The first accurate, data-based assessment of internet traffic volume since 1996 has revealed that US internet traffic is growing by an annual factor of four.
The ability to assess network growth is expected to be a boon to financial analysts, who will gain a significant tool for understanding industry performance and predicting telecommunications share prices.
Dr Lawrence Roberts, chief executive of Californian network switch manufacturer Caspian Networks, announced the figure on Thursday at a Dublin conference of international internet luminaries. Dr Roberts, who conducted the research, is an internet pioneer and networking expert who was put in charge of developing the Arpanet - which became the internet - in 1964.
"Internet growth was something no one could get their hands on, because there was no data," said Dr Roberts. Estimates offered by carriers such as UUNet, AT&T and MCI "are basically wrong" he said. "The market is dramatically growing in ways no one suspected."
According to Dr Roberts' data, internet traffic was expanding by a factor of 2.7 up until January 2000, when it jumped to 3.6 for that year. In the first six months of 2001, expansion hit a factor of four, which Dr Roberts expects will remain steady through 2008.
The figures will come as a surprise to many analysts and carriers, who had believed network usage was sluggish, static or perhaps even in decline, following the downturn in the economy, the failure of many dot.coms, and the drop in demand for network equipment.
Dr Roberts said the last time that accurate internet traffic data was available was 1996, when the US government still ran the internet and controlled the complete network. "After that, there were competing carriers, so there was no way of finding out what the traffic is," he said.
For half a decade, measuring network traffic has been a matter of guesswork. Analysts estimated network traffic flow by looking at how many new nodes (connection points) were added to the internet. They also studied the sales figures of infrastructure companies such as Cisco, Juniper and Nortel Networks, which sell the building block equipment for networks.
For financial analysts, having to rely on such "guesstimates" has made it extremely difficult to measure true market demand for network capacity and thus, to predict share prices for telecommunications companies.
Dr Roberts obtained the data for making his analysis by signing non-disclosure agreements (NDAs) with all 19 major US carriers - a task likely to have been smoothed by his historical profile within the industry. He also looked at the number of network trunk ports (places where segments of a network interconnect) and nodes and the ways in which they are utilised for each carrier. Because the US network still handles the bulk of internet traffic, statistics for the US give a good snapshot of global network traffic.
Dr Roberts said networks are handling internet traffic more efficiently because of improved routing and switching. In addition, he said, there had been an over-installation of some network pieces in the past 18 months. Therefore, looking only at the current sales of equipment companies, and current network build-out, gives a deceptive picture of data traffic.
Dr Roberts was a speaker at Digital Infrastructures, a two-day technology and strategy conference for industry executives run by the California-based Technology Transfer Institute/Vanguard.
