Study Finds Significant N. American Internet Capacity Limitations

November 20, 2007 by Mary Anne Simpson weblog

A study released by the preeminent research center, Nemertes Research Group sends warning to access providers and innovators. An estimated $42 - 55 billion is needed to meet expected demands. Without investment, innovation may be crippled.

The preeminent research center, Nemertes Research Group finds that Internet infrastructure limitations will stifle innovation in the near future. The release of their findings include an analysis of Internet and IP infrastructure which they assign the term capacity. Factored into the analysis is the current and projected traffic of users which is deemed demand. The goal of the research project was to understand the effect capacity and demand have with each other and to determine if demand would ever exceed capacity.

The analysis of capacity required comparing carrier expenditures, vendor revenues and compared this data against market research studies. In assessing demand, Nemertes took a unique approach and examined the user´s consumption of available bandwidth has increased over time. They call this the innovation-centric demand model which they believe is the mos reliable method of predicting the unpredictable. Thereby, adopting a model that allows reasonably accurate projections about a future scenario without the need to know the specific innovation that made it possible.

While cautioning that their findings will not cause the Internet to collapse in North America within the near future. there are significant warning flags. Specifically, North American Internet access infrastructure will probably cease to be adequate for supporting demand in the next three to five years. Their findings confirm that overall core fiber switching/routing resources will scale nicely to support any conceivable user demand, but a substantial investment is required particularly in North America.

The estimated financial investment required by access providers to "bridge the gap," between demand and capacity is in the range of $42 billion to $55 billion. Unfortunately, this is about 60 to 70 percent more than current access providers intend to invest.

The study concludes with the cautionary advice that while the "sky is not falling," the ultimate effect will be that innovation will be stunted. The next Google, YouTube, or Amazon will simply not be possible without a substantial investment in infrastructure. Demand will continue to grow, but there will be a continued degenerative effect on capacity to fulfill demand.

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