Any way you look at it, the telecommunications business remains dominated by one issue above all: bandwidth, and how to get enough of it to satisfy end users without breaking the business – and the bank.

For years now, the Internet's not-quite-believers have been saying that demand for Internet bandwidth was finite and would eventually start slowing down. As the market saturated and consumers ran out of things to do with all that capacity, demand would tail off. Yet there's no sign whatsoever that this is about to happen.

Look at the most recent traffic data from the Amsterdam Internet Exchange B.V. (AMS-IX) , the world's largest Internet traffic exchange point. The volume of accumulated traffic handled at the exchange grew by about 54 percent between June and December 2008, and the trend continued strongly in January 2009, with a whopping 10-terabyte rise last month in traffic handled.

Increases of that order are consistent with a very long-term trend that has seen Internet bandwidth demand rising by around 80 percent a year, year after year, for well over a decade, regardless of the number of applications, type of applications, type of end users, type of end user devices, and other metrics that might be expected to disrupt the trend line.

There is absolutely no reason to suppose that this steady year-on-year rise in bandwidth consumed will not continue for as far out as we can see. One recent contributor to that rise, for example, is the very rapid spread of mobile broadband and devices attached to it, as described in a column last week by my colleague Patrick Donegan. (See Verizon Rides a Mobile Data Wave.) In the future, a whole raft of new consumer service ideas such as 3D TV and gaming, consumer telepresence, ultra-high-definition video, consumer and business cloud computing, and holographic video are all in commercial development or in the lab.

However, the exact nature of the apps, end users, or devices that will ratchet up demand doesn't really matter that much to those planning network requirements. The consistent history of 20 years, along with the miraculously flexible character of the Internet, means it will continue to generate new ideas at a steady rate. Even though we don't know what those ideas will be, telcos can safely assume that bandwidth consumption will continue to grow in line with historic precedent.

In practice, that means – for example – that it's fair to assume that the average household will be running a fixed Internet connection at about 1 Gbit/s 10 years from now. This therefore must be the objective that everyone aims for.

Discussions about Internet bandwidth inevitably have a chicken-and-egg character: If telcos don't make bandwidth available, demand will automatically be tamped down. But that would be a pretty dangerous game to play, alienating end users, regulators, and politicians, and ultimately backfiring on those who are lagging the global trend. The long-term requirement is clear. The only question – not a small one – is how to get there.

— Graham Finnie, Chief Analyst, Heavy Reading