Investing

The Countries Where Internet Use Will Explode

Think the Internet is big now?  You ain’t seen nothing yet.

A recent report from Cisco Systems Inc. has some astounding predictions, including one that global Internet traffic will rise 4-fold from 2010 to 2015, a compound annual growth rate of 32%.  In four years, internet traffic will be the equivalent of 204,100,000 people streaming Internet HD video simultaneously, all day, every day.   The report expects that there will be 15 billion network-connected devices in the world, twice the world’s population.  Those estimates, however, may prove to be conservative since  much of the growth is taking place  in fast-growing emerging economies such as  China and India.  America’s compound annual growth rate in Internet traffic of 26% pales in comparison to the countries on the 24/7 Wall St. list.  There are more than 230 million in the U.S.  That number is only expected to increase 2% by 2015.   Many commentators such as Strategy Analytics have lamented the poor performance of the U.S. compared with other countries in terms of broadband adoption and download speeds.  ” The United States, despite claiming a vibrant and growing broadband market, still falls shy of the top twenty in the 2010 survey,” the research firm says in its Global Broadband Scorecard: 2010Broadband Composite Index (BCI) Rankings.  “In fact, the US dropped three slots in our penetration rankings compared to our last update.”

Interestingly, one area that won’t experience significant growth is peer-to-peer (P2P) file sharing services such as BitTorrent.   Consumer VOIP (voice over IP demand) is expected to see a CAGR of 4%. Traffic from wireless devices will exceed traffic from wired devices by 2015, according to Cisco.

“P2P traffic, still the largest share of Internet traffic today, will decrease as a percentage of overall Internet traffic,” according to the report. “Internet video streaming and downloads are beginning to take a larger share of bandwidth, and together with Internet video calling will grow to over 60 percent of all consumer Internet traffic in 2015.”

The biggest opportunity for Internet growth, though, may lie in the Middle East and Africa, which Cisco expects will increase by 52%.  Business IP traffic in the Middle East and Africa will grow at a compound annual growth rate  of 30%,  faster than the global average of 24%.   Africa’s population, which is about 1 million now, is expected to double by 2050, according to the United Nations.  Experts are expecting broadband demand will rise at a CAGR  of more than 20% for the next few years.    The population in the Middle East doubled between 1976 and 2005, creating one of the reasons for the current unrest in the region.  The region’s population is forecast to rise 54% to 437 million by 2050 from 2010.

China already had  more than 457 million Internet users at the end of 2010, more than the combined populations of the United States, Canada and Mexico.  Growth there will continue to explode, however, thanks to the growth of mobile devices.  China Unicom,  China’s second-largest carrier, recently announced that it was developing its own mobile operating system.  The People’s Daily Recently reported that the company will “help push forward the digitization in southwestern Sichuan Province” over the next few years, which was the location of a devastating earthquake a few years ago.  Since the disaster, China Unicom has invested $308 million in Sichuan.

Internet and wireless growth in India, the second most populous nation, has exploded over the past few years.   In the most recent quarter, the number of wireless customers increased 9.38% over the previous quarter to 687.7 million, according to regulator Trai.  To its credit,  Trai recognizes that penetration rates are low and is encouraging the government to adopt policies to encourage greater broadband use.    Even so, there may be  500 million broadband users by 2012, bigger than the U.S. population, which is about 307 million.

Other counties on the 24/7 Wall St. list are seeing surging demand for wireless spectrum.  The Australian government has come under criticism for its spectrum management policy.  As the Sydney Morning Herald noted, many Australians “own multiple SIM cards for phones, broadband … and iPad tablets.”   That is also the case in Latin America.  Mexican billionaire Carlos Slim said earlier this year that he was planning to invest  $1.5 billion over the next two years in Argentina’s telecommunications sector.   MVS Communications and Clearwire Corp. recently announced plans to develop a $1 billion 4G network in Mexico.   Brazil is attracting attention from foreign investors, including Google Inc. (NASDAQ: GOOG), because of surging Internet use there.   The government in Brasilia recently announced plans to invest as much as $633 million  into internet services each year until 2014.

These are The Ten Countries Where Internet Use Will Explode.