Network Traffic Forecast and Analysis 2013-2017

Network Traffic Forecast and Analysis 2013-2017

IGI, Date of Publication: Sep 18, 2013

This report provides the reader with a forecast for North American Network Traffic for the next several years, but perhaps more importantly, it will also explore the industry and consumer patterns that are driving that traffic. The lessons of the very recent history of telecommunications suggest that it is very important to understand network traffic patterns and the resulting, reasonable forecasts for growth. Dramatic “busts” disastrously impacting entire industry segments have resulted from a misunderstanding of traffic patterns and the resulting misleading forecasts. This report is directed at trying to provide understanding of these parameters and providing a basis for sound business judgments. This report will provide hard data traffic forecasts by all sources of traffic on the network and will use those source forecasts to build composite forecasts, but, as noted, it will also do more than just provide raw numbers, by giving the reader a perspective of the drivers and patterns behind those numbers. The report will use the “Demand” (traffic) and “Supply” (network resources) paradigm of the economist to help understand the interactions of the traffic “market place”.

Traffic Demand Today

Traffic demand on the network is largely driven, today, by the various sources comprising the Internet and particularly by mobile data traffic. The data streams resulting from end users accessing the Internet or the cellular telephone network are the major sources of traffic growth. These data streams comprise three of the four “Major Sources of Traffic,” as identified in this report and they are the largest and the fastest growing. Two companies, more than any others, are responsible for this growth – Apple and Microsoft. Of course, there are many other companies (e.g., Samsung – the largest cell phone maker, Google – the developer of Chrome, etc.) that are a part of either or both of these markets, but these two are almost entirely responsible for inventing the markets of the Smartphone as we know it today and the Internet.

Problems in the Industry

There are dramatic changes facing Apple and Microsoft, who are the largest companies in the US telecommunications business and who are among the largest companies in the World. Both Apple and Microsoft are having financial troubles. Regardless of their cash on hand (a measure of past successes, not a promise of future success) these two companies are reporting slowing sales of their major products – hardware in Apple’s case and software in Microsoft’s case – and resulting lower net earnings. As this is being written, Microsoft has bought the Nokia cell phone assets in a bid to get a foothold in the cell business, and Apple has announced a new release of its operating system and new iPhone models. Their troubles are symptomatic of the industry and must be discussed in the context of traffic demand – the subject of this report.

On the supply side of the equation, a similarly caused situation is occurring with the largest telecom companies (primarily AT&T and Verizon) in that they are having to build network infrastructure to carry traffic for which they can’t charge adequately thus reducing their return on investment, while their base services (landline telephones) are disappearing.

All of these problems in our industry are related to traffic: its growth, its source and its nature. This report addresses a forecast for US traffic in total and by source, and provides an analysis of the traffic growth patterns from each of the various sources. The sources have been structured in a way that they are physically separate, and thus can be dealt with on an investment basis.

Organization of the Report

This Report will investigate the parameters of this situation – supply and demand, wire-line income, optical network innovation, and telecoms’ investment. The report is over 130 pages long and contains over 85 figures and charts.

The Report will begin with a discussion of market drivers (the drivers of the market are what drives traffic) and will then look at the demand and supply situation of the network much as an economist would. The reader should remember that either an over-supply (wasted capacity) or unfilled demand (poor service, slow response times, etc.) can affect the traffic that the network experiences. In the “demand” section, we will introduce our first set of forecasts providing hard forecasts for the major sources of Internet traffic. As a part of the demand/supply review, we will investigate related issues such as the impact of changes at some of the major companies (Apple and Microsoft) and the impact of the conversion of the network from wire line to wireless.

The next major section will provide the hard data forecasts for traffic from each of the major sources of traffic. The report uses this breakdown (by sources) rather than just by Internet, etc., to make the data more useful to the reader.

The Appendixes provide several items (traffic definitions, terms, Histories of the companies mentioned, etc.) that are thought to be needed by many readers.



Table of Contents




The Lightwave Network


The Lightwave Series of Reports


General Reports on the Network


General Market Reports


Specific Systems Reports






Specific Drivers


The Giants Are Falling


Apple – The Best Device Maker in History


Microsoft – The Preeminent Software Developer in History




Demand - Optical Network Traffic


Major Traffic Sources


Four Major Sources of Traffic


AAA Access Lines


Mobile Devices


International Traffic


H-S Access Lines


Demand Growth - Summary


Supply - Capital Investment in the Network


Carriers’ Investments


RBOC Investment Plans


Verizon Investment Plans


Importance of Wireline


Summary Thoughts on Investment




Network Innovations in the last 20-30 Years




The Wireless Access Landscape


Forecast for Wireline to Wireless


RBOC Loss of Main Lines


It’s a Wireless Access Industry!


Can Advanced Architecture Services Make-Up the Revenue Gap?


Summary of Revenue Issues




Major Traffic Sources




Four Other (Non-IPTV) Sources of Traffic


AAA Access Lines


Mobile Devices


International Traffic


H-S Access Lines




High-Speed Access Lines Forecast


Household Penetration — New Forecast




Developing a High-Speed Line Traffic Forecast


Rationale for Updating the Traffic Forecast High-Speed Lines


New High-Speed (xDSL and Cable Modem) per Line Traffic Forecast


Change to 75% of BH to Average


Components of BH Traffic Change Over Time


New Internet Traffic Forecast from High-speed Lines (xDSL and Cable Modem)


Dialup Traffic


AAA Traffic


Mobile Traffic


Total Internet Traffic Forecast


Lightwave Network


Network Location of Internet Traffic


Internet Traffic Forecast


Other Traffic Types on the Backbone Network


International Traffic


Network Location of International Traffic


Forecast for International Traffic


VoIP Traffic


Location of VoIP Traffic on the Network


Forecast for VoIP Traffic


Other Data Networks


Location of Other Network Traffic


Forecast for Other Network Traffic


Private Line Networks


Location of Private Line Traffic


Forecast for Private Line Traffic


Voice Traffic


Location of Voice Traffic


Forecast for Voice Traffic




IPTV Global Architecture


Super Hub Office


Serving Offices


What are the Access Bandwidth Needs?


