Explosive growth forecast in demand for bandwidth

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A new Internet study* indicates that the demand for bandwidth from global networks could soar 300-fold in the next eight to 10 years.

The boom will be driven by increased levels of high-speed Internet access to the home and business, dramatically growing Internet take-up rates outside of North America, and new disruptive technologies and applications that will take advantage of fast and cheap access to the network.

“The current levels of investment in new networks worldwide will expand to meet coming demand for the optical Internet,” said John Ryan, principal analyst at RHK and chief author of the study. “The use of the Internet as a basic tool within the global economy suggests a larger role for telecom services and systems and revenue growth in all sectors.

“Clearly, the bandwidth capacity in place today is dwarfed by what we will need in a year or two, given the current rates of explosive growth we are seeing,” Ryan added.

The Third Wave
The ‘third wave’ of Internet access, which is what RHK calls the adoption of Ethernet-speed access in the home and gigabit Ethernet access for many enterprises and institutions, will drive even greater demand for bandwidth.

An explosion in eBusiness and content management is likely to extend today’s robust Internet traffic growth rate of 200% per annum well into the decade. This would take traffic to 300 times the size of today’s Internet by the decade’s end, consistent with the growth called for by deployment of new-generation access technologies.

The analysis points to the rapid growth in high-speed Internet access to the home - both DSL and cable - as a key driver for surging bandwidth demand.

Some 400,000 North American households per month are adopting high-speed access. With DSL or cable modems running at 10 times the speed of a dial-up modem, these users add directly to demand on the Internet backbone.

In addition, other firms have recently found that high-speed users spend 61% more time on line than a year ago because the high-speed online experience is far more rewarding. The explosion of demand applies as well to enterprises where service providers are “inundated with requests for new, high-bandwidth applications”.

It is estimated that by July 2001 there will be some 800 million Internet users worldwide - up from 380 million today.

Asian growth is phenomenal: China alone is adding around two million Internet subscribers a month, while Korea has two million high-speed households already hooked up. “Trans-Pacific capacity is consumed as fast as it is installed or made available,” the report says.

Behavior Change
The study argues that Internet use is likely to grow well beyond most forecasts because the widespread availability of fast, nearly-free Internet access will lead to a change in behavior as people modify their social, business, and entertainment lives to enjoy new services and applications that will be enabled by a fast, free Internet.

Napster is cited as an example of a disruptive technology that arose from new capabilities of the Internet. At one university studied, bandwidth consumed by Napster rose to 27% of all Internet traffic at that university-illustrating the potential of a new service to drive multi-terabit demands for bandwidth.

“Napster went from zero to 10 million users in one year,” John Ryan said. “That’s an indication of the amazing power of fast, free bandwidth to alter the way people behave.

“When people grow used to the fact that they can grab a file from around the world as easily and quickly as they can from their own hard drive, we will start to see all kinds of new forms of behavior that will take advantage of this bandwidth. We are just at the start of an explosion in the use of networks.”

The study was welcomed by Anil Khatod, president of global Internet solutions at Nortel Networks, as validation of Nortel’s strategy, which is focused on building a high-performance Internet with the capability to deliver maximum bandwidth while offering new services and driving down the cost of network ownership for service providers.

“The impressive forecasts and evidence gathered in the sutdy show yet again that the explosive boom in Internet usage is unstoppable and inevitable. The potential of the Internet is limitless - here in North America and in the rest of the world,” said Khatod.

* Internet Traffic and Use: Surging Not Slowing, was prepared by leading telecom analysts RHK for Nortel Networks

Based in south San Francisco, California, US, RHK specializes in the analysis of advanced technologies for the public telecoms network. Areas of expertise include: access networks, core and edge switching & routing, emerging network architectures, new voice infrastructure, optical components, Telcom OS, SONET/SDH, WDM & optical networks, and other emerging technologies.

Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet, promising a new era of collaboration, communications and commerce.

Nortel Networks

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