Sunday, July 1, 2007

Bandwidth to Spare - Build It And They Will Come

The cover of the June 25 edition of BusinessWeek touts telecom's revival from the dead. The article, written by Spencer Ante, chronicles the precipitous decline of companies like Level 3 Communications and Global Crossing that invested heavily in laying fiber-optic networks and then were unable to service their debt when the bubble burst. Global Crossing and WorldCom endured bankruptcy; Level 3's stock went from a high of $130 a share to a low of $1.98.

However, the upshot of laying
19 miles a day of fiber in 20 different time zones is an incredible network and the inevitability that the world would find a use for such a powerful tool. Mr. Ante writes that half the internet's transmission capacity was going unused in 2002, while today that capacity has almost doubled in size yet only 30% goes unused. Certainly business usage accounts for most of that, but broadband adoption amongst adults has passed the critical 50% mark.

There is still ruthless competition amongst internet backbone service providers, but those who own the transmission pipes are prospering because internet communications are a smashing success. According to studies cited in the
article, a dollar spent on communications infrastructure is a greater stimulant to economic growth and productivity than a dollar spent on roads, electricity, or even schools. The efficiencies of internet communications make it cheaper to do business, service customers, and find new customers.

Who are the users and what are the applications for all this usage? Certainly video is greatly responsible. Level 3 says video represents half of its network traffic today versus no video traffic in 2000. A
sidebar cites several sources of the growth, including greater usage of video (which requires 1,000 times more bandwidth than audio), richer media versus a more text-driven web, newsgroups, cable telephony, and online gaming.

What is exciting for those of us in web-based communications is that corporations are just starting to understand how to use interactive internet broadcasting to communicate internally and externally more effectively and efficiently. Amateur video on YouTube was prominently mentioned in the article but corporate applications for web broadcasting were not even mentioned. Corporate investment in network infrastructure is still very high and broadband connections are the norm. The brief history of backbone internet services shows us that a state of the art worldwide communications network will not go unutilized: if you build it they will come, even if they just upload wacky videos.

HDTV is cited as the next big driver of bandwidth usage, but I believe rich corporate broadcasts will certainly be worth a mention when the next history is written.

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