Cisco (CSCO) expected a staggering increase in IP traffic between now and 2013. A new report from the router company says that global IP traffic will quintuple in the five years ending in 2013.
The primary reason for the surge will be video traffic which Cisco defines as file-sharing, TV, internet video and video-one demand. Video will account for 91% of all consumer Internet traffic four years from now.
While the news may be good for Cisco and router sales, it probably presents a severe problem to telecom firms like AT&T (T) and Verizon (VZ), and large cable companies including Comcast (CMCSA), Cablevision (CVC), and Time Warner Cable (TWC). Each of the firms is making some attempt to cap bandwidth use, to a large extent because the “pipes” going into most American homes can only carry so much data. Upgrading the plants of the broadband companies is a multi-billion task as Verizon is finding as it builds out it FiOS product.
Wireline broadband is not the only means of delivery that faces bandwidth issues. Cisco says that mobile video will have a 150% compounded annual growth rate between 2008 and 2013. That forecast may be optimistic if Sprint (S) does have have its WiMax national network in place and AT&T and Verizon Wireless are not in the market with their 4G products.
No matter what happens, Cisco is likely to sell a lot of broadband delivery hardware.
Douglas A. McIntyre