Global Internet traffic is expected to grow 32% per year from 2010 to 2015. In 2010, an average of 46 terabits/second traveled over the Internet and should surpass 199 terabits/second in 2015. But while IP traffic is growing exponentially, the budgets for network equipment are growing at less than 10%.
IDC predicts that spending on Ethernet equipment will grow about 8% per year from 2011 to 2014, so a critical challenge facing the industry is how to supply 32% more traffic annually while receiving only 8% more revenue per year. To meet both capacity and cost forecasts, the cost of bandwidth must decline at 18% per year (see Figure 1).
OUTLOOK: 1
GROWTH SPURTS: The evolution of the Internet
Meeting this required reduction in bandwidth cost will come from numerous factors, but first let's examine factors contributing to bandwidth growth.
Factors contributing to traffic growth
1. Video. Internet traffic growth is largely due to video streams to millions of televisions and smart devices (desktops, laptops, media tablets and smartphones). The first generation of Internet video streams were short, low-quality videos at tens or hundreds of kilobits per second (kbps) to PCs. These video streams are now being sent to billions of other devices and second-generation Internet video streams are long, high-quality videos at 1Mbps-5Mbps sent to high-definition televisions. Instead of streaming amateur video of skateboarding dogs to PCs, users are streaming feature-length films with over-the-top (OTT) video services like Netflix to televisions in their living rooms. The combination of long-form, high-definition videos and billions of access devices creates exponential traffic growth. [Also see: "Cisco: Puppy cams threaten Internet"]
2. Proliferation of smart devices. IDC predicts that for the first time ever, more than 1 billion smart devices will ship this year. Smartphones will make up the majority of these devices, with more than 500 million sold in 2012. By 2014, the number of smart devices in use will grow to more than 3 billion devices. These devices will make the Internet more accessible than ever so users stay online from more places for longer periods of time.
3. Expansion of the user base. The user base of the Internet is expanding rapidly as the cost to connect declines and the ease of connecting increases. According to the Visual Networking Index, the Internet user base is growing at about 5% per year from 1.7 billion users in 2010 to 2.2 billion users in 2015. The users are not only growing geographically, but they are growing demographically as the Internet becomes easier to use with more smart devices.
These three factors whip up a perfect storm that will stay with us for at least a decade. Internet service providers need to build out their networks to weather the flood.
The American scholar Albert Bartlett stated, "The greatest shortcoming of the human race is our inability to understand the exponential function." Examples help. If you invested $100 and got an 8% return over 10 years, your investment would reach $216. Not bad. But if you found an investment that had a 32% return rate, the $100 would multiply to $1,606 after 10 years -- much better.
With 32% annual growth, the money grows almost eight times more. The amazing aspect of the growth in Internet bandwidth is that there are minimal limitations to the demand for cheap bandwidth. The limitation in bandwidth is mainly from the supply side.
Reducing the cost of bandwidth
The main limiting factor in the supply side of the Internet is the amount of money invested in equipment supporting the devices where all the Internet traffic starts. The only way to provide exponentially growing bandwidth with minimal growth in investment is to offer more bandwidth/dollar every year. Ethernet plans to deliver more bandwidth/dollar in a number of ways including:
1. Denser, faster ports. The first main factor of bandwidth costs declines is by increasing port density per blade or switch and increasing the port speed. When the first 10G switches were released in 2002, they would sport one or two 10G ports/blade or pizza box switch. In 2011, many switches or switch blades in modular switches supported up 48 or even 64 10G ports. Integration and technology maturity enable higher port counts that drive the cost of bandwidth to new lows. [Also see: "The push is on to cut 100G Ethernet's price"]
ANALYSIS: What's beyond 10G Ethernet?
2. Higher utilization. Many Ethernet ports and servers have utilization rates of less than 30%. With technologies like server virtualization and media servers, the utilization of the network can rise over 50%. This higher utilization rate doesn't cost the user any more money and delivers more bandwidth.
3. Economies of scale. As Ethernet technology scales in production, manufacturers invest more money in technologies to lower costs. If only a few hundred ports of an Ethernet variant are expected to be shipped in a year, then only a few vendors are investing in the manufacturing technology. When tens or even hundreds of millions of ports of an Ethernet technology are sold every year, the industry reaches economies of scale so that production costs go down and competition goes up.
4. Integrated photonics. Most technophiles know how semiconductors have been integrating more and more electronics and lowering costs for decades. The photonics industry only used one laser and receiver on a link up to 10Gbps, so integrated photonics was not that necessary. With 40G and 100G, arrays of lasers are needed to make an optical module. Currently, 40GBASE-SR4 uses an array of four lasers while 100GBASE-SR10 uses an array of 10 lasers. These modules are using integrated manufacturing techniques to drive the cost of the modules down.
In summary, this array of factors will drive the cost of Ethernet bandwidth down so the gap between bandwidth demand and IT budgets can be overcome. To bridge the forecasted gap of 32% increase in bandwidth with 8% increase in spending, the cost/bit for Ethernet will need to drop at about 18% per year on average. The largest change in Ethernet costs over the next few years will be moving to higher-speed ports at lower cost and density and the economies of scale of Ethernet in general. The maturity of 40G and 100G technologies will drive the cost of bandwidth down as well.
The next fundamental change in Ethernet will be related to using integrated photonics to drive down the cost per bit in terabit/second systems. Many modular switches already support terabits/second when hundreds of 10G ports or tens of 100G ports are supported. Next generation modular switches will support tens of terabits/second via thousands of 10G ports and hundreds of 100G ports. Larger data centers will require this scale of bandwidth and Ethernet use the latest technologies to enable new applications on unprecedented scales. The exact mixture of technologies to reduce the cost/bit of Ethernet are not known, but the cost/bit will decrease as sure as the demand for more bandwidth will rise.
About the author: Kipp serves as president of the Ethernet Alliance. He is an author and engineer who participates in industry organizations, develops standards and writes books as a senior technologist at Brocade. Kipp is an expert on networking, including protocols, fiber optic links and cable management.
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