IP Traffic Growth Is Recession Proof

While it does not grab the headlines that it did at the turn of the millennium, demand for IP bandwidth and services continues to rise at lofty rates. Market research firm TeleGeography determined that carriers added 13.2T bps of new capacity to their networks in 2010, a 55% increase from the previous year's level.A couple of factors are driving the bandwidth growth. In developing markets, broadband penetration is still in an early stage of development and carriers are trying to bring Internet service to customers. In more mature markets, wider use of bandwidth-intensive applications, such as video services, has sparked the need for additional capacity.

Carriers have been adding the extra capacity to ensure that there is sufficient bandwidth to support user transmissions. In 2010, average network utilization rose slightly to 32 percent while peak utilization remained unchanged from 2009, at 46 percent. In addition, IP transit prices continue to decline, even in mature markets like the US. Median prices for high-capacity Wide Area Network (WAN) ports have declined approximately 25 percent compounded annually over the past three years.

Moving into 2011, it seems like carriers will continue to add more bandwidth to their networks, so small and medium businesses will find needed bandwidth available and at their disposal. If they were concerned that their service provider would not be able to support higher bandwidth applications, such concerns seem unfounded. The more significant challenge may be their internal networks, which may need to be upgraded.