Net founder: traffic growth spells revival

Internet traffic quadrupled during the past year, and demand from corporations is so strong that carriers will be forced to start spending significant money on upgrades early next year, sparking a turnaround in the industry, a founder of the Internet said on Wednesday.

Lawrence Roberts, chairman of Caspian Networks, three decades ago created ARPAnet, the precursor of the Internet. Roberts based his findings on data that typically isn't available from tier 1 carriers in the US. He signed nondisclosure agreements to get information on the equipment carriers employ and how much of capacity was used on typical days and peak days. He compared total traffic in April and October 2000 with April 2001.

"Beginning in 2000, Internet traffic has doubled every six months, and it grew at the same rate the first quarter of 2001," Roberts said in a conference call. In the late 1990s when the industry grew and dot-coms sprouted like weeds, Internet traffic didn't grow as fast - some 280 percent per year.

Dot-com failures and the spectacular crash of companies with overly exuberant business plans fueled the myth that traffic on the Internet has slowed, Roberts said. But dot-coms never contributed more than 5 percent of all Internet traffic, he said. Enterprises hungry for 24/7 access to the Internet will fuel sharp growth for nine years before the expansion plateaus around 2010. At that time, the Internet industry will be valued at roughly $100bn per year.

Roberts also found that the top US carrier moves only 14 percent of all traffic, and the top four carriers combine for only 50 percent of traffic. Competitors had assumed the top players controlled more of the market. They should take heart at how wide-open the race still is, he said.

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