London-based research and consulting firm Ovum predicts that international and domestic growth of Internet usage threatens to clog the World Wide Web's backbone unless intended upgrades take place as scheduled.
"If new fiber build across the Atlantic does not progress to plan, there will be a chronic shortage of capacity to the United States," Ovum analysts Daniel Bieler and Iain Stevenson wrote in a new report. The analysts warn that "this will result in poor service that could threaten the development of the Internet on a global basis."
The firm predicts that 500 million people worldwide will be logged onto the Internet by 2005. Of these, 206 million will be hooking up through dial-up connections and 17.5 million will have permanent connections, such as T1 lines to their work or home.
"Permanent connections look set to become increasingly critical for corporations and organizations that depend on fast transmissions of large data files," the report stated.
Ovum's other forecasts include the following:
The U.S. market will become saturated after 2002 and most growth will come from Western Europe and developed areas of Asia. Total traffic will grow to more than 6 terabits per second by 2005.
There will be major capacity growth but no redistribution of traffic patterns. The most important routes this year will still be the most important in 2005.
The Japanese market will dominate the Internet in Asia because of its large proportion of highly educated users. Although China and India will become major markets as infrastructure as their economies develop, they will not be significant until after 2005.
Value-added service provisions are key to keeping service providers alive. Internet access revenues from dial-up connections will start to decline despite significant growth in subscriber numbers. Revenues from permanent connections will rise initially, but will also decline in per-capita revenues around 2004.
"Network providers must be able to supply enough capacity to meet the growing amount of IP-based traffic in corporate networks," the analysts concluded. "Bandwidth requirements will increase by a factor of 50 to 100 times over the next seven years."
Ovum predicts that the increasing number of companies relying on the Internet to run critical software and as the networking infrastructure for the business will be a leading cause of this stress. Also, the increasing use of the Internet as a means for businesses to communicate and trade with each other will strain the already-burdened system.
"Business-to-business Internet usage will be responsible for about 55 percent of all bandwidth requirements in the developed world and 66 percent in the developing world until 2000," Ovum predicted. "But the deployment of even-faster access devices for consumers will lead to a rapid increase in residential demand for capacity after the millennium. High dial-up subscriber numbers will put enormous pressure on the network."