Connecting the Network Dots Suggests Trouble Ahead


Numbers from The Broadband Forum lend veracity to Cisco's prediction about how quickly bandwidth usage will rise. It also suggests that content producers and end users should hope that Infonetic's Stephane Teral's prediction of a capex spike is on the mark.


The Broadband Forum study, done on its behalf by Point Topic, found that almost 24 million people worldwide are accessing IPTV. Growth during the last quarter was 9.77 percent. The study also tracked broadband. It said that about 16.6 million lines were added globally (more than 3 million in North America) during the quarter, bringing the total number of broadband lines worldwide to 429.2 million. Despite the sorry state of the world economy, the quarterly growth rate was slightly higher than the growth rate during the previous three months. The press release has a detailed breakdown of the top 10 broadband countries and IPTV use by region.

Clearly, IPTV is inching closer to mainstream. Cisco has come to the same conclusion. Last week, I blogged about the latest release of the company's Visual Networking Index. The study made ample use of terms like xettabyte and exabyte. The inescapable conclusions are that bandwidth use is exploding. IPTV specifically, and video in general, are the main culprits. In 2013, IP traffic will be five times what it was last year, and 90 percent of the traffic will be video.

This is all good. Bandwidth consumption wouldn't fly through the roof, after all, if there weren't a bevy of hot new services and applications. Everybody, it seems, will win. That's probably so-if the carriers prepare adequately. The downside is that this explosion may occur when the networks are at a relatively vulnerable point.


<strong>I interviewed Teral about his recent research on the recession-induced pullback of capital spending</strong>.The reality is that network upkeep is among the first things that go when the economy tanks. The problem is that a certain level of investment is necessary just to keep the system running adequately. Carriers, Teral says, were straying close to-and in some cases stepping over-the safety line.

The metric Teral uses is capital intensity, which he defined as the capex-to-revenue ratio. He says that the minimum acceptable figure is 10 percent. Some carriers are a bit below that level, others not far above.


These are not normal times, however. Putting Teral's comments in the context of radically escalating usage makes the scenario a bit more intriguing. Are the current levels even more dangeous in an era in which bandwidth demand is set to explode? Will the continued upsurge reveal structural faults that wouldn't have been seen in more placid times? Keep in mind that multimedia demands more sensitive treatment and is more likely to be impacted by a substandard network. Clearly, the pressure is on carriers.