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Are We Addicted to Internet Bandwidth Like We Are to Petroleum

Guest post by: Michael Farrell

Article Overview: As worldwide demand for Internet connectivity rises, bandwidth will become an increasingly scarce commodity, suggests Mike Farrell with aspenIbiz. Read this short post about revolutionary technologies that make bandwidth usage more efficient with the potential to generate Information Revolution wealth opportunities.

Are We Addicted to Internet Bandwidth Like We Are to Petroleum

During my career with Deloitte in the San Francisco Bay Area, I consulted with companies that were building and using the Internet; these included network equipment manufactures, developers of application software for networks, and bandwidth and service providers. We developed web-mail, VOIP, and web-based video conferencing products. At that time, we thought of the Internet as an infinite resource; an endless collection of content and information. Now, a little over a decade later, this could not be further from the truth. Yes the Internet is a vast resource. But as with oil, the fuel that powers the Internet is finite. And if we fail to act soon, the way in which we access and use the Internet could change forever.

Where can we find scarcity on the web? Look no further than bandwidth.

Bandwidth is the capacity to move information. When you pay your Internet bill, you are paying for bandwidth; this is why higher bandwidth options like cable or DSL cost more than older, lower-bandwidth dial-up. Your phone bill is made up of bandwidth too; all those texts you receive, the e-mails you get, and the calls you make, are really just bandwidth. Even your cable TV bill is for bandwidth.

But if your bandwidth is just a pipeline to information, why are we spending so much on it? Information is supposed to be free, right? Well, the main factors that make up bandwidth costs are network maintenance and upgrades, as well as scarcity (more on scarcity in just a moment).

When a mobile carrier builds a new cell tower or a cable TV provider installs new cables, that's an upgrade cost. It costs the company money to build that infrastructure and the costs are passed down to the consumers who use it. No problem.

But where things get interesting is scarcity. The Internet is not quite as infinite as we would like to think and that shortage of available bandwidth commands a hefty premium. Just look at text messaging.

A recent tech blog post asked, "Do Text Messages Cost Too Much?" Of course they do; they are a complete rip-off. All you have to do is look at the little amount of bandwidth they require.

As a reference point, 600 text messages hold less data and use less bandwidth than a minute long phone call. To get an idea how popular texting has become, the average number of text messages per month has risen to 75 billion messages, which is over 10 times the average number of text messages per month of three years ago.

A government investigative committee recently asked the largest carriers why text messages costs have doubled since 2005. Surprisingly, each of the companies increased the price of text messaging at nearly the same time with identical price increases. These factors are hardly consistent with vigorous price competition that would occur in a competitive marketplace.

This scenario and growth rate highlights the power these protected utilities have over the marketplace. It also shows how misguided our legislators are when it comes to dealing with real technological problems.

Recent studies show that Americans spend as much on bandwidth as they do on energy. A family of four likely spends several hundred dollars a month on cell phones, cable television and Internet connections; this amount is about what we spend on gas and heating oil.

Internet companies, cable companies, wireless cell providers, and phone companies have a vested interest in keeping the supply of bandwidth low just as OPEC does with the production of oil. Scarce bandwidth means higher phone, TV, and Internet bills and ultimately more profits for the companies involved.

The federal government licenses, to communication companies, access to the airwaves. Many of the licensees of the radio frequency spectrum in the airwaves are not doing a very good job of using this resource efficiently. Over 90% of the airwaves are empty at any time.

Relying on monopolistic telecom providers for transmission of information is a dangerous path on which to continue. The best solution is to increase competition and open up nationwide the unused airwaves, or white space between channels, to provide additional high-speed Internet capacity all across the country. If telcos get the reigns to the white space, we can kiss goodbye the chance of seeing any improvement in bandwidth costs.

With continued government inaction, with continued restriction of the airways, and with the number of connected people in the world expected to double from 2.5 billion to 5 billion by 2015, there will be significant bandwidth scarcity.

Just think about the situation with oil. If someone needs to lower the amount spent on gas for commuting to work, they can't change the gas prices or the length of the commute time, but they can change one thing, their car. If they trade in their SUV for a hybrid, they can become more efficienct and they can decrease their commuting costs substantially.

As with lowering the commuting cost, the key to solving high bandwidth costs and scarcity is with efficiency.

A breakthrough technology that is revolutionary and providing efficiency for the internet service provider networks is called a control plane system that bridges the gap between hardware and software. This provides the capability to dynamically allocate data packets and bandwidth to users on the network of carriers with high-bandwidth networks. It is a way for individuals, businesses, government agencies, and academic institutions to lower their bandwidth costs and increase the performance of their networks.

This is a very important objective in today's budget-conscious economy; just like a commuter lowering their commuting costs.

I trust this post is providing some background and evidence that powerful breakthroughs in Carrier Ethernet, used in high-bandwidth networks, are underway. Transformative technology is driving solutions to bandwidth scarcity that could make you an Information Revolution Millionaire.

I favor a quote from Steve Forbes. Forbes says that pursuing additional financial education and the resulting increase in our financial literacy (including the investment potential of breakthrough technology) will open our eyes to alternative wealth creating strategies and this will be the key to resolving our financial crisis.

To gain the necessary financial education, it is best to obtain association with, access to, and membership in a wealth creation community. As a result, you will learn and have the knowledge to use alternative wealth creating strategies such as Bank on Yourself, debt reduction, and asset protection. You will be exposed to wealth acceleration investments in areas (discussed in previous blog posts) such as Carrier Ethernet technologies, nanotech lithography, robotics, nano-based next-generation battery technology, precious metals, water rights, oil, natural gas, potash mines, food commodities, and gold mines. You will have the knowledge to consider investments in energy assets that are inherently useful like oil rigs, hydropower, or methanol plants; things that are hard to build, difficult to replace, and costly to substitute; definitely not financial stocks, definitely not retail stocks, definitely not commercial property.

It is wise to monitor breakthrough technology as there are truly exciting developments afoot in the field of Carrier Ethernet technologies. I will continue to monitor developments and provide updates in future articles and at my blog over the next few weeks.

Finally, I want to thank Greg Guenthner and Jim Nelson of Agora Financial as they were the source of some of the materials about the technology advancements mentioned in this post.

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Article Tags: B2B B2C eCommerce, Bandwidth, Big 4, Breakthrough Technology, Deloitte, Digital Entrepreneur, Financial Education, Innovation, Internet, Mike Farrell aspenIbiz, Relationship Marketing, Tradeum, VerticalNet



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