How fast is the Internet growing?

Just returned from participating on a panel called "The Exaflood: Managing the coming digital deluge" at the always outstanding Gilder / Forbes Telecosm. The theme this year was "The Exaflood," i.e., the rapidly growing flood of digital information on the Internet and enterprise data networks.

The panel was moderated by Bret Swanson, a Senior Fellow at the Discovery Institute and Director of the Center of Global Innovation at the Progress and Freedom Foundation. It comprised Andrew Odlyzko, Professor at and Director of the Digital Technology Center at the University of Minnesota; Bob Metcalfe, Ethernet inventor and author, now at Polaris Venture Partners; Johna Till Johnson, President of Nemertes Research; Tom Evslin, founder and former CEO of ITXC and "Fractals of Change" blogger; Lane Patterson, Chief Technologist at Equinix, Walt Ordway, former CTO of the Digital Cinema Initiative, and myself.

There was a diversity of opinion regarding the growth of demand and how to measure it, both recently and over the next few years. Andrew Odlyzko began with a fairly modest estimate of growth rates, pointing out that correctly forecasting growth rates is key for the service provider and equipment vendor industry, since if they are unexpectedly high, congestion and service outages will follow, but if they are unexpectedly low, then overcapacity and poor ROIs will occur. Then, Bret Swanson, who moderated the panel and is a Senior Fellow at the Discovery Institute, recapped a recent study he conducted with George Gilder, excerpted in the Wall Street Journal, projecting a 50-fold growth rate in Internet traffic through 2015, which translates to a 54% CAGR. Johna Johnson then discussed the difficulty of acquiring good data, since core network traffic data is likely to differ from edge data that doesn't traverse service provider cores. She quoted Nemertes projections of 100% growth. Johna also pointed out that it can be difficult to determine unserved demand.

Who's right? Well, ask again in 2015. In the meantime, core network growth rates of 60% annually, which is what we've seen on a regular basis over the last few years, are unlikely to slow. In fact, if anything, the opposite is likely to happen, as multi-megabit/s consumer broadband access increases, consumer desktop HD video streaming grows, consumer IPTV gets deployed, peer-to-peer file sharing continues, and enterprise video conferencing from desktops and immersive Telepresence solutions accelerate. Even mobile video bandwidth continues to grow due to synchronous real-time video, both uplink, downlink, and full duplex. Next generation network upgrades to OC-768 and 3G HSPA deployments and 4G LTE spectrum acquisitions and deployments over the coming years mean that wireline and wireless capacity will be growing, hopefully in tandem with the Exaflood of demand.

Mark Cuban and the Emotional Value of Networks

At Blog Maverick, in a post titled "Metcalfe's Law and Video," Mark Cuban discusses a different perspective on network value, specifically with a view towards the intensity over time of connectivity. He comments that "the more people that see content when it is originally "broadcast," regardless of the distribution medium, the more valuable the content." Although that can be demonstrated by simple net present value calculations, he is talking about emergent effects, such as emotional attachment and the social value from real or virtual simultaneous participation.

He also hypothesizes that not only is there greater value from simultaneous delivery, but also that there is greater cost. His argument is that networks that are designed for large scale simultaneous delivery of content cost more than those that are less ambitious.

To me, this is arguable. For example, there are inherent economies in using a broadcast, content distribution network, or IP multicast to distribute content simultaneously, than to keep redelivering it on demand and sequentially. If the capital expenditure for a scalable and feature-rich network has been made, broadcast and multicast technologies and architectures actually reduce cost per bit delivered per person.

If you combine his viewpoint on the value add of "live" and simultaneous events, with my observation that such events can actually cost less, that means that there is a sweet spot, if the network is engineered properly, in delivering live simultaneous content versus delayed and on-demand content.

This conclusion is actually not surprising, since traditional broadcast TV and movie theaters were only economically viable (in their day) due to the cost reductions inherent in broadcasting program content to a large simultaneous audience rather than unicasting it asynchronously. Of course, today's technology has now reduced the marginal cost of unicasting to be an infinitesimal fraction of a customers willingness to pay for such content.

Or so it would seem. In reality though, for the foreseeable future there will be content that is too bandwidth-hungry for widespread acceptance. Maybe YouTube videos don't have that property right now, but what about HDTV to your laptop screen? How many people are willing to pay for mobile bandwidth sufficient to deliver it in real time, say for 1080p video conferencing? If not that, how about digital cinema quality images?

For the next 5 to 10 years, there will always be that dilemma. After that, perhaps not, because we will have the ability to deliver enough bandwidth to each user, whether fixed or mobile, to equal or exceed the limits of human perception. At that point, until we evolve or bio-engineer our visual cortex and other sensory modalities to become Human 2.0, any additional bandwidth will be overkill, at least for the purposes of entertainment.