How come seemingly every revenue prediction curve I see has one of two forms – the “scary” curve which I show above, or the “hockey stick” curve which is the opposite of this? There are options in-between, which in fact are probably more realistic, but people like to show extremes to make a point. I write this because earlier this week, I attended Light Reading’s Backhaul and Core Strategies for Mobile Operators Conference in New York. Telllabs put a chart like this up when talking about the mobile operators’ “profit crisis,” meaning that revenue/bit is declining faster than cost/bit. That may be true, but Heavy Reading also showed some charts indicating that some of the leading mobile operators have outperformed the Dow Jones in the past year. So it’s possible that at some point in the future the operators will hit a wall and underform (again), or it’s possible the operators are figuring out a few things with pricing, with their networks, etc.
My perspective is that the mobile operators are doing a decent job meeting the needs of their customer base. With no doubt that more and more data and video will be going on the networks (yes I could show the “opposite” curve to make this point but I will not this time since we all know it points up steeply to the right) and that that will put more and more of a strain on many areas of the network, including the backhaul networks.
Mobile backhaul is one area where the data and video transformation of the network has already had impacts. The mobile carriers, at least in the US, have and are continuing to move to Ethernet and Ethernet fiber in their backhaul networks, and that continued expansion will play a huge role in improving the networks. And moving to put quality of service into the networks is another example.
The conference was a good overview, including the requisite technical jargon. Tower Cloud gave an interesting presentation about mobile backhaul in rural regions, which is a growth area in this market.