A rather radical transition in the nature of traffic on the Internet will be a major issue to track during the next year.
Marketing gurus like to refer to the "inflection point," which can best be described as the moment at which a trend evolves into a permanent condition. There are many signs that that an inflection point has been reached in which real-time data, such as VoIP and video streaming, has passed static best-effort forms, such as e-mails, as the major form of traffic on the Internet.
The new reality is reflected in a trio of reports released during the past month or so. Most recently, analyst Chetan Sharma has taken a close look at cellular activities in the United States. He obligingly put a big chunk of the report, including a set of slides, on his blog. Among the great amount of information he offers, the report says U.S. wireless data traffic grew 5 percent between the second and third quarters and 27 percent over the course of the year. Sharma says the outlook is bright through the end of 2010, with 2009 numbers expected to outpace 2008 by more than 30 percent.
There also is a shift in who is making money. Sharma found that the gap between the biggest two carriers (AT&T and Verizon) and the next two (Sprint and T-Mobile) is growing precipitously. At the same time, the "rest" category is shrinking. The reality may be that the big network providers are more capable of the investment necessary to support high levels of data.
GigaOm's Colin Gibbs did some comparisons and came up with the same conclusion: Verizon Wireless and AT&T did quite well in the third quarter. Verizon Wireless, he notes, added a million subscribers and increased its revenue 24.4 percent compared to the previous year, reaching $15.8 billion. AT&T added 2 million subscribers and increased its revenue 8 percent, to $13.65 billion. Gibbs adds a handy roundup of the results reported by Leap Wireless, Metro PCS, T-Mobile and Sprint in addition to AT&T and Verizon Wireless.
There is little controversy that the ways in which people use the Internet is changing. <strong>Late last month, I spoke with Thomas Barnett, the senior manager of service provider marketing for Cisco</strong>. Barnett described the company's Visual Networking Index, which features input on Internet use from more than 20 service providers. The company says that peer-to-peer networking, while still growing in total, is less on a percentage basis than it was a year ago. Video, collaboration and social networking are growing. The study also found that 25 percent of traffic is flowing during Internet prime time, which is from 9 p.m. to 1 a.m. locally. The top 1 percent of subscribers are generating more than 20 percent of traffic and the top 10 percent are generating more than 60 percent.
The third study is from Sandvine. This is the sixth year in which the vendor has done its Global Broadband Phenomena report. The company points to big changes this year. There is a significant shift to real-time entertainment content, which consists of video and audio streaming, Flash, placeshifting and other uses. This category of content constituted 26.6 percent of traffic, more than double last year's 12.6 percent. Overall "experience now" applications -- real time-entertainment and real-time communications-rose this year as well. Last year, this category represented 17.7 percent of traffic during these hours. That percentage grew to 32.8 percent this year.
Though the details differ and there almost certainly are areas of contraction in the reports, the trend line is very clear: The way in which people use the Internet is constantly shifting, and the general arc is toward immediacy and interactive services and applications. The architectures that are used in creation of the networks, therefore, must be flexible enough to accommodate this growth-even if its precise nature isn't known when the fiber is deployed.