Phone
Time Warner Cable Inc., the biggest pay-television provider in New York City, is pitching phone companies including AT&T and Verizon Wireless on a service that uses its underground cables to carry mobile calls and Web downloads — easing the congestion spurred by data-hungry users of smartphones like the iPhone.
The service, known in the industry as wireless backhaul, has become Time Warner Cables fastest-growing business after revenue tripled last year, said Craig Collins, senior vice president of business services. Across the cable industry, sales from wireless carriers may reach about $3.6 billion in 2012, according to researcher GeoResults Inc.
“Backhaul is a growth play that we are pursuing aggressively,” Collins said. “These mobile players want to get the bandwidth they need at a cost-effective price and our structure allows them to get that pretty seamlessly.”
U.S. smartphone use has grown almost 700 percent in four years, according to the U.S. Federal Communications Commission. Mobile-data volume is more than doubling annually as people use devices like the iPhone, BlackBerry and Google Inc.s new Nexus One to send photos, watch videos and surf the Web. When networks jam, consumers face dropped calls and may find they cant access Web pages or TV, analysts said.
“Backhaul is the first line of defense in addressing the capacity pressures on wireless networks,” said Craig Moffett, a Sanford C. Bernstein & Co. analyst in New York who has followed the telecommunications industry for more than two decades.
Cable Efforts
Apples iPhone eats twice the capacity of other smartphones, straining AT&Ts network, according to Bernstein. Network clogs are particularly heavy in major cities and AT&T wireless chief Ralph de la Vega mentioned in December that New York and San Francisco are particular trouble spots.
Time Warner Cable has backhaul lines in place to serve New York, and Comcast is the major cable company in the Bay Area. Philadelphia-based Comcast, the largest U.S. cable operator, expects backhaul to become a $1 billion business over time, according to a Feb. 3 conference call.
Charlie Douglas, a Comcast spokesman, declined to comment. AT&T spokesman Michael Coe declined to comment on its backhaul providers. Comcast has risen 3.4 percent in Nasdaq Stock Market trading in 2010. Time Warner Cable has gained 17 percent on the New York Stock Exchange.
Into Cable
While Time Warner Cable declined to specify if AT&T, the lone U.S. carrier for the iPhone, is a customer, the New York- based cable company says it wants to sign carriers large and small. Chief Executive Officer Glenn Britt alluded to AT&Ts extra iPhone traffic in a December conference call.
When mobile-phone calls are made, a signal is sent over radio waves to an antenna, usually mounted on a rooftop or cell tower. The backhaul system pulls the signal from the antenna into the carriers wired network. During periods of high usage, carriers can add capacity by adding lines to their own backhaul pipes or leasing others.
Not a Cure
Backhaul alone cant solve the crunch. While leasing extra lines helps once mobile signals enter the physical network, there still can be congestion when the signal is in the air, traveling from tower to tower. To that end, carriers have urged the FCC to allocate more airwaves that carry calls and data requests before they reach the antenna.
Carriers may be reluctant to use cable backhaul because its relatively new, with limited connectivity to cell sites. Phone companies provide some backhaul to other carriers as well, leasing lines in some cities. Plus, they may not want to give too much business to cable companies, their rivals in TV and high-speed Internet access for homes and businesses.
“Cable companies will be tasked with serving what is a direct competitor, and as they look at their own cellular operations, theres bound to be some complications,” said Ian Olgeirson, an industry analyst with SNL Kagan.
Cox Pioneers
Still, using cable pipes is probably more cost effective for mobile carriers than adding more backhaul lines to their own networks, said Andrew Fuertes, a senior analyst at Visant Strategies based in New York.