Internet Growth Could Hurt Service Providers
(02/25/98; 5:26 p.m. EST)
By Andrew Craig, TechWeb
techweb.com
Internet service providers and telecom carriers are
concerned their profit margins will be squeezed by
having to cope with a demand for Internet bandwidth
which is increasing at a much greater rate than
revenue.
Bandwidth demand is growing by about 1,000 percent
per year, while revenues of Internet service providers
(ISPs) are growing at a much slower pace, according
to senior officials of leading ISPs speaking at the
Internet Service Provision '98 conference in
Amsterdam Wednesday.
The competitive nature of the ISP market forces low
prices onto suppliers and makes it difficult for them to
pass the cost of new equipment and more leased
bandwidth onto their customers, said speakers.
No technology in history has grown as fast as the
Internet, said John Sidgmore, chief executive officer at
UUnet, one of the world's biggest commercial ISPs.
"Internet bandwidth demand is expanding by 10 times
each year. This is presenting a scaling challenge that
we've never found before," said Sidgmore.
But revenue from Internet services provision is not
growing at the same rate, said Steven von Rump, vice
president of business markets at telecom provider
MCI. "There is a widening gap between traffic and
revenue, and it is becoming more and more of a
challenge for ISPs to fill that gap," said von Rump.
Rather than just boosting bandwidth to meet increasing
demand, service providers and telcos are looking at
alternative ways to reduce bandwidth congestion, said
conference speakers. One way is to use data storage
devices to cache copies of large, frequently accessed
files within the ISP's network. This way, large files do
not have to travel across the Internet from the source
every time they are downloaded, but just from the ISP
to the subscriber.
Storing files locally using caching servers will help to
reduce Internet congestion, said Paolo D'Andrea,
marketing director at Italian telecom carrier and ISP
Telecom Italia. "We're thinking about using caching,
because bandwidth demand is increasing but revenue
is not increasing," said D'Andrea. "Every time we add
2 megabytes to our customers' leased lines to the
Internet, it is immediately saturated by more traffic. So
we're thinking about making leased-line customers pay
on a usage basis," he said.
Another way of reducing Internet congestion and
easing the demand for bandwidth is by installing
private connections between ISP servers, a process
known as "peering." Peering lets traffic from one ISP
pass directly to customers of another provider with a
peering arrangement and bypasses the main Internet
gateways, where most congestion occurs.
Peering has been criticized for shutting off sections of
the Internet and going against the "Internet vision," said
von Rump. But, he said, such criticism is ill-founded.
"From a user point of view, individual or corporate,
the connection is still the same. There is no change in
the vision of the Internet, but it provides a means to
reduce cost and improve the quality of transmission
across the Internet," he said.
Search Archives
Related Stories:
Fatter Pipes Needed
To Keep Internet
Smoking
Rivalry In ISP Market
Heats Up
= Link to our
tech encyclopedia
for more info.
|
