Dropped calls may be annoying to a mobile phone user but network equipment makers and operators are eyeing a big payday from congested cellphone networks.

Flashy smartphones like Apple Inc's iPhone, which allow downloads of everything from games to stock prices, are straining mobile networks and pushing carriers to upgrade wired broadband connections to cell towers, known as backhaul.

The market for backhaul equipment will double to $10.9 billion in 2013 from $4.6 billion in 2008, according to research firm Infonetics.

This will provide new areas of growth for network equipment makers such as Alcatel Lucent, Ciena, Nokia Siemens, a venture of Nokia and Siemens.

The Supercomm telecom trade show in Chicago this week was buzzing with operators and gear makers talking up the new possibilities of backhaul.

We're seeing at this show, really a lot of demand for optical backhaul capability, said Nokia Siemens North American President Sue Spradley.

Operators like Verizon Wireless and AT&T Inc are beefing up their backhaul by replacing old copper wires with fast fiber optic connections in markets where they have both a wired and a wireless network.

They are working on new deals with local operators outside their wireline markets to improve mobile data rates there.

Telecom operators such as Level 3 Communications Inc and Qwest Communications International Inc and cable operators such as privately held Cox Communications all want be first to lay fiber to a cell site to make sure they win the backhaul contract with the wireless operators which have equipment there.

Spradley said the U.S. market had a real requirement for upgrades as operators want to avoid bottlenecks in their increasingly popular data networks.

IPhone users, who tend to download more data than average mobile phone owners, have criticized AT&T's slow data speeds and the company has said it is building a stronger backhaul.

If you have a really fast radio link and you don't have a large pipe you're slowing down the network, said Spradley, adding she had customers signing deals worth a few million to the $50 million range at the trade show.

The executive said she expects the small operators who made initial orders for backhaul equipment to come back for more once they win business for upgrading more cell sites.

LOCAL WHOLESALE BOOST

Some local telecom companies struggling with home phone disconnections, are also getting new wholesale telecom business from the trend.

Qwest, which runs a long distance fiber service for businesses as well as local phone and Internet services for consumers, said it is already seeing growth from backhaul.

Qwest Chief Financial Officer Pieter Poll said in an interview that his company had received inquiries from wireless operators about backhaul upgrades for about 7,500 cell sites out of 17,000 across Qwest's operating states.

The executive said this was a sign of strong demand even if Qwest does not ultimately win the backhaul contract for all these sites, as it competes heavily with cable providers.

Where it does win contracts, Poll said it could mean consumers in nearby communities may end up with higher-speed residential services sooner than they would have otherwise.

Level 3, a service provider with a long-distance fiber network that serves businesses and other carriers, announced a new backhaul service offering this week.

Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc, is planning to upgrade its backhaul for its next-generation network, which it promises to put in as many as 30 markets in 2010.

For 4G, whether its WiMax or LTE, the backhaul will have to be fortified, Mark Wegleitner, a senior vice president for technology at Verizon, said in an interview.

Long Term Evolution (LTE) is the 4G technology Verizon will use, and WiMax is a rival technology.

Estimates vary as to how much carriers will have to boost their backhaul links, which can typically move around 6 Megabits of data per second to 10 Megabits per second (Mbps).

Qwest says some of its customers are looking for speeds as high as 350 Megabits per second, but Wegleitner said upgrades to a range of 30 Mbps to 50 Mbps would be more typical. But he noted that the company would be ready to upgrade to 300 Mbps in busier cell sites.

Cranking up the hardware, once you've fiber installed, isn't that hard to do, he said.

(Reporting by Sinead Carew; Editing by Richard Chang)

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