Cable Operators' Revenues from Mobile Traffic Backhaul to Soar

Cable operators worldwide stand to earn revenues in excess of US$1 billion in 2011 from mobile traffic backhaul, according to a study from ABI Research. In contrast, 2006 revenues are forecast to be only US$57.6 million. The difference represents a 75% CAGR over the forecast period.

According to principal analyst, Michael Arden, cable operators' interest in the mobile market takes two forms: "On one hand, cable operators are considering the revenues to be gained from leasing their networks for mobile backhaul. On the other, they are getting involved as direct competitors in the mobile arena, and will brand their own mobile services."

In the United States, most MSOs seem likely to partner with Sprint - using Sprint's base stations and other mobile infrastructure. However, as the cable operators' own mobile brands gain traction, they will backhaul their own traffic.

In this scenario, the mobile operators do not quite play the role of MVNOs, because the cable operators will use their own resources for backhaul to save costs. But, Arden says, "This slightly unusual business model works for the cable operators because they have available network capacity, and they feel the need to offer wireless services to compete effectively with the satellite and telco operators in the 'bundled services' arena."

Further, if the cable operators establish mobile services that engage with the emerging VoIP market, they will be able to differentiate themselves by providing converged services, perhaps offering customers a single-number home and mobile package.

This trend does add competition to the market, which will not particularly please Verizon Wireless, Cingular, or most of the other mobile operators; but Sprint should be happy about this added source of income . . . unless the cable operators start to take away their own mobile customers."

Posted to the site on 1st September 2006