Are we in some real sense in a “post-productivity” era of communications, where the driving force for building and operating networks is entertainment? Yes, some of us might argue.
What drives traffic across the global backbone? Video. Globally, IP video will represent 79 percent of all traffic by 2018, up from 66 percent in 2013, according to Cisco.
What drives fixed network Internet access traffic at peak hours? Video. In fact, video drives as much as 63 percent of total traffic during peak periods.
What drives mobile network bandwidth? Video, which represented 53 percent of mobile network traffic in 2013.
Though consumed bandwidth is not identical to service provider revenue, the two are related. Over time, revenue for fixed and mobile networks will be driven by data bandwidth, primarily related to Internet apps, and Internet app traffic disproportionately will consist of video.
Uncompressed 4K video, for example, requires 9.2 Gbps per video stream. Not even a gigabit connection can handle video at such rates. Video encoded at 8K standards might require between 23 Gbps and 28 Gbps. Obviously, no app provider will stream at such rates.
But the dimensions of the problem are very clear: video drives video demand across all networks.
Looking at fixed network service provider revenue, managed video and Internet access revenue streams already are driven by video services and applications.
If AT&T succeeds in acquiring DirecTV, for example, video entertainment would be the single biggest revenue stream, followed by high speed access, itself increasingly used to support video consumption. Voice but be only the third biggest revenue contributor.
The revenue picture is different at Verizon, which earns half its total revenue from business customers. Video might represent as much as 35 percent of consumer revenues, but perhaps only 17 percent of total revenue.
If you wonder why AT&T seems far more interested in consumer video entertainment, revenue tells the story. Consumer video entertainment has much less impact on total Verizon results than video does for AT&T total revenue.
AT&T, for example, says that upstream traffic is growing at double the rate of downstream traffic, and the reason is uploads of photos and video to social sites. In other words, in addition to driving more downstream bandwidth demand, entertainment now also drives the need for more upstream bandwidth.
Long Term Evolution networks, for example, will grow speeds by concatenating spectrum bands, as two South Korean mobile service providers will do by the end of 2014, enabling 300 Mbps top speeds.
T-Mobile US says it eventually will use 20 MHz by 20 MHz of bandwidth, enabling speeds up to 150 MHz for its LTE network.
The point is that global networks now are sized for video entertainment. Increasingly, many enterprise networks (especially networks operated by application providers with a high consumer video component) also are sized for video apps and services.
In that sense, we are well past the point where networks of all types are driven by “productivity apps” and uses. These days, entertainment video drives investment in networks, and increasingly, service provider revenue.
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