Myths about Internet growth

An anonymous reader writes "An article in The Economist outlines WorldCom's role in starting the myth that Internet traffic doubles every 100 days. This helped inflate the telecoms bubble."

Comments

Thats wrong

[happyhippy]

It should be 'annoying X10 pop unders double every 100 days'

Re:Thats wrong

[GuyFromAccounting]

As far as I can tell, X10 stopped using pop under adds the same day I replaced IE with Mozilla.

RIAA, MPAA, and BSA

[smashr]

I think we can safely file THAT particular statistic away with the MPAA's and RIAA's claim that piracy has cost billions and billions of dollars in lost revenue.

Of course, I could see the BSA, RIAA, and MPAA getting together and claiming that the piracy of billions of dollars of software is the CAUSE of traffic doubling every 100 days!

Growth follows the market

[gentlewizard]

The problem with this article, as well as the original Worldcom estimate, is that they assume linear growth. In reality, the demand for Internet bandwidth grows and shrinks with the economy in general. We're in a slump right now, so growth has slowed down. In the next boom, more people will want to download rich content such as video, which will in turn increase the demand for bandwidth.

Like the stock market, the bandwidth market has its up times and its down times. When you invest in the stock market, you invest for the long-term trend which historically has been up. In the same way, the need for bandwidth will continue to grow over the long term as we continue to find new and cool things to do with it.

Exponential growth

[delfstrom]

"The greatest shortcoming of the human race is our inability to understand the exponential function."
-- Bartlett, as quoted in my 1st year physics textbook

This raises the other question . . .

[Badgerman]

How many other "marketing-oriented" "facts" are being touted today as justification for business, hiring, tactical, or hiring strategies? Or to be cruder, how many other business lies are out there mucking things up?

There's a re-evaluation of business tactics and laws going on. Maybe its time to re-evaluate supposed technological "truths" as well.

And maybe we techies can use this as yet another example of the hype over reality in technology, since WorldCom is in the use. Next time someone non-technical tosses out something obviously ridiculous, bring THIS up and ask them where they got their idea.

Re:This raises the other question . . .

[bons]

You mean "facts" like:

• "Open Source is more secure because everyone can look for security holes"? (Even if no one actually does, which is likely on some of these projects.)
• P2P increases/decreases music sales (pick your favorite, they're both just guesses)
• COBOL is dead

We live in a world of blatent lies and guesses. What bothers me is that the article tries to pin the blame on the source of the "facts" instead of the horde of people who just accepted the "facts" as facts. Heck, Slashdot readers will rip into any moderator dumb enough to make THAT mistake. Why are we willing to accept such a low standard from anywhere else?

It's depressing to watch a reporter claim someone else is being irresponsible for starting a bad rumor and forgive everyone else for their complete failure to verify the truth of what turned out to be an urban legend.

Re:Not to troll, but..

[Noofus]

Its simply because people trust statistics from any sort of authority figure.

If the PRESIDENT says something, people assume he MUST be right.

If says "our industry is growing FAST FAST FAST", people will believe it. This appears to be how bubbles form (Enron, Worlcom, etc). People will believe statistics if they seem somewhat reasonable and come from what appears to be a reputable source.

Besides, this doubling every 100 days figure seemed like a great concept to latch onto (gee, humanity is becoming more connected...thats great!)

So I guess the answer IMO, is that people ARE just getting caught up in excitement.

Exponential growth

[Maniakes]

According to this, there was about 1 gbps of internet traffic in 1995.

If this doubled every 100 days, there would be 50,000 terabits per second of internet traffic today. There's actually less than one terabit/sec of traffic.

By 2010, we could expect more bits per second of internet traffic than there are atoms in the universe.

Capacity doubled - usage didn't

[hughk]

Nobody would put down a single fibre. It is too expensive to physically lay it. You lay two (or more) fibres instead but leave them unused (dark fibre). However, repeaters are there it is just they aren't attached wither end. Theoretically all you need is to connect a switch and you have your extra capacity.

This should have meant high bandwidth and low prices, but as suppliers like Worldcom had to borrow heavily for their infrastructure costs, they were stuck with high prices. Something similar happened with Deutsche Telekom in Germany. They built a fibre network through the former DDR but borrowed heavily to finance it. The things is that nobody was going to pay for that capacity at a premium price. Telekom didn't mess around with their predictions in the way that Worldcom did, but they also came unstuck.

