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RHK Predicts Bandwidth Demand will Increase 300 Percent Over Decade

Telecom analysts RHK this week predicted that demand for high-speed Internet access will surge 300-fold over the next eight to 10 years.

RHK's study, commissioned by Nortel Networks, forecast the boom will be driven by increasing numbers of Internet users and increasingly complex applications and content. The report suggests that by July 2001, there will be about 800 million Internet users, up from 380 million today.

RHK pointed to American households, some 400,000 of which are adopting high-speed access each month. Also, RHK said high-speed Internet users spend 61 percent more time online than a year ago because the high-speed online experience is more rewarding. Asian growth is also a factor: RHK said China is adding about 2 million Internet subscribers a month and Korea already has 2 million high-speed households hooked up. The company also said trans-pacific capacity is consumed as fast as it is installed or made available.

"The current levels of investment in new networks worldwide will expand to meet coming demand for the Optical Internet," said John Ryan, principal analyst at RHK and chief author of the study. "The use of the Internet as a basic tool within the global economy suggests a larger role for telecom services and systems and revenue growth in all sectors. Clearly, the bandwidth capacity in place today is dwarfed by what we will need in a year or two, given the current rates of explosive growth we are seeing."

The study also suggests that behavior will change as people modify their social, business and entertainment lives to make room for services and applications enabled by the Internet. The study cites Napster as a case in point.

"At one university studied, bandwidth consumed by Napster rose to 27 percent of all Internet traffic at that university -- illustrating the potential of a new service to drive multi-terabit demands for bandwidth," RHK said.

Ryan added, "Napster went from zero to 10 million users in one year. That's an indication of the amazing power of fast, free bandwidth to alter the way people behave. When people grow used to the fact that they can grab a file from across the country or around the world as easily and quickly as they can from their own hard drive, we will start to see all kinds of new forms of behavior that will take advantage of this bandwidth. We are just at the start of an explosion in the use of networks."