Are we reaching the limits of cyberspace?

The recent Telecommunications Predictions TMT Trends 2007 report, published by Deloitte, predicts a scenario where European bandwidth struggles to sustain the ever increasing growth of TV, music, social networking and commerce on the internet.
The reasons cited for the looming supply shortage are, the lack of a compelling business case for operators to buy and light fibre to meet the demand, combined with the time taken to deliver bandwidth.  How can this happen when Europe was “fibred up” between 1999 and 2002, creating the infamous bandwidth glut?
The reason we find ourselves in this position is that during the crash years of 2001-2004, operators dramatically scaled back plans, went bust or simply walked away, as there wasn’t the business to justify lighting these networks. Those left, scrapped it out for the remaining customers as the price of bandwidth plummeted, fuelled by the grey equipment debris of the crash. The hype of 2000 was, as it turns out, 5 years too soon. Fast forward to 2005 and here’s the tipping point. The price of 10G router optics comes into line, broadband penetration takes hold and everyone’s going online. Cue an explosion in demand. Happy days I hear you say, well for most not really, more a final straw. The grey markets were gone and operators had to build a new business based on buying new equipment and in many cases new fibre.
Contrary to the popular belief (where a single fibre can carry 800G so you only need a few fibres for the world) the reality is equipment isn’t always compatible for upgrade or new vendors have new technology and remember you are carrying live services so turning off the equipment while you change it isn’t really practical, if you want to keep your existing customers. The perpetual upgrade on a single fibre doesn’t work, what does is having another fibre or two. The need to put in new systems has created new supply economics for delivery of optical services, especially as fibre is now 55% of the cost of building your optical delivery platform.

So are we reaching the limits of Cyberspace and what does this mean for the future supply of bandwidth for Europe? Simply that those with fibre reserves are the only ones who are in position to supply the demand, so we need to look to them to keep the internet going.

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