What Drives Global Bandwidth Demand? Everything

No single driver accounts for the strong growth of Internet bandwidth demand in every region of the world. Instead, almost every trend in communications, computing and entertainment now collectively boosts demand for capacity.

More users, more users on mobile, more people watching video, more content consumption, stored in more places and assembled from more sources, plus globalization all contribute to higher usage.

But usage alone is not the whole story. “Where” usage occurs also has changed, with the greatest volume growth in Asia. That, in turn, leads to more traffic across Asia to and from Europe, and to and from North America.

Use of more-global internet exchange points (IXPs) likewise has affected traffic flows.

Historically, most traffic transited through US-based network access points (NAPs) in which backbones interconnected their networks and exchanged traffic. As all ISPs had to connect to the US for international transit, they also used these links to exchange domestic and regional traffic, a process referred to as tromboning.

Today, regional IXPs are used to exchange more local traffic. Still, the largest number and percentages of IXPs are located in North America, Europe and Asia. That in turn drives traffic between the three regions.

By 2018, perhaps 78 percent of all workloads will be processed in cloud data centers, Cisco argues.

But traffic between data centers is growing faster than either traffic to end-users or traffic within the data center, and by 2018, traffic between data centers will account for almost nine percent of total data center traffic, up from nearly seven percent at the end of 2013. 

The high growth of this segment is due to the increasing prevalence of content distribution networks, the proliferation of cloud services and the need to shuttle data between clouds, and the growing volume of data that needs to be replicated across data centers.

Data center traffic on a global scale will grow at a 23-percent CAGR, but cloud data center traffic will grow at a faster rate (32 percent CAGR) or 3.9-fold growth from 2013 to 2018, Cisco predicts. .

Cloud workloads are expected to nearly triple (grow 2.9-fold) from 2013 to 2018, whereas traditional data center workloads are expected to see a global decline, for the first time, at a negative two-percent CAGR from 2013 to 2018.

From 2013 to 2018, the Middle East and Africa is expected to have the highest cloud traffic growth rate (54‑percent CAGR), followed by Central and Eastern Europe (39-percent CAGR) and Asia Pacific (37‑percent CAGR).

      Cloud Traffic Growth by Region, in Exabytes

Region	2013	2014	2015	2016	2017	2018	CAGR 2013–18
Asia Pacific	489	716	1,010	1,368	1,802	2,331	37%
Central and Eastern Europe	85	120	170	238	331	442	39%
Latin America	89	130	180	240	312	394	35%
Middle East and Africa	31	53	86	132	193	262	54%
North America	643	857	1,102	1,384	1,701	2,077	26%
Western Europe	311	401	502	631	791	988	26%

Source: Cisco Analysis, 2014

      Regional Distribution of Total Data Center Workloads, in Millions

Total Data Center Workloads in Millions
	2013	2014	2015	2016	2017	2018	CAGR 2013–2018
Asia Pacific	16.3	20.9	28.4	37.9	48.0	61.2	30%
Central and Eastern Europe	2.3	2.7	3.1	3.6	4.3	5.1	17%
Latin America	2.6	3.2	3.9	4.7	5.7	6.9	21%
Middle East and Africa	1.8	2.3	2.9	3.5	4.3	5.2	24%
North America	56.1	62.8	68.7	73.9	80.3	88.0	9%
Western Europe	29.2	33.3	36.5	39.7	42.2	45.1	9%

Source: Cisco Analysis, 2014

The portion of traffic residing within the data center will decline slightly over the forecast period, accounting for nearly 77 percent of data center traffic in 2013 and about 75 percent by 2018. 

Despite the decline, the majority of traffic remains within the data center because of factors such as the functional separation of application servers, storage, and databases, which generates replication, backup, and read and write traffic traversing the data center. 

Furthermore, parallel processing divides tasks and sends them to multiple servers, contributing to internal data center traffic.

Broadcasters Call for Temporary Halt to U.S. TV White Spaces

Any database-driven approach to spectrum sharing will hinge on the accuracy of the databases, it goes without saying. 

