I noticed that both ATT and Verizon recently selected Ericsson and Alcatel-Lucent as wireless backhaul suppliers for the upcoming buildout of their new 4G/LTE networks in 2011. That is, AVNW was not on the supplier list.
This is disappointing. I do not know the contract terms, but I suspect Ericsson and Alcatel-Lucent offered vendor financing and were able to be competitive in other areas (e.g., pricing). AVNW does not (and should not) assume the risk of offering vendor financing... this is their traditional competitive weakness against such large equipment makers.
AVNW will do better as global credit markets heal and we can compete more on technology than on financing arrangements. As a pedestrian analogy: its like a car-buyer choosing to buy a car based on low-interest financing offers (rather than how well the car meets their family transport needs). AVNW products grow with the customers needs and offer a superior value proposition in the long-term, but ATT and Verizon have large debt loads at a time when credit is expensive... vendor financing enables them to conserve cash for other purposes (or to pay down that debt load) while continuing the much-needed build-out of their networks.
One area to test my beliefs might be in the AVNW go-stimulus program where financing is being provided by the US Government. I need to spend more time reviewing where we are in this program, but it seems to be an area where we could see substantial new contract wins in CY10 because we get to compete based solely on the superior technology and value of AVNW products... it might be that the distortions of vendor-financing are mostly removed from the buying decision.
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Separately, I've been wondering how much backhaul capacity is needed in a modern 4G cell site. Years ago, a single cell site was well-served by a single T1 line which offered 1.5 Mbps capacity... enough to support 24 simultaneous voice calls (at 64 Kbps per call).
But a modern mobile user wants to download large email attachments (PDFs, PPTs, etc), watch short YouTube videos, and generally "surf" the web. Increasingly, such users want to do this while listening to subscription-base music, radio talk shows, feature-length films, live sports, TV news, etc. This all requires a lot more bandwidth than a 64 Kbps voice call.
I'm not sure how much bandwidth a single modern mobile user will ultimately want, but I think its well over 10 Mbps right now... and I won't be surprised to see demand grow to 64 Mbps. Supporting 24 simultaneous users, each at 10 Mbps, requires 240 Mbps backhaul (equivalent 160 T1 lines); supporting 24 simultaneous users at 64 Mbps requires 1.5 Gbps (equivalent to 1000 T1 lines).
Fortunately, a single spectrum-efficient wireless link from an ANVW Eclipse radio can provide up to a 2.0 Gbps IP backhaul today. Moreover, the network designer doesn't need to buy and pay for all that capacity up front. They can buy and install only the capacity they think they need now and, when they see actual demand outstripping this capacity, they can easily upgrade that capacity almost instantly with a remote software-based system upgrade. This keeps their initial capital outlay low (and commensurate with current demand) while providing an easy and cost-effective upgrade path. |
