Don't expect video to exhaust fiber glut

Current YouTube traffic estimated to equal the entire Internet load in 2000

Cisco says that in 2010, just 20 homes using the latest broadband technology to access video content will generate enough traffic to equal the entire load on the Internet in 1995.

Juniper says YouTube already generates traffic equal to the entire Internet load in 2000.

Indeed, the widely held assumption is that the explosive growth of video across the Internet will quickly exhaust excess capacity and spike bandwidth prices that have dropped almost 60 percent per year for the past three years. But so far, this has yet to prove out.

Not everyone believes the widely reported "fibre glut" of the late 1990s and early 2000s will be exhausted by video, prompting a spike in the price of retail and wholesale bandwidth. Some believe video will hardly make a dent in excess capacity but that pricing will stabilize based on other factors, such as industry consolidation creating fewer suppliers.

"In long haul, there is still plenty of fibre," says Andrew Odlyzko, director of the Digital Technology Center at the University of Minnesota. "If you look at the total Internet traffic in the U.S., it could be squeezed down one or at most two fibre strands. And on most routes you have hundreds of strands."

David Rusin, CEO of American Fiber Systems, a New York provider of lit and dark fibre resources, agrees that fibre is plentiful. "Now what's happening with consolidation, which affects supply. . . that could have an impact if [carriers] no longer provide dark fibre."

Insight Research did a study back in 2001 of fiber utilization among 13 major long-haul carriers. Data was culled from fibre pairs in 24 major cities.Only 7 percent to 8 percent of the total capacity was used, and of that only 3 percent to 4 percent was actually lit, says Robert Rosenberg, president of Insight Research. Historically, utilization has been more like 30 percent to 40 percent, he says.

"It was really a small percentage of the capacity in the ground," Rosenberg says "You said to yourself, 'Gosh, this thing is never going to go away.'"

Tracking traffic

Couple with that the slowing growth of Internet traffic. Even though the rate of video growth has been increasing -- Level 3 says 50 percent to 60 percent of the traffic across its IP backbone is video, compared with 5 percent to 10 percent five years ago -- the overall growth of traffic on the Internet has slowed to 50 percent per year from 100 percent or more in the heady days of the bubble.

"Back in those days, everybody was putting in as much as they could and it made sense," says Clif Holliday, an analyst with Information Gatekeepers Inc. (IGI). "There's probably an awful lot of excess fibre in the ground."

According to IGI, Internet traffic is expected to grow 45 percent to 50 percent per year until 2010. The major feeders of traffic on the Internet backbone will be high-speed DSL and cable modem broadband access lines, international transactions and fiber-to-the-premises (FTTP) lines.

File sharing is a major component of high-speed traffic, and the largest segment of file sharing is video, according to IGI. But video file sharing will be dwarfed by FTTP traffic in the form of IPTV, especially high-definition IPTV, Holliday says.

"Using digital delivery of HDTV is a tremendous bandwidth hog," Holliday says. "It will overshadow everything else if the telcos do what they say they are going to do, and if they are successful at it."

AT&T and Verizon are spending billions laying fibre closer to homes in order to deliver TV and IPTV service. Verizon reported 207,000 FiOS TV customers at year-end -- adding 89,000 in the fourth quarter alone -- and wants to have its TV services available to sell to 5 million homes by the end of 2007.

IPTV will not dent excess Internet capacity per se but will help alleviate overcapacity on specific routes in the facilities of some of the largest carriers of Internet traffic, Holliday says.

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