Vodafone Says Affordable Backhaul is an Issue

May 27, 2014
By: Gary Kim

It appears backhaul strategy is becoming more significant as mobile service providers make the transition to faster networks. The ability to use the middle mile and backhaul assets owned by cable operators were among the reasons mobile service provider Vodafone (News - Alert) bought Ono and Kabel Deutschland in Germany, for example.

But Vodafone argues European Union regulators must do more to assure Vodafone and other new contestants that affordable backhaul is available. Specifically, Vodafone wants lower prices for optical backhaul facilities, and argues regulation might be the only way to assure such access.

Those issues should escalate, as wireless backhaul has been more prominent in European mobile operator backhaul strategy than is typical in North America. So, as demands for an order of magnitude more backhaul capacity grow, European mobile operators are going to have to consider shifting from wireless to optical fiber backhaul.

In North America, the switch is primarily from copper-based special access to optical Ethernet access, given the historic North American service provider preference for fixed network backhaul.

Nearly everywhere, competitors complain about incumbent telco advantages where it comes to ownership of backhaul and access facilities.

So “market power” tests will be relevant. Service providers without facilities will want access, at sort of low wholesale rates, to incumbent backhaul facilities, and incumbents just as certainly will resist.

Complicating matters, in some markets, is the growing availability of cable TV facilities that might be used, but not on a mandatory access basis. Typically, cable operators are happy to sell commercial retail access, but resist mandatory wholesale requirements.

But some might suggest that it is additional facilities-based supply which “solves” the backhaul problem, not wholesale policies, even if wholesale often is the only reasonable option in some regions.

Such calls for mandatory wholesale at reasonable prices are a never-ending part of the competitive telecommunications business, as new entrants frequently cannot afford to build their own facilities.

What is new is the salience of mobile backhaul access.




Edited by Maurice Nagle