This video may be “1080p,” but the frame-rate is slow, and the video motion is thus not very smooth. George Ou estimates the bit-rate at 3.7 Mbps, which is not enough for real full-motion HD. But we’re moving quickly in that direction.

• Internet traffic growing at least 45% annually.
• Web video jumped to 52% of all Internet traffic from 42%.
• P2P, although still substantial, dropped more than any other application.
• Google, between 2007 and 2009, jumped from outside the top-ten global ISPs by traffic volume to the number 3 spot.
• Comcast jumped from outside the top-ten to number 6.
• Content delivery networks (CDNs) are now responsible for around 10% of global Internet traffic.
• This fast-changing ecosystem is not amenable to rigid rules imposed from a central authority, as would be the case under “net neutrality” regulation.

Around 6:30 p.m. EST, Akamai’s Net Usage Index for News spiked all the way to 4,247,971 global visitors per minute vs. normal traffic of 2,000,000, a 112 percent gain.

See our new paper estimating the growth of consumer bandwidth – or our capacity to communicate – from 2000 to 2008. We found:

• a huge 5,400% increase in residential bandwidth;
• an astounding 54,200% boom in wireless bandwidth; and
• an almost 100-fold increase in total consumer bandwidth

U.S. consumer bandwidth at the end of 2008 totaled more than 717 terabits per second, yielding, on a per capita basis, almost 2.4 megabits per second of communications power.

Well, here’s CEO Reed Hastings in Tuesday’s Wall Street Journal:

Netflix Inc. is a standout in the recession. The DVD-rental company added more subscribers than ever during the first three months of the year. Its stock has more than doubled since October.

But Netflix’s chief executive officer, Reed Hastings, thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix’s revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. So Mr. Hastings, who co-founded the company, is quickly trying to shift Netflix’s business — seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets.

His position offers a rare look at how a CEO manages a still-hot business as its time runs out. “Almost no companies succeed at what we’re doing,” he says.

I think that new video applications require lots more bandwidth — and, equally or even more important, that more bandwidth drives creative new applications. Two sides of the innovation coin. And I think investment friendly policies are necessary both to encourage deployment of new wireline and wireless broadband and also boost innovative new applications and services for consumers and businesses.

But this article, as one of many examples, mis-summarizes my view. It uses scary words like “apocalypse,” “catastrophe,” and, well, “scare mongering,” to describe my optimistic anticipation of an exaflood of Internet innovations coming our way. I don’t think that

the world will simply run out of bandwidth and we’ll all be weeping over our clogged tubes.

Not unless we block the expansion of new network capacity and capability.

The next line of attack is to use the words of the expert analyst Andrew Odlyzko to “debunk” a point they have just invented.

According to Odlyzko, the current Internet growth rate of about 50% per year “can be accommodated with essentially the current level of capital investment.” 

But this entirely misses the point. Why? Because the “current level of capital investment” is absolutely huge. And it is not a given — it is not automatic — that dozens of communications companies in a highly competitive, fast-moving broadband world can sustain the “current level of capital investment” if big obstacles are thrown in their path. In fact, it’s highly improbable.

In 2008, the U.S. invested $455 billion in information and communications technology. Things like computers, software, routers, switches, fiber optics, and cell towers. That was about 22% of all U.S. capital investment and an amazing 43% of all U.S. non-structure capital investment. We invested $127.3 billion in communications equipment alone (real private fixed investment; 2000 constant dollars). Communications service providers account for the bulk of this, investing about $70 billion per year.

It’s easy, with useful and entertaining Internet innovations popping up all around us, to just assume these modern miracles will continue flowing. But new productivity-enhancing technologies like cloud computing do not just appear out of, er, thin air. They require hundreds of billions of dollars worth of risky investment in support of speculative business plans in markets that are changing faster than any markets ever have.

The most reliable way to block the future is to assume it will happen. We have to make it happen.

Maybe the 101-megabit product is a good experiment. Maybe it will be successful. Maybe not. One hundred megabits per second is a lot, given today’s applications (and especially given cable’s broadcast tree-and-branch shared network topology). A hundred megabits, for example, could accommodate more than five fully uncompressed high-definition TV channels, or 10+ compressed HD streams. It’s difficult to imagine too many households finding a way today to consume that much bandwidth. Tomorrow is another question. The bottom line is that in addition to making a statement, Cablevision is probably mostly targeting the small business market with this product.

Far more perplexing than Cablevision’s strategy, however, was the reaction from groups like the reflexively critical Free Press:

We are encouraged by Cablevision’s plan to set a new high-speed bar of service for the cable industry. . . . this is a long overdue step in the right direction.

Free Press usually blasts any decision whatever by any network or media company. But by praising the 101-megabit experiment, Free Press is acknowledging the perfect legitimacy of charging variable prices for variable products. Pay more, get more. Pay less, get more affordably the type of service that will meet your needs the vast majority of the time.

Free Press has recently been criticizing other bandwidth caps, like Time Warner’s 250 gigabyte per month limit for standard users. But offering tiers of service — again, pay more, get more; pay less, get broadband more affordably — is just another type of bandwidth cap. You can’t pay $40 a month and demand the same bandwidth for which an Internet company pays tens of thousands of dollars per month. Tiers based on peak bandwidth (speed) or tiers based on total data consumed over some period of time are just different ways to divide capacity and differentiate products. Far from being anti-consumer, these varied rational pricing strategies, which charge more for more usage, axiomatically make getting basic broadband more affordable. More broadband products means more choice and higher consumer welfare.

The 101-megabit product is in itself a “cap.” Fast though it is, 101 megabits is not “unlimited,” which is what Free Press seems to want. Moreover, the new offering creates new “caps” at the 15 and 30 megabit levels, which are its existing products. Go to the last line in Free Press’s statement, and you begin to see through all the recent feigned outrage:

We also encourage companies like Cablevision to think about the other part of the value equation — price. These days, lower prices are just as important as faster speeds.

So. Unlimited service for ever lower prices. They want not just something for nothing. But, seemingly, everything for nothing.

In fact, if I remember, Free Press used to favor per-usage data metering and oppose tiered speed offerings. Just the opposite of today’s apparent position. 

And can anyone tell me what this paragraph means?

It does, however, beg the question why Cablevision can offer fast access with reportedly no caps or overage fees, when others claim such a plan would cause the sky to fall and an exaflood to break the Internet. We hope this new announcement will put an end to the bandwidth bogeyman.

Backwards, again. We’ve always said companies would need to offer higher-end services — and charge more for them — to both drive and accommodate new bandwidth-intensive applications. It’s the type of inflexibility in prices, products, technologies, applications, and business plans that could squelch the crucial wired and wireless bandwidth investments that we need to deliver an exaflood of exciting new applications and services to an ever greater portion of the population. 

When you come right down to it, Free Press’s “position” is inconsistent to the point of just not making much sense at all.

Here’s one of my papers:
Estimating the Exaflood – 01.28.08 – by Bret Swanson & George Gilder