Online Games Pose Carrier Conundrum

Online gaming is coming to America and bringing broadband demand with it, a new study says

June 9, 2004

3 Min Read
Online Games Pose Carrier Conundrum

It's more a trickle than a tsunami, but a study shows online gaming, the application that drives so much bandwidth usage in Asia, is beginning to take hold in the United States. The challenge for carriers will be to make sure they can make money off the trend.

Online gaming could consume one third of all U.S. backbone traffic by 2008, or 735 petabits per month, according to Eric Mantion, an analyst with In-Stat/MDR. Worldwide, online games accounted for 2 exabits (1018, the step after a petabit) of data being transferred last year, Mantion says.

The U.S. experience isn't the same as what's happening in Korea, where individual games attract millions of participants and tournaments are broadcast on TV. Still, the numbers show that interest is brewing. About one sixth of the U.S. population plays online games now, and that figure should grow to one half by 2008, Mantion estimates.

That's a nice chunk of traffic for carriers, but they face the problem of getting paid for their work. "When you pay money to play EverQuest, you're paying that company. You're not paying Qwest or whoever you buy broadband from," Mantion says. "Lots of people want to talk about the revenues [from games] but they don't calculate the impacts."

Even though games will take North America slowly, compared with Korea, carriers and equipment vendors need to start making provisions, Mantion says. For example, Sun Microsystems Inc. (Nasdaq: SUNW) has appointed a chief gaming officer and is developing a server specifically for online games. It's conceivable that carriers could likewise appoint executives just to deal with the effect of games on the network, Mantion says.

"For years, broadband providers have used these Web caches. I might get something from a Yahoo Website, but two seconds later, you might get it from a cache. In the same way, they're going to have to start adding game servers to their networks," Mantion says. "If the broadband players don't do anything, they have substantially more to lose than the price of a few game servers."

AT&T Corp. (NYSE: T), for example, provides some of the North American Web servers for Blizzard Entertainment, which runs its own network for massively multiplayer games such as WarCraft III. AT&T doesn't get money from the games directly, but the traffic does cross AT&T's network, guaranteeing the carrier a bit of money from service providers. "It's like foot traffic," Mantion says.

Of course, broadband access will need some changes as well. Cable, being a shared medium, already has a throttling mechanism. DSL would need something equivalent to make sure gamers don't eat up bandwidth. "Instead of pricing access, you start price services," says Frank Dzubeck, president of Communications Network Architects. "They only way [carriers] are going to get a piece of the pot is by you buying more bandwidth."

The real backbreaker for the U.S. networks will be video -- HDTV in every home -- rather than gaming, Dzubeck says. Either way, he doesn't think networks aren't prepared to handle the load: "The metro's not built out. If you do fiber to the home, we don't have enough in the metro. If we ever do a buildout like Verizon or SBC wants to do, forget it."

— Craig Matsumoto, Senior Editor, Light Reading

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