Study: Internet could run out of capacity in two years

Consumer and corporate use of the Internet could overload the current capacity and lead to brown-outs in two years unless backbone providers invest billions of dollars in new infrastructure, according to a study released Monday.

A flood of new video and other Web content could overwhelm the Internet by 2010 unless backbone providers invest up to $137 billion in new capacity, more than double what service providers plan to invest, according to the study , by Nemertes Research Group, an independent analysis firm. In North America alone, backbone investments of $42 billion to $55 billion will be needed in the next three to five years to keep up with demand, Nemertes said.

The study is the first to "apply Moore's Law (or something very like it) to the pace of application innovation on the 'Net," the study says. "Our findings indicate that although core fiber and switching/routing resources will scale nicely to support virtually any conceivable user demand, Internet access infrastructure, specifically in North America, will likely cease to be adequate for supporting demand within the next three to five years."

The study confirms long-time concerns of the Internet Innovation Alliance (IIA), an advocacy group focused on upgrading U.S. broadband networks, said Bruce Mehlman, co-chairman of the group. The group, with members including AT&T, Level 3 Communications, Corning, Americans for Tax Reform, and the American Council of the Blind, has been warning people of the coming "exaflood" of video and other Web content that could clog its pipes.

The study gives "good, hard, unique data" on the IIA concerns about network capacity, Mehlman said. The Nemertes study suggests demand for Web applications like streaming and interactive video, peer-to-peer file transfers, and music downloads will accelerate, creating a demand for more capacity. Close to three quarters of U.S. Internet users watched an average of 158 minutes of video in May and viewed more than 8.3 billion video streams, according to research from comScore, an analysis group.

Internet users will create 161 exabytes of new data this year, and this exaflood is a positive development for Internet users and businesses, IIA says. An exabyte is 1 quintillion bytes or about 1.1 billion gigabytes. One exabyte is the equivalent of about 50,000 years of DVD-quality video.

Carriers and policy makers need to be aware of this demand, Mehlman added.

"Video has unleased an explosion of Internet content," Mehlman said. "We think the exaflood is generally not well understood and its investment implications not well defined."

The responsibility for keeping up with this growing demand lies with backbone providers and national policy makers, added Mehlman, also executive director of the Technology CEO Council, a trade group, and a former assistant secretary of technology policy in the U.S. Department of Commerce.

"It takes a digital village," he said. "Certainly, infrastructure providers have plenty to do. You've seen billions in investment, and you're seeing ongoing billions more."

U.S. lawmakers can also help in several ways, he said. For example, the U.S. Congress could require that home contractors who receive government assistance for building affordable housing include broadband connections in their houses, he said. Congress could also provide tax credits to help broadband providers add more capacity, he said.

Consumers also pay high taxes for telecommunication services, averaging about 13 percent on some telecom services, similar to the tax rate on tobacco and alcohol, Mehlman said. One tax on telecom service has remained in place since the 1898 Spanish-American War, when few U.S. residents had telephones, he noted.

"We think it's a mistake to treat telecom like a luxury and tax it like a sin," he said.