Citing errors in the databases, the U.S. National Association of Broadcasters has asked for an immediate halt to TV white spaces operations in the United States.

“The current database design allows--and may encourage--users of TV white space devices (also known as TV Band Devices or TVBDs) to falsify information they are required to enter into the database when they register certain fixed and mobile devices,” NAB argues. “This information includes, among other things, the location information upon which the Commission premised the entire concept for spectrum sharing in the TV band.”

“Given that many policymakers view spectrum sharing via database-centered interference safeguards as critical to future U.S. spectrum policy, it is essential that the Commission correct these fundamental flaws now,” NAB argues.

The skirmishing is not terribly unusual. Struggles over allocation of spectrum often pit broadcasters against communications interests or satellite interests against mobile interests.

Cloud Computing Has Gone Mainstream

Between 50 percent and 68 percent of organizations surveyed by Spiceworks have adopted cloud computing, moves that automatically boost communications spending.

Market research firm IDC predicted that the worldwide cloud market, which encompasses private, public and hybrid clouds, will jump from $95.8 billion this year to $118 billion in 2015 and $200 billion by 2018.

The private and hybrid clouds, which will call for IT involvement, should see the strongest growth, according to Technology Business Research. The private cloud is expected to grow 35% year-over-year in 2015 with the hybrid cloud predicted to grow 50 percent.

Cloud, Data Center Spending Might Drive Communications to As Much as 43% of Total Enterprise IT Spending

Frost and Sullivan predict Indonesia cloud and data center services will be the growth engine for enterprise IT spending, growing 605 percent from 2013.

By 2018, enterprise IT spending in Southeast Asia will total $62 billion, according to forecasts from Gartner.

Indonesia enterprise spending overall will be up 317 percent from 2013. Frost and Sullivan predicts..

If global patterns of spending apply, communications spending in Southeast Asia will be much as $27 billion in 2018, using a rule of thumb that communications represents about 43 percent of all information technology spending, these days.

That might seem a high percentage. Keep in mind the forecast includes spending on mobile services as well as voice services and data bandwidth.

The Southeast Asia region comprises 11 countries of which Singapore, Malaysia, Indonesia and Thailand spend the most on IT and account for roughly 80 percent of IT spend in the region.

Together, Indonesia, Malaysia, Singapore and Thailand will spend $52 billion on IT in 2015, with annual growth of six percent, Gartner says.

Indonesia enterprise IT spending will reach US$3.8 billion in 2019,” said Ajay Sunder, Frost & Sullivan VP, up from $1.6 billion in 2014. Using the same 43 percent ratio, communications spending in Indonesia would reach $1.6 billion.

Indonesia will have around 1.7 billion connected devices by 2020 with over 470 million mobile subscribers and over 200 million active Internet users, Sunder said.

Globally, the percentage of communications spending specifically related to core communications services was much as 44 percent of 2014 information technology spending, and about 43 percent of all 2015 global IT spending.

                    Worldwide IT Spending Forecast (Billions of U.S. Dollars)

	2014 Spending	2014 Growth (%)	2015 Spending	2015 Growth (%)
Devices	696	3.8	732	5.1
Data Center Systems	141	0.8	143	1.8
Enterprise Software	317	5.8	335	5.5
IT Services	956	2.7	981	2.5
Telecom Services	1,626	-0.1	1,638	0.7
Overall IT	3,737	1.0	3,828	2.4

source: Gartner

Gartner estimates that enterprise spending on IT products and services in Singapore will be US$19.1 billion (SGD $24 billion) in 2015. Compared with other mature markets in the region, such as Australia, this intensity of IT spending is high relative to Singapore's gross national output and population.

The dominant sectors in 2015 will be communications, media and services, banking and securities, government and manufacturing. Together they will account for 70 percent of total enterprise IT spending in the country in 2015. The fastest-growing industry segments through 2018 will be banking and securities, utilities and manufacturing, and natural resources.

Spending by enterprises in Malaysia is projected to be US$12.6 billion (MYR 40.6 billion) in 2015 at an annual growth rate of 6.4 percent across data centers, software, IT services, internal services, devices and telecom services.