subscribers will come from in the next few years, it will be from those types of deployments. We’re seeing requests for more of these types of deployments at tens of sites at a time.”
Bandwidth efficiencies
The level of integration has also gone up, Elinav says, which makes satellite backhaul solutions easier and less costly to install.
It’s not just the cost of the equipment, but also improvements in bandwidth efficiency that make cellular satellite backhaul potentially more attractive.
For example, RAD Data Communications says that optimizing GSM Abis traffic (i.e. the traffic between the base station and the base station controller) could yield savings ranging from 30% to 70% of backhaul costs. Toby Korall, senior product line manager at RAD Data, says that the company’s new gateway trunking solution, can compress 16 E1s over a single E1 line or IP uplink, “so the savings could jump as high as 94%.”
Mike Fitzgerald says Altobridge has taken things even further with his company’s “split architecture” for GSM/VSAT base station deployments, which allows the satellite link to be used on an on-demand basis and gives base stations the intelligence to identify local-to-local calls – and switching them locally.
“That’s a key element because 70% to 80% of the calls on that base station are being made to others in that community,” he says. “You don’t need to use the satellite link for those calls, but in the past, there was no other way. If you have a thousand sites, an operator isn’t going to deploy a softswitch at every one of them because it’d be a nightmare to manage.”
Keeping as much unnecessary traffic off the satellite link as possible adds up to a lot of savings, he adds. “You might only be saving about 5 kbps of bandwidth, but if you look at a market like Indonesia where you have 10,000 remote villages, that bandwidth adds up, and someone has to pay for that.
So with our solution, you’re looking at an overhead of zero, which makes a USO-type site quite viable.”
Rural base stations combined with VSATs can also reduce power consumption by using a VSAT power-saving feature in which the power amplifier (PA) is turned off at night. Cellcos are typically hesitant to switch off towers at night in case someone needs to make an emergency call. But VSAT PAs can be triggered back on by someone picking up a handset receiver, says Fitzgerald.
“By having the VSAT site off at night, 40% to 50% of the battery backup requirements can be removed from that site,” he says. “You can manage both sides of the link and wake up the PA on the VSAT side. So you have GSM and VSAT working together with minimal power at night, rather than keeping them both running 24 hours a day.”
The bandwidth efficiencies also translate into lower costs for the actual space link, which has also been a barrier to cellular satellite backhaul in the past. “There’s also more competition among VSAT players, so that’s pushing the price down as well,” he says.
What all this adds up to, says Fitzgerald, is a cost per subscriber that’s “incredibly low – maybe a couple of dollars per user, whereas before it was usually greater than the ARPU.”
As for ARPUs, in February Altobridge released the results of two case studies in which Malaysia’s Maxis Communications and Mongolia’s Mobicom spent four months each trialing a managed BTS service in locations so remote that the nearest town was eight hours away. According to results released by Altobridge in February, one site serving over 440 remote-enterprise subscribers generated $25.86 in ARPU a month. Another site served 50 subscribers with ARPUs of $19.60 a month.