LightCounting Market Research' s report finds that mobile fronthaul networks will use over 14 million optical transceivers in 2014, resulting in a market valued at US $530 million. This is roughly the size to the FTTX market. However, unlike FTTX, sales of fronthaul transceivers will nearly double in the next five years, to exceed $900 million. A Q&A with LightCounting's principal analyst, John Lively.
Q. What is mobile fronthaul?
There is a simple explanation for mobile front-haul but that belies how complicated it is.
The equipment manufacturers got together about 10 years ago and came up with the idea to separate the functionality within a base station. The idea is that if you separate the functionality into two parts, you can move some of it to the tower and thereby reduce the equipment, power and space needed in the hut below. That is the distributed base station.
So instead of a large chassis base station, the current equipment is in two: a baseband unit or BBU which is a smaller rack-mounted unit, and the remote radio unit (RRU) or sometimes the remote radio head, mounted at the top of the tower, next to the antennas. The link between the two units is defined as fronthaul.
Q. What role does optics have in mobile fronthaul?
In the old monolithic base station, the connection between the two parts was an inch or two of copper. Once you have half the equipment up on the tower, obviously a few inches of copper is not going to suffice.
They found that copper is a poor choice even if the BBU is at the bottom of the tower. Because the signal between the two is a radio frequency analogue one, the signal is not compressed and so has a fairly high bandwidth.
One statistic I saw is that if you use copper cable instead of fibre, the difference between the two just in terms of weight is 13x. And there are things to consider like the wind load and ice load on these towers. So you want small diameter, lightweight cables. So even if there were no considerations of distance, there are basic physical factors that favour fibre for this link. That is the genesis of fronthaul.
But then people realised: We have a fibre connection, we can move the BBU; now we can go tens of kilometers if we want to. Operators can then consider aggregating BBUs in central locations that serve multiple radio macrocells. This is called centralised RAN.
Centralised RAN reduces cost simply by saving real-estate, space and power. With the right equipment, you can also allocate processing capacity dynamically among multiple cells and realise greater efficiencies.
So there are layers of benefits to fronthaul. It starts with simple things like weight and the inability to shed ice, getting down to annual operating costs and the investment needed in future wireless capacity. Fronthaul is a concept with much to offer.
Q. What is driving mobile fronthaul adoption?
What has brought fronthaul to the fore has been the global deployment of LTE. Fronthaul is not LTE-specific; distributed base station equipment has been available for HSPA and other 3G equipment. But in the last 3-4 years, we have had a massive upgrade in global infrastructure with many operators installing LTE. It is that that has driven the growth in fronthaul, taking it from a niche to become a mainstream part of the network.
Q. What are the approaches for mobile fronthaul?
The fronthaul that we have heard about from component vendors is simple point-to-point grey optics links. But let me start by defining CPRI. As part of the development of distributed base stations, a bunch of equipment vendors defined a way the signals would be transmitted between the BBU and the RRU, and it is called the Common Public Radio Interface or CPRI. As part of the specification, they define minimum requirements from the optical links, and they go so far as to say that these can be met with existing optics including several Fibre Channel devices.
As part of LightCounting's vendor surveys, we know that the predominant mode of implementation of fronthaul today is grey optics. That paints one picture: fronthaul is simple point-to-point grey optics. Some of the largest deployments recently have been of that mode, with China Mobile being the flagship example.
However, grey optics is not the only scheme, and some mobile operators have opted to do it differently.
A competing scheme is simple wavelength-division multiplexing (WDM) - a coarse WDM multi-channel coloured optical system. It is obviously simpler than long-haul: not 80 channels of closely spaced lambdas but systems more like first-generation WDM long-haul of 10 or 15 years ago, using 16 channels.
At first glance, it appears that the WDM approach is a next-generation scheme. But that is not the case; it has been deployed. South Korea's SK Telecom has used a WDM fronthaul solution when building their LTE network.