The problem comes down to the revenue models and the telecom analysts in the banks. If I have a bank of 64K connections and I upgrade them to 1024K, I can't simply charge 16 times the price. A few customers can afford this (think banks), but many others can not.

Capacity including dark fibre definitely was doubling every 100 days but usage wasn't and certainly not revenue.

Re:Not to troll, but..

[medcalf]

This kind of thing happens all the time. Sometimes it's an honest mis-statement or a result of unstated assumptions. Sometimes it's a blatant lie. The perception of the false comment's status generally depends on your political views. (For example, a Republican would be suspicious of Clintonian whoppers, while a Democrat would be forgiving; and the opposite dynamic would hold with Republican political statements.)

That said, the reason that most people swallow them whole is because people believe what they hear from figures deemed "in authority", such as politicians, CEOs, doctors, and the mainstream media. All, interestingly enough, of these sources have egos the size of Texas and consciences the size of Guam. Why do people trust authority figures, given that there is every rational and historical reason to distrust them instead? Probably has an evolutionary basis (in that cohesive groups had better odds of survival, and adherence to authority in a crisis increased the cohesiveness of the group). In fact, the military deliberately teaches officers and non-coms the tone and style of speach needed to get instant obedience.

Moral: The media are stupid and lazy

[guacamolefoo]

This issue (a dubious statistic repeated infinitely in press) results from the fact that facts are not checked thoroughly before publication. This sort of stuff happened with the stats the women's movement used, environmentalists, conservative groups, etc. The number of women dying from eating disorders was a classic error that was endlessly cycled and never questioned until the misconception was permanently rooted in the public consciousness.

Every interest group pushing an agenda (yes, even profit-seeking corporations seeking to sell more bandwith) seems to come up with some dubious statistic like this. The media gobble up press releases, disguised oftentimes as "studies" which are bought and paid for by the interest group, and they spit them out on in the newspapers and other media outlets, sometimes virtually unchanged.

I am not surprised by the Economist's story -- I am surprised that it took so long for it to make it into print. I wonder how many times the Economist itself published that same "fact" before discovering that the emporer had no clothes.

Price of Bandwidth

[_Sprocket_]

We've all heard talk of over-built data networks and "dark fiber". What interests me is how this apparent over-capacity does not seem to match up the price of bandwidth and the apparent bandwidth management of consumer-level heavy users.

Is there a mismatch? Do we actually have a demand that's being held in check by an inappropriate pricing schedule (perhapse even businesses with a lack of vision)? Or does potential capacity fail to overcome the cost of "lighting up" and maintaining these over-built networks?

Re:Price of Bandwidth

[WolfWithoutAClause]

We've all heard talk of over-built data networks and "dark fiber". What interests me is how this apparent over-capacity does not seem to match up the price of bandwidth and the apparent bandwidth management of consumer-level heavy users.

I think what happened a few years ago was that the price was pushed below the sustainable level by VCs indirectly financing your bandwidth. For a couple of years I had a deal that actually cost me nothing whatsoever for my internet connection; actually it saved me 10% of my telephone line rental as well.

What's happened now is the VCs have gone away and the price has bounced back to where it really should have been in the first place and the companies supplying bandwidth are turning a profit again. For companies profit is like breathing- you can hold your breath for only so long and then you die; the companies are breathing again; but looks like some held their breath for too long.

However the cost per bit is going down all the time, and we should gradually see the price that we pay come down with it. (Should being the key part of that sentence ;-)

Re:Price of Bandwidth

[jratcliffe]

But is there really a difference in the cost of providing bandwidth (other than hardware, which is still a fixed cost) if I want a low end ISDN line or an OC3 pipe? I would liken it to cable TV. Somehow I manage to now get digital cable with a few hundred more channels than its anolog predecessor for the same price. The cable company didn't really have to do all that much other than give me a new cable box (which I rent from them).

