More on the NY Times article and bandwidth demand -- from the Street.com. This was posted over on the CCUR thread, so I am copying it from there (too lazy to go to the source).
Message 10493622
About That Coming Bandwidth Glut
By Jim Seymour
Special to TheStreet.com
7/13/99 3:28 PM ET
Some days, I think I could divide my email from TSC readers into just two (virtual) piles. Call one "Help! Everyone says the sky is falling, and there's going to be a terrible bandwidth glut, and Qwest (QWST:Nasdaq) and the other bandwidth resellers I know you like are going to collapse! What should I do?"
Call the other stack "Everything Else."
I had a great example of this over the past weekend. When I started writing this column Saturday morning, I checked my email archives. I was genuinely surprised to see that I hadn't had a "bandwidth-glut fears" email in all of 12 hours. But sure enough, Sunday's New York Times had a long piece on possible bandwidth overcapacity, and by midafternoon, I already had 26 worried emails waiting in my inbox.
I'm not surprised that there's so much fear and confusion out there about a possible bandwidth glut. A general misunderstanding of the evolving bandwidth market has led to unfortunate and confusing claims by analysts, writers and others -- generally forecasting impending doom for the builders and aggregators of bandwidth. Those claims fall in four areas:
There isn't going to be that much demand for more bandwidth. And even if there is, turning on only a fraction of today's so-called "dark fiber" -- buried cable not yet in use -- can handle it just fine.
There's so much investment going into bandwidth expansion today that the industry will soon be wildly overbuilt, and bandwidth will fall into the commodity-pricing swamp.
Wireless and satellite service is going to wipe out demand for bandwidth over any kind of wire: Before long, everything goes wireless.
New technologies, principally Dense Wave-Division Multiplexing, or DWDM, are going to make data transmission so much more efficient that we won't need much more bandwidth than we have today.
My take:
Demand. This, of course, is the big question: If demand does not continue to grow at least as fast as it has over the past 12 months, bandwidth resellers are in trouble. Their cable plant -- their sunk-costs investment in buried-fiber networks -- is not supportable at today's demand levels. If demand for bandwidth sags, so do these companies.
So what's ahead? You know the answer to that already. We see the same forecasts for sharply rising demand for data communications -- Web traffic doubling about every 90 days (and lately, even faster), data-transmission demands so high that voice falls to a tiny fraction of total data-comm traffic. The specific numbers aren't so important there as the trend line: Is demand growth going to stay that steep?
In a word, yes.
But it's going to get even hairier than that, to the great advantage of companies that today are building bandwidth capacity for resale.
Many of the demand-doomsayers see demand for bandwidth expanding at an essentially linear rate -- in other words, they see growth as being in the "More of the Same" category. In fact, demand isn't just going to grow at its recent rate -- staggering as that is -- but faster still. Because increasingly, bandwidth is going to be absorbed by new functions that just don't exist on current systems.
That's the point so many bandwidth doomsayers miss. It isn't just going to be more of the same-old same-old. In fact, the availability of abundant, affordable bandwidth underlies the business plans of a huge percentage of the hot companies of today and tomorrow. Yet the impact on the available pool of bandwidth of all these new and generally unnoticed businesses' operations is largely ignored by the bandwidth-doomsayers.
One example of an out-of-left-field biggie in bandwidth-demand: digital delivery of movies to the home. The video-rental business is going to be squashed over the next decade by digital delivery of movies. No more going to the never-quite-near-enough Blockbuster or Hollywood (HLYW:Nasdaq) store, searching the shelves, then finding that the movie you want is out. Or if you get lucky, it is there, you take it home, view it, then have to take it back.
Ordering rental videos over the Web for physical delivery doesn't work much better -- two-way shipping gets too expensive and takes too long. And delivery from local video-rental stories isn't a bad interim answer, but if you still have to take it back, you haven't solved the problem.
With online delivery directly to your TV for "live" viewing, (or to a digital-storage box attached to your TV set), you'll be able to dial up, select the film you want, select the start time, click and boom -- it's there. The movie studios are scared to death we'll capture and save these digitized films for later viewings as well -- of course we will! -- and so are eager to find ways of making this a "live-viewing-only" market.
The content owners -- the studios -- hold the cards here, so at least at first, this will be mainly a pay-per-view-style market, offering a finite number of viewings, or a finite viewing period, or both.
Eventually, as the studios learn not to fear digital delivery -- just as they had to learn not to fear videocassette rentals, which now provide about half of Hollywood's revenues -- you'll be able to save films to a hard disk, effectively buying them instead of just renting them over the Net. (We'll see third-party systems that bypass limits on this emerge very early in this market, of course; when I say you'll eventually be able to save digital movies directly to a disk for later repeated replay, I mean the time when you'll be able to do so without a little black box that defeats the anti-save technology inevitably larded onto the early digital-download business by Hollywood Inc. I have hopes -- but only small ones -- that the demonstrated success of such current products as the TiVO and Replay digital-download-and-save boxes will convince Hollywood studios that allowing customers to keep downloaded copies of movies isn't such an evil thing, after all. Then again, this is Hollywood, the land of paranoia and denial.)
Making downloadable, live-viewing digital movies work takes a little less than a 7 megabytes-per-second Net-access service, easily achievable with both ADSL and cable modems -- though with both cranked-up to speeds not usually delivered to Net-access subscribers by either today. (And, we should note, not possible within the limits of the dumbed-down G.Lite flavor of ADSL, which maxes out at 1.5 Mbs, now being pushed by most RBOCs and CLECs.)
Imagine the cumulative bandwidth demand of, say, 25 million films cascading down the wire every night, and you begin to get a sense of just how big a bandwidth sucking sound this will be.
That shot-in-the-dark guess is based on the Census Bureau's 1996 estimate of 91.9 million to 94.2 million U.S. households -- an estimate subsequently widely criticized as lowball, with the real number now generally accepted at about 100 million. Of course, next year's census will increase that number. But even using the 1996 estimate, I think one household in four watching a movie on a typical night is about right, once Net access to pay-per-view "live download" movies is widespread. With the continuing sharp decline of network television as a source of early hours G-rated home entertainment, and with the powerful convenience of watching whatever movie you want, whenever you want, I don't think 25 million households "consuming" films on a given night is high at all.
This direct-delivery-to-the-home market for movies has been forecast for a long time, but there hasn't been a means in place to deliver all those millions of concurrent, high-bandwidth video streams. Over the next few years, that kind of fat pipe into American homes will be commonplace.
Bandwidth demand isn't going anywhere but up. Period |
