The Global Demographic Tailwind

[DewDiligence]

Global Internet Traffic Will Quadruple by 2014, Says CSCO

[For additional details, see CSCO’s own PR at http://newsroom.cisco.com/dlls/2010/prod_060210.html .]

http://blogs.wsj.com/digits/2010/06/02/cisco-says-data-traffic-from-video-will-eclipse-file-sharing/

›June 2, 2010, 2:06 PM ET

Up and to the right–that’s the shape, once again, of the latest bar chart of global data traffic growth distributed by Cisco Systems. Not surprising, perhaps, for a company that sells hardware to manage such data communications. Yet there are sub-themes worth noting in the annual forecast Cisco issued Wednesday.

One is that there is finally something bigger than file sharing for network operators to worry about. That practice, which grew up around Napster and other services, is based on a peer-to-peer approach that usually involves people sending data directly between their PCs, not downloading files from a central server. P2P file sharing, as it is often called, became a dominant bandwidth hog as consumers started using such services to download illicit copies of movies, software programs and other data files.

Now, Cisco says, traffic from other forms of video distribution–including sites like YouTube and video-on-demand services–will surpass global peer-to-peer traffic by the end of 2010. That will mark the first time in 10 years that P2P did not rank No. 1 among consumers of Internet bandwidth, the company says.

It’s not that file sharing won’t grow; it’s just that video services will grow faster, Cisco says. The company predicts a 22% compound annual growth rate for data traffic from file sharing between 2009 and 2014, compared with 33.1% for consumer video services.

There are several reasons behind the trend. One is simply the rising popularity of Internet video. Another is that some programming that has historically been viewed by consumers through conventional cable networks–which don’t get counted in Cisco’s forecast–is shifting to Internet-based offerings that do get counted. Still another is that a shift to high-definition programming creates vastly larger file sizes.

One of the big wild cards is 3-D. Arguments are raging about how quickly consumers will buy TV sets that can accept such signals–and how fast they will embrace the idea of watching programming that requires them to wear 3-D glasses. Assuming they do, the shift can have a big impact on data traffic because 3-D generates even larger files than high-definition alone.

Suraj Shetty, vice president of Cisco’s service provider marketing, says its forecasts assume relatively tiny penetration of 3-D by 2014. “If it grows at a faster rate, that could have a very sizeable impact,” he says. “If all the video were transmitted in 3-D our overall numbers could increase three-fold.”

To appreciate the overall numbers, it helps to be familiar with the word Exabyte—commonly defined as about 1 quintillion bytes, or a billion gigabytes, and roughly equivalent to the data stored in 250 million DVDs. Cisco projects that global traffic will increase more than fourfold by 2014, amounting to some 767 exabytes of data sent annually (that’s more than three-quarters of a zettabyte, for those keeping score).

To keep the growth in perspective, Cisco notes that the 100-exabyte increase it projects from 2013 to 2014 is 10 times greater than all traffic traversing Internet-protocol networks in 2008.‹