Drivers of Bandwidth Requirements


Bandwidth Requirements — 2012 Scenario




Total Network Traffic — No IPTV


Growth of the Internet


Total Traffic Forecast — Including IPTV




Overbuild – How?


Overbuild - Significance


A New Type of Competition


Summary of Overbuild Forecasts






Internet Traffic Calculations


Bits and Bytes


Transfer Rate


Busy Hour Traffic


Protocol Efficiencies


Statistical Multiplexing








Table of Figures

Figure 1, Lightwave Network
Figure 2, Market Capitalization of Various Competitors - 2012
Figure 3, Market Capitalization of Various Competitors – 2013
Figure 4, Mobile Traffic Forecast
Figure 5, Data Traffic from Major Sources
Figure 6, Comparison of Four Major Sources to Total Traffic
Figure 7: Internet Growth Rate — New Forecast
Figure 8, Summary Points on Demand
Figure 9, Supply Demand Relationship
Figure 10, AT&T Capital Investment 2009-2012
Figure 11, Verizon Wireline Capital Expenditures 2009-2012
Figure 12, Verizon Wireline Negative Growth
Figure 13, Verizon Wireline Revenue Negative Growth
Figure 14, Verizon Wireline as a Portion of Total Revenues
Figure 15, Network Showing Wireless Access
Figure 16, Wireless Data Forecast
Figure 17, Network Innovations
Figure 18, Mobile Network Access
Figure 19, Dilemma of Wireline vs. Wireless
Figure 20, Wireless Competition
Figure 21, Summary for Wireline to Wireless Migration
Figure 22, Verizon Wireline vs. Wireless Revenues
Figure 23, Verizon Loss of Main Lines vs. Wireline Revenue
Figure 24, Wireline Customers vs. Wireline Total Revenue
Figure 25, Alternatives for Making AAA Lines More Important
Figure 26, FiOS vs. Uverse Services
Figure 27, FiOS vs. Uverse Quarterly Additions
Figure 28, Revenue Issues
Figure 29, Total Traffic Compared to IPTV
Figure 30, Data Traffic from Major Sources – NO IPTV
Figure 31, Comparison of Four Major Sources to Total Traffic (no IPTV)
Figure 32 New High-Speed Access Forecast
Figure 33, High-Speed Lines Forecasts - All Types
Figure 34: High-Speed Access HH Penetration Rate — New Forecast
Figure 35: BH High-Speed per Line Usage — Old Forecast
Figure 36: New Forecast for Per Line Traffic
Figure 37: Components of New Forecast for per Line Usage in BH
Figure 38: Components of the Total per Line BH Traffic Estimates
Figure 39: Changes in per Line BH Usage Components
Figure 40: File Sharing Component Decomposition
Figure 41: File Sharing Components — 2006
Figure 42: File Sharing Components in 2010
Figure 43: File Sharing Components Change Over Time
Figure 44: Internet Traffic Formula
Figure 45: Forecast for Internet Traffic from High-Speed Accesses
Figure 46: Dial-up Lines Forecast
Figure 47: Dial-Up Traffic Forecast
Figure 48: High-Speed vs. Dial-Up Traffic
Figure 49: Ratio of High-Speed Traffic to AAA per Line Traffic
Figure 50: AAA Line Forecast
Figure 51: AAA Traffic
Figure 52, Mobile Traffic
Figure 53: Lightwave Network
Figure 54: Network Location — Internet Traffic
Figure 55, Internet Total Traffic Forecast
Figure 56: Internet Traffic Change over Time
Figure 57: Network Location of International Traffic
Figure 58: International Traffic
Figure 59: Location of VoIP Traffic
Figure 60: VoIP Traffic
Figure 61: Location of Other Network Traffic
Figure 62: Other Data Networks
Figure 63: Location of Private Line Traffic
Figure 64: Private Line Networks
Figure 65: Location of Voice Traffic
Figure 66: Voice Traffic
Figure 67: IPTV Global Architecture
Figure 68, Drivers of Access Bandwidth Requirements
Figure 69, Usage Scenario - 2012
Figure 70, 2012 Bandwidth Requirements
Figure 71, Forecast Access Bandwidth Requirements 2012
Figure 72, Comparison of Internet Access Speed Offered
Figure 73: Total Traffic Forecast (No IPTV)
Figure 74, Growth Rate - All Traffic - No IPTV
Figure 75, Internet Components Forecast
Figure 76: Internet Growth Rate — New Forecast
Figure 77, Total Traffic Forecast - Including IPTV
Figure 78: Backbone Growth Rates (Includes IPTV)
Figure 79, All Traffic Components with IPTV
Figure 80, Total Traffic Forecast and Growth Rate with IPTV
Figure 81, Verizon's NOOF Arrangement
Figure 82, Overbuild Forecasts
Figure 83: Traffic/Speed Relationships
Figure 84: Example of Various Traffic Sizes
Figure 85, Multiples of Byte
Figure 86: New Transfer Rate Forecast
Figure 87: Summary of Concepts



Date of Publication:
Sep 18, 2013
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