Internet growth
Broadband and mobile usage is increasing at an alarming rate; here's what businesses should know
The numbers are staggering and almost incomprehensible.
Internet usage is set to grow fourfold in the next five years, according to the annual Visual Networking Index report released by Cisco Systems Inc.
Staggering enough is that usage has grown by 800 percent over the past five years. Combine that with the projection that growth from 2014 to 2015 will be equal to all Internet traffic recorded worldwide in 2010, and it’s hard to imagine what it even means.
That doesn’t make awareness any less important, said John Stineman, executive director of the Heartland Technology Alliance, which is working to make sure businesses are aware of the impact this issue could have on them.
“This is a very real thing, and it impacts people in a real way,” Stineman said. “It is going to be something that the business community and business leaders will need to focus on and work with policy-makers to get them to focus on so we can get there.”
The problem
The issue is far from easy to understand. An explosion in usage means more and more people are using the Internet’s infrastructure, on a variety of devices for a variety of purposes. For example, the Cisco report asserts that in four years, Internet traffic volume will be so large that every five minutes, usage will total the equivalent of downloading every movie ever made.
Can the Internet’s infrastructure run out of space to hold the massive expansion of usage? Not exactly, experts say. The Internet won’t stop working, but a failure to keep up with usage would likely result in diminished innovation.
“If we just stopped growing today and didn’t deploy another cell tower or another network gizmo, then, no, we wouldn’t have enough,” said Diane Smith, an adviser for MobileFuture, a coalition of technology and communications companies that includes AT&T Inc. and Cisco. “But we grow this network pretty rapidly.” Smith, who is running for Montana’s only seat in the U.S. House of Representatives, was the speaker for a webinar hosted by the Heartland Technology Alliance earlier this year.
The ability to expand the network exists, but experts say it will take an effort by policy-makers to allow private companies to invest in more spectrum, or wireless capacity. It might sound simple, but figuring out exactly how to invest in the future of the Internet is anything but.
The effect on business
What if we somehow don’t keep up with network demand? The more tangible way to think about consequences is that if Internet service providers don’t have enough spectrum, they might have to ration service, or charge more for additional data usage by customers, said Brian Fontes, a former chief of staff for the Federal Communications Commission (FCC) and an adviser to MobileFuture.
For businesses, that could mean increased costs associated with using data for business applications, which could ultimately translate to higher prices for consumers.
To look at it another way, it helps to think back five years.
The idea of walking around with a smartphone and using it to read the news, check Facebook or do anything business-related was more or less a foreign concept. Describing to someone the concept of a company such as Des Moines-based Dwolla Corp., a mobile phone-based payment system, would likely have been met with blank stares.
As such, it’s nearly impossible to imagine what kinds of things people will be able to do with technology in 2015, the final year of Cisco’s projection.
That’s not to say the Internet will cease to work for a small business or a company the size of Principal Financial Group Inc., but it could prevent them from making innovations they would have otherwise made, or from utilizing innovations that others could have made.
“The bottom line is, if you look back at the last five years to now, there’s no way that between now and the next five years we’re somehow going to go backwards,” Stineman said. “Whatever it is going to be, it’s going to be quite a bit more bandwidth.”
If that sounds hypothetical, it is, but only to an extent. Anybody can speculate as to what the effects will be of more Internet usage, but there will be effects.
“I think it will affect businesses pretty dramatically,” Smith said, noting that the impacts could be felt most heavily in rural America. “Think about Realtors, or guys that are driving trucks from place to place, or anybody who’s shipping anything. All of those businesses live and die off of spectrum-based applications.” Even in health care, where an Internet-based application can monitor someone’s blood sugar or heart rate, “and all of a sudden those signals get interrupted, which doesn’t happen today … small errors can create big, bad outcomes.”
Freeing up spectrum
Spectrum is assigned by the government to private communications companies, such as phone and Internet providers or media outlets, for use. Companies bid on it through an auction process, where “they literally go in and there are blocks of spectrum that are available,” Smith said.
“The issue now is they need to free up and allocate some additional spectrum for these mobile application uses that everybody’s doing,” she said.
Former FCC chief of staff Fontes lays it out like this: The government knows spectrum needs to be freed and allocated, but it’s a long process. The FCC manages spectrum use for commercial purposes and works with the National Telecommunications and Information Administration, which manages government use of spectrum.
Fontes is on an advisory committee in the U.S. Department of Commerce that is charged with helping identify 500 megahertz of spectrum that can be reallocated in the coming years – the key word being years. That involves a process that includes looking at currently allocated bands that are unused and can be redistributed, and coordinating between government agencies and private companies. Even if everybody agrees about what needs to be done, the process itself can take eight to 10 years, well beyond the timeline of Cisco’s forecast.
The alternative to that, he said, is encouraging private investment, more efficient uses of spectrum and innovative solutions. One example is putting up more cell sites; another is merging with another company to be able to utilize its spectrum, which is what AT&T Inc. is trying to do through its proposed acquisition of T-Mobile USA Inc.
Investing in infrastructure
Joe Hrdlicka, director of government relations at the Iowa Telecommunications Association (ITA), which represents a number of rural telephone and Internet carriers throughout the state, said that keeping up with growth is something that ITA members are thinking about. In a survey earlier this year, 34 members indicated they have held off on broadband network investment because of regulatory uncertainty.
That being said, the ITA is working with Debi Durham, director of the Iowa Economic Development Authority, to create a policy that helps encourage broadband deployment, Hrdlicka said.
From a national perspective, Fontes adds, “I do believe in innovation.”
“I do believe that folks, when pressed with extraordinary circumstances, will try to find solutions,” he said.
Economic development is often thought about through a lens of roadway infrastructure, but for businesses to develop the way they’d like to in the future, the infrastructure of the Internet has to be thought of in the same way, Stineman said.
“My point is not to have a doomsday message, but my point is that we can’t pretend like there isn’t something we need to be paying attention to here,” he said. “We don’t have a crumbling communications infrastructure; we definitely have a communications infrastructure issue. And if we don’t get ahead of it, it’s going to be a bigger problem.”