Internet Capacity is Not Outpacing Internet Traffic Growth – That is Good News!!

Implications: According to new research the demand for Internet usage will start to outpace the capacity of the Internet’s access points around 2010. Okay that is good news; not bad news. No sane network operator would dare spend money on any network capacity that far outstrips network demand. If they did, the provider’s head of operations would be crucified for not building a network intelligently. Ten years ago the term was “smart building.”

Analysis:

You won’t get any argument from me that if network capacity does not outpace usage then you have a problem.

I am not quite sure why the report was even written. The data appears correct. The basic assumption that Internet users will suffer from increased download times, connectivity issues, and even see increased latencies in Internet interactivity, is correct. However, that all assumes the carriers do not build out.

Building a network has always been (for the last 130 years) about timing the capacity increase appropriately to meet the demand needs. In the late 1990s, this was called “smart building”. Okay what has changed? Nothing.

Should the carriers increase their spending by another 30% to 40% as inferred in the research report? No.

The carriers need to review their forecasts and trending studies. To the carriers, please do not add money to your budget when you have not done your own homework. If your forecast studies show a need to build then build but please do not hit the panic button.

Other than the picture of gloom and doom, I generally agree with the report’s findings. I also agree with Mr. Mehlman of the Internet Innovation Alliance. I believe that the investment community and the management teams of the providers will rise to the occasion and make sure that bandwidth is available. If there is money to be made, money can be found.

The carrier community rose to the occasion of the Y2K problem. If anyone is still around who can remember (and has not retired) the NYC capacity nightmares of the early 1970s, there is no way any provider with wisdom and experience would ever allow service to degrade so low that it is nearly non-existent.

If demand is increasing so fast that capacity becomes an issue, then investors should be happy. It means that there are customers out there willing to pay you money for your services. If lack of capacity is an issue, the carriers should be happy. What the carriers need to do is respond to demand needs intelligently. What carriers also need to avoid is “building such a large network that the capacity lies unused for years”. Back in the mid-1990s, CLEC just built and built without regard to building smart. The result was a philosophy of network construction and operation that came to be known as the “we build it and they will come” philosophy. Billions of dollars were spent on over-built networks. Let us hope today’s providers of service do not repeat the mistakes of the past.