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Better News on Internet Backbones

Light Reading
News Analysis
Light Reading

Some potentially good news for equipment vendors can be found in a study of the supply and demand for international Internet bandwidth about to be released by market research consultancy TeleGeography Inc..

The annual survey, entitled "Global Internet Geography," indicates that utilization rates of Internet backbones have been creeping up over the past year. As a result, service providers are likely to resume adding capacity to their international backbones in 2005, having held back on doing so in 2004.

"The case is particularly acute in Asia, where peak utilization on international backbones into Chennai and Shanghai exceed 80 percent (compared to a global peak of around 40 percent). No wonder so many international network managers complain about QOS into these places," writes Jason Kowal, Telegeography's president, in an email to Light Reading.

Table 1: Bandwidth & Traffic Growth on International Routes

Backbone Growth Average Traffic Growth Peak Traffic Growth
Trans-Atlantic 32% 110% 133%
Trans-Pacific 68% 119% 123%
Intra-Europe 50% 82% 69%
Intra-Asia 101% 434% 452%
Intra-Americas 46% 208% 206%
Elsewhere 28% 89% 85%
Overall 46% 115% 111%
Source: Telegeography Research, Global Internet Geography, Primetrica Inc.

In order to add capacity to their networks, service providers will probably have to light additional wavelengths in DWDM gear, and install more Sonet/SDH equipment and routers. There's plenty of unlit capacity left in sub-sea cables, according to Kowal. "It's all about traffic growing really fast and bandwidth coming too slow," he adds.

Telegeography's "Top 10 Findings" of its report are as follows:

  • International IP traffic grew 115 percent between 2003 and 2004, outpacing the underlying capacity growth of 46 percent.
  • Average Internet traffic among Asian countries grew approximately 434 percent between 2003 and 2004, compared to 82 percent among European countries.
  • Average Internet traffic across the Atlantic and Pacific grew 110 and 119 percent, respectively, between 2003 and 2004.
  • Despite the rapid growth of peer-to-peer file sharing, Web traffic still accounts for the largest share of traffic on most networks.
  • IP transit prices fell 49 percent in major European cities and 55 percent in major U.S. cities; prices in Asia have declined at a comparable rate, but remain twice as high as European and U.S. prices.
  • International Internet traffic growth was so rapid in some cities that local revenues for IP transit appear to have increased substantially in 2004.
  • Business restructuring has done little to halt the decline in prices. Although some restructured carriers have been among the most aggressive with price cuts, they are not necessarily the price leaders
  • The three most-connected IP networks, based on autonomous system connectivity, are MCI Inc. (Nasdaq: WCIP), AT&T Corp. (NYSE: T), and Sprint Corp. (NYSE: FON).
  • As of mid-2004, Internet backbones consumed 23 percent of available capacity on transoceanic submarine networks.
  • The top 50 Internet backbone operators control 94 percent of international IP capacity.

    — Peter Heywood, Founding Editor, Light Reading

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