Q. Is it clear what operators prefer?
Both schemes have pros and cons. If there is a scarcity of fibre, you are leasing fibre from a third party for example, every additional fibre you use costs money. Or you have to deploy new fibre which is super expensive. Then a WDM solution looks attractive.
Another benefit, which is interesting, is that if you are a third-party provider of fronthaul, such as a tower company or a cable operator that wants to provide fronthaul just as it provides mobile backhaul, you need a demarcation point so that when there is a problem, you can say where your responsibility begins and ends.
There is no demarcation point with point-to-point links, it is just fibre running directly from operator equipment from Point A to Point B. With WDM systems, you have a natural demarcation point: the add/ drop nodes where the signals get onto the WDM wavelengths.
For example, a tower may serve three operators. Each operator would then used short-reach grey optics from their RRU to connect to the add/ drop node that may be at the bottom or on the tower. Otherwise, when there is a fault, who is responsible? That is another advantage of the WDM scheme.
It is not unlike the situation with fibre-to-the-x: some places have fibre-to-the-home, some fibre-to-the-curb, some fibre-to-the basement. There are different scenarios having to do with density, operator environment or regulation that create different optimal solutions for each scenario. There is no one-size-fits-all.
Q. What optical modules are used for mobile fronthaul and how will this change over the next five years?
The RRHs typically require 3 or 6 Gigabit-per-second (Gbps). These are CPRI standard rates that are multiples of a basic base rate. In some cases when they are loaded up with multiple channels - daisy chaining the RRUs - you may require 10Gbps.
From our survey data, in 2013 the mix was 3 and 6Gbps devices primarily, and this year we saw a shift away from 3 and more towards 6 and 10 Gbps. We believe that was skewed to some degree by China Mobile, which in many areas is putting up high capacity LTE systems with multiple channels, unlike many other operators that are doing a LTE multi-phase deployment, lighting one channel to start with and adding capacity as needed.
There is also some demand for 12.5Gbps but nothing beyond that, and 12.5Gbps demand is rather small and unlikely to grow quickly. That is because the individual RRHs are not going up in capacity. Rather, the way that capacity keeps up with bandwidth is that the number of RRHs multiplies. The way fronthaul keeps up with bandwidth demand is mainly by the proliferation of links rather than increasing the speed of individual links.
Q. A market nearly doubling in five years, that is a healthy optical component segment?
The growth is good. But like everything in optical components, it is questionable whether vendors will find a way to make it profitable. The technology specifications are not particularly challenging, so you can expect competition to be pretty severe for this market.
We are already seeing several Chinese makers with low manufacturing costs establishing themselves among the top suppliers in this market.
Q. Besides market size, what were other findings of the report?
I do expect WDM systems to become more widespread over the next five years. It makes sense that not everyone will want to do the brute force method of a link for every RRU out there. This is probably the biggest area of uncertainty, too: to what extent will WDM catch up or displace first generation grey optics?
The other thing to think about is what happens next? LTE deployments are well underway, a bit more than half way done worldwide. And it will be at least 5 years before the next big cycle: people are only just starting to talk about 5G. What is fonthaul going to look like in a 5G system?
It is hard to answer that in any clarity because 5G systems are not yet defined. What I find fascinating is that they are talking about multi-service access networks instead of fixed and mobile broadband being separate.
With WDM-PON and other advanced access networks, there is a growing belief that fronthaul could be carried over existing networks rather than having purpose-built fronthaul and backhaul networks. Fronthaul may thus go away and just be a service that tags onto some other networking equipment in the 5-10 year timeframe.
Q. Did any of the findings surprise you?
One is the fact that WDM is being deployed today.
Another is the size of the market: the component revenues are as big as FTTx. If you think about it, it makes sense: they are both serving consumers and are similar types of applications in terms of what they are doing: one is fixed broadband and one is mobile broadband.
Q. What are the developments to watch in the next few years regarding mobile fronthaul?
The next five years, the key thing to watch is the adoption of WDM in lieu of point-to-point grey optics. Beyond that, for the next generation, what fronthaul will be needed in 5G networks?