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Mobile fronthaul transceiver market to grow - and change - over the next five years

Mobile fronthaul is a key ingredient of low-cost, high-capacity 4G mobile broadband networks, and is a relatively new and fast-growing application for optical transceivers. Next week LightCounting is publishing “Mobile Fronthaul Optics”, a new report and forecast describing this opportunity in detail. Our research shows that fronthaul networks will consume more than 14 million optical transceivers in 2014, with a market value of $530 million, roughly on par with the FTTX application segment. Unlike the FTTX segment, however, we believe sales of fronthaul transceivers will grow to more than $900 million over the next five years, driven by initial deployment and subsequent capacity upgrades of mobile 4G networks around the world. Transceiver suppliers will need to be nimble to capitalize on this opportunity, however, because fronthaul transceiver product mix will change considerably over the next five years. The share of fronthaul networks using WDM will grow, and transceiver product mix will shift to include more colored optics accordingly. At the same time, the mix will gradually shift to higher speeds, some exceeding 10 Gb/s. Vendors are also at risk of falling into a price war like the one that has sucked the profit out of the FTTX market, since there is little opportunity to differentiate on performance in this market.

Mobile fronthaul came about when several mobile RAN vendors created the Common Public Radio Interface standard (known as ‘CPRI’) in 2003 and then developed a new generation of base station radio equipment, called ‘distributed base stations’, in which the old base station function is split into a base band unit (BBU) located in a secure vault or hut, and Remote Radio Units (RRUs), located atop cell towers next to the radio antenna panels. The communication link between the BBUs and the RRUs is called ‘fronthaul’, and optical fiber is the preferred medium, for cost and performance reasons.

BBU and RRU equipment has been deployed in some higher speed 3G networks, but the deployment of LTE networks starting in 2011 was a catalyst for more widespread adoption of distributed base station equipment and mobile fronthaul. Remaining initial 4G deployments, and upgrades of existing LTE networks via coordinated multipoint and carrier aggregation, will drive fronthaul growth for the next five years.

Despite the similarity in names, fronthaul is NOT simply an extension of the backhaul network. Because fronthaul networks carry cellular RF transmission data in CPRI format, fronthaul networks require lower latency and higher capacity than backhaul, and typically operate over shorter distances. Fundamentally different solutions are required, at the network equipment and component level.

The most common fronthaul solutions in use today are simple 2-fiber links using low cost Ethernet or Fibre Channel transceivers. Speeds range from 1 Gb/s to 10 Gb/s, with 3, 6, and 10 Gb/s being the most common today. Link distances range from several tens of meters to more than 10 kilometers, and both multimode and single mode devices are used. Since this solution is very fiber-rich, equipment vendors have developed alternative solutions based on different forms of WDM for fiber-scarce deployment areas. These systems serve multiple RRUs via different wavelengths on a single fiber or pair of fibers. SK Telecom deployed this type of system in conjunction with its LTE rollout starting in 2011.

LightCounting is offering its 60-page Mobile Fronthaul Optics report and the wireless transceiver forecast spreadsheet as a package, available November 25, 2014. The report covers current and future fronthaul architectures, service provider deployment strategies and trends, component requirements, products sold today, and products needed for future fronthaul systems are discussed. Leading vendors of fronthaul equipment and components are profiled and historical transceiver shipment data is included, along with a visual guide to mobile fronthaul networking equipment.

The forecast spreadsheet contains a five-year forecast of fronthaul transceiver shipments, prices, and revenues, broken down by five speeds, three reaches, and grey vs. colored optics, and in addition includes a backhaul transceiver forecast with similar detail.


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