Internet users consumed more bandwidth than ever last year, driven by the growing popularity of peer-to-peer networks and heightened demand for video files.
Burgeoning demand also prompted internet carriers to upgrade their network capacity to handle the upswing in traffic, a new report indicates.
According to TeleGeography, a telecommunications research firm, international demand for bandwidth grew 42 percent in 2004, with the largest upswing in usage coming from Asian nations. Last year marked the second consecutive annual upswing in demand, the firm said, after carriers added 62 percent more capacity in 2003.
"It really seems to be picking up again," said Alan Mauldin, senior research analyst at TeleGeography, regarding demand for bandwidth among internet carriers surveyed for the report, released this month.
As internet service providers and operators of backbone networks sucked up more capacity, so did end users.
Researchers singled out peer-to-peer file trading as the single fastest-growing consumer of network capacity. Currently, Mauldin said, the amount of traffic from peer-to-peer trading rivals that generated by regular web surfing.
Growing demand for data-rich files, such as movies, is further boosting bandwidth consumption.
"From mid-2004, we saw a significant shift away from music and on to video," said Andrew Parker, chief technical officer at CacheLogic, a firm based in England that monitors global peer-to-peer traffic. "Before that it was mainly music."
According to Parker, efforts by the film and recording industries to crack down on illegal trading of copyright works haven't resulted in a drop in traffic volumes.
In North America, where the Recording Industry Association of America and the Motion Picture Association of America have focused enforcement efforts, Parker said there has been virtually no change in P2P traffic levels since the groups began cracking down on illegal file trading.
"In some parts of the world we have seen the opposite happen. The publicity created by the MPAA actually drove users to find out what all the fuss was about and resulted in an increase in traffic levels," Parker said.
Today, CacheLogic estimates that P2P applications consume between 60 percent and 80 percent of capacity on consumer ISP networks. The fastest growth in P2P usage is coming in Asian nations with high broadband penetration rates, Parker said.
The average size of traded files is growing, too, Parker said, and today exceeds 100 MB. In one period of observation, which took place just after a much-anticipated film release, CacheLogic found that 30 percent of peer-to-peer traffic at one ISP was from a single 600-MB file.
While ISPs aren't suffering from a shortage of bandwidth yet, Parker believes demand for video content could be a problem in the future for broadband providers who charge a single price for all-you-can-eat access.
"ISP business models were based on the idea that not everyone would be using their internet capacity all the time," he said. If customers are using their broadband connections to download movies and television programs all day, that could put a strain on networks.
But Roopak Patel, senior internet analyst for Keynote Systems, believes ISPs will be able to cheaply increase capacity or fine-tune their networks to handle a rise in video traffic.
"It's not as if we're hurting for bandwidth," Patel said, noting that there are still plenty of under-used fiber-optic networks that were built early in the decade, a boom period for telecommunications infrastructure investment.
"I wouldn't say (ISPs) are worried about delivery of video content. They probably say, 'Bring it on.' That's what will drive their revenue," he said.
While P2P activity accounts for the lion's share of rising bandwidth consumption, internet traffic analysts said the growing popularity of voice over internet protocol, or VOIP, is a factor, too. However, Patel said VOIP calls typically require a data-transmission rate of less than 30 Kbps, compared to more than 300 Kbps for a video file.
"It's important to note that VOIP is all the rage, but as far as what it means in terms of bandwidth, it's not very big because VOIP is not a very bandwidth-intensive operation," Mauldin said. He estimates that VOIP accounted for 5 percent to 10 percent of most carriers' traffic in 2004.
In 2005, TeleGeography predicts that international VOIP traffic will grow by more than 30 percent from last year and that the volume of global internet traffic will continue to rise sharply.
Prices for bandwidth capacity, meanwhile, will continue to drop, Mauldin said, until carriers use up the glut of bandwidth capacity created during the fiber-optic building boom five years ago.
Mauldin takes comfort in the fact, however, that bandwidth prices aren't falling as much as they have in past years. If this keeps up, he said, prices may actually start going up.
"Obviously, traffic can't grow faster than the underlying capacity forever," he said.
