User Demand for the Internet Could Outpace Network Capacity by 2010
First Study to Independently Assess User Demand and Internet Capacity Finds Internet Exaflood Could Strike as Early as 2010
$137 Billion Global Infrastructure Investment Could be Required to Prevent Declines in Service
WASHINGTON, D.C. and NEW YORK, NY– November 19, 2007 – Consumer and corporate Internet usage could outstrip network capacity both in North America and worldwide in a little more than two years, according to “The Internet Singularity, Delayed: Why Limits in Internet Capacity Will Stifle Innovation on the Web,” a landmark study conducted by Nemertes Research. This study—the first-ever to assess internet infrastructure and model current/projected traffic patterns independent of one another—indicates that Internet access infrastructure, specifically in North America, will cease to be adequate for supporting demand within the next three to five years.
The financial investment required to “bridge the gap” between demand and capacity ranges from $42 billion to $55 billion in the U.S., primarily to be spent on broadband access capacity; this is roughly 60-70 percent above and beyond the $72 billion service providers are already planning to invest . Required investment globally is estimated at $137 billion, again primarily in broadband access.
“This groundbreaking analysis identifies a critical issue facing the Internet – that we must take the necessary steps to build out network capacity or potentially face Internet gridlock that could wreak havoc on Internet services,” said Larry Irving, co-chairman of the Internet Innovation Alliance. “It’s important to note that even if we make the investment necessary between now and 2010, we still might not be prepared for the next killer application or new Internet-dependent business like Google or YouTube. The Nemertes study is evidence the exaflood is coming.”
Voice and bandwidth-intensive applications such as streaming and interactive video, peer-to-peer file transfer and music downloads and file sharing are redefining the Internet. Nearly 75 percent of U.S. Internet users watched an average of 158 minutes of online video in May and viewed more than 8.3 billion video streams, according to research by comScore. Additionally, wireless devices such as cell phones, Blackberrys and gaming accessories provide consumers ever-increasing access to the Internet, exponentially accelerating consumption of Internet bandwidth according to the Nemertes study.
To analyze the demand and capacity factors across geographies, Nemertes Research created a detailed model of Internet infrastructure capacity and user demand based on:
- Research data and Internet traffic statistics collected by academic organizations such as CAIDA and MINTS.
- User demand data from a variety of sources, such as Pew Research and the Center for The Digital Future at the USCAnnenbergSchool.
- Publicly-available documents, including vendor/service provider financials
- 70+ confidential interviews with enterprise organizations, equipment vendors, service providers, and investment companies.
Interviews with the several hundred IT executives who regularly participate in Nemertes’ enterprise benchmarks. Investment figures from service providers and telecom equipment manufacturers.
The findings indicate that by 2010, the Internet’s capacity will not likely accommodate user demand. As a result, users could increasingly encounter Internet “brownouts” or interruptions to the applications they’ve become accustomed to using on the internet. For example, it may take more than one attempt to confirm an online purchase or it may take longer to download the latest video from YouTube. Overall, the impact of this inadequate infrastructure will be primarily to slow down the pace of innovation. The next Amazon, Google or YouTube might not arise—not from a lack of user demand, but because of insufficient infrastructure preventing applications and companies from emerging.
Importantly, the study—comprising both a detailed quantitative model and a 70-page report—assessed user demand and Internet infrastructure independently. Rather than measuring current traffic patterns, it measured how user demand would evolve if Internet capacity was not limited.
“This is the first study to independently model both Internet capacity and demand,” said Johna Till Johnson, president and senior founding partner of Nemertes Research. “The Internet is inherently self-protecting—you can’t push more traffic onto the ‘Net than it can handle. This means that studies which focus just on growth rates of existing traffic on the Internet miss the issue of how much more traffic could be appearing on the ‘Net—based on the measured demand by business and consumer users—if Internet capacity were sufficient to accommodate it.”
The Internet consists of a series of privately built and owned interconnected networks. Like the physical transportation system, which includes freeways as well as country roads, the Internet consists of high-speed connections (fiber and underground cable) and lower-speed links (copper and coaxial connections), with traffic handled by switching equipment.
As with the physical transportation system, an Internet user’s experience is defined by both the capacity of the high-speed connections (the “core”) and the lower-speed links. If the freeway is empty, but local roads are congested, users will spend most of their time stuck in traffic at the edges—something the study predicts will occur with increasing frequency starting in 2010.
“How we use the Internet today is fundamentally different than it was even three years ago, with the advent of bandwidth-intensive applications like video-on-demand,” said Bruce Mehlman, co-chair of the IIA. “We need to take steps now to ensure continued improvement of the broadband infrastructure in North America meets the projected demand. To encourage the necessary investment to ensure a positive user experience, it is important for the right tax, commercial and policy environment to be in place. The internet is a critical global resource and our hope is that this study helps us understand what can and should be done today to ensure its integrity and usability for generations to come.”
Nemertes’ research initiatives, including this study, are funded by its client base of Fortune 2000 enterprise organizations, vendors, service providers, and not-for-profit organizations including the Internet Innovation Alliance, which purchased distribution rights to these research findings.
To view the Nemertes Research study visit www.internetinnovation.org or www.nemertes.com.
The Internet Innovation Alliance
The Internet Innovation Alliance (www.internetinnovation.org), a non-profit coalition dedicated to universal broadband, was founded by Larry Irving and Bruce Mehlman in 2004. Irving is president and CEO of Irving Information Group, a consulting firm providing strategic advice and assistance to international telecommunications and technology companies. Mehlman is co-founder of Mehlman Vogel Castagnetti Inc., a bipartisan public affairs consulting firm based in Washington, D.C.
Nemertes Research is a research advisory firm that specializes in assessing the business value of emerging technologies. You can learn more about Nemertes Research at our Web site www.nemertes.com.