Sadly, not true. First, there are big differences in the cost of the customer prem equipment between different networking technologies. You can buy a cable modem for $80 or less in bulk - a SONET box capable of supporting an OC-3 link will cost you ~$15,000. That being said, if you want internet access, your local access provider (be it the phone, cable, or whatever company) is going to have to purchase a connection to the backbone, and that costs money too (figure $40k for a 155Mbps link). Secondly, on the cable front, going from a few analog to a lot of digital channels required billions of dollars in capital expenditures for the cable companies. First of all, they had to upgrade all the amplifiers and passive components in their networks, and introduce a lot of new elements, since the higher frequencies used for digital channels attenuate over shorter distances, and hence need to be re-amplified more often. In many cases, they had to replace the actual physical cable as well.

My phone line has been there for years. Other than a $50 line cleaning kit, what is really the increase in cost for me to get DSL? Other than equiptment that the telco buys to provide DSL. If they buy it to provide access to one user, what is the increase in cost when you add another 300 users? I understand that hubs and routers have physical limitations, but it just seems that we are getting porked.

The equipment on the other end of your DSL connection (called a DSL Access Multiplexer, or DSLAM), doesn't come cheap, and the unit's cost scales pretty close to 1:1 with the number of ports it has - net/net, the cost does rise with the number of customers. Beyond that, the telephone companies had to make some pretty significant adjustments in their network architectures (pushing fiber down the network, for example), to make DSL available on a widespread basis.

I might back up the above by comparing it to wireless (cell) phones vs traditional land lines. Don't the cell division make hand over fist compared to the land line division? I mean, they put up a tower that can service thousands of people. No cables (from telco to your phone) and thus significantly less service persons and cost per customer. It makes me wonder if my inflated cost for use of a cell phone (in my opinion) is there to offset the money-sucking land line division... Shouldn't cell phone service be only a small % of the (my) cost of wire-based telephone service in my house?

Actually, the cellular service providers are LOSING money hand over fist. First off, building those towers isn't cheap, esp. when you consider the legal aspects of getting access to the sites, permitting, etc. Second, they have to buy landline connections from the towers to their networks, and that is usually slow and expensive. Third, there's a limited number of users you can support from a given tower - spectrum isn't endless. This doesn't even begin to consider the costs of obtaining the spectrum itself - look at the billions of $ that the European wireless carriers paid for 3G licenses there. That being said, it's certainly cheaper, if no network exists, to serve an area with cellular than build a physical phone network. A lot of phone companies in the developing world are doing just that (Telmex in rural Mexico, for example). The real costs of cellular, on an operating basis, are operating - marketing, customer service, etc. The industry still has really severe bad debt problems, and customer churn is high, so getting and keeping customers sucks up a huge amount of the revenue pie.

Overall, are we getting hosed? Basically, no, I don't think so.

good write-up over at LightReading

[JUSTONEMORELATTE]

LightReading had a very well-researched article about this earlier in the week. Here's a quote from the article, where a former employee explains the numbers:

Here's how it worked, according to the former WorldCom employee: WorldCom would hook up new customers with connections capable of handling, say, up to 1.5 Mbit/s of data, knowing that for most of the time the lines would only carry a fraction of this amount. WorldCom would then use the 1.5 Mbit/s figures, not the actual traffic figures, when citing Internet traffic growth statistics.
"There was massive connectivity growth, but UUNET's business wasn't growing as much, "says the former employee.

UUNET was (still is?) a division of Worldcom.

Typical

[llamalicious]

The next thing you know, they'll be telling us computers double in speed every 18 months!

er.

Worldcom Blame...

[Kakarat]

I am sure that Worldcom's bloated statistics did mislead some, however it's quite convenient where the other companies are laying the blame.

Rival telecoms companies believed the myth and cited UUNET's figures, even if their own traffic figures disagreed.

I find it disturbing that these rival telecom companies aren't making their own decisions. "Tech: Sir, we are only using 3% of our bandwidth and 45% of the nations traffic traverse our networks. CEO: Damnit, can't you hear? We need more bandwidth!! MOORRRREEE!!!!"

Re:Not to troll, but..

[ch-chuck]

most people swallow them whole is because people believe what they hear from figures deemed "in authority", such as politicians, CEOs, doctors, and the mainstream media.

NAPOLEON: What shall we do with this soldier, Guiseppe? Everything he says is wrong.
GUISEPPE: Make him a general, Excellency, and then everything he says will be right.
-- G. B. Shaw, "The Man of Destiny"