Internet Traffic: Growing or Slowing?

"In spite of the widespread claims of continuing and even accelerating growth rates, Internet traffic growth appears to be decelerating." That's the verdict from Andrew Odlyzko of the University of Minnesota, a specialist in Internet metrics who monitors more than 100 public sources of web traffic data for the university's MINTS project.

In his mid-year 2008 analysis, Odlyzko notes that estimates of Internet traffic growth are all over the map (even within Cisco, where company white papers describe slower growth rates than executives speeches). Citing that disparity, and the history of problematic growth projections (i.e. "the Internet is doubling every three months"), the MINTS project has focused on aggregating actual data that is available to the public. While many networks keep their figures private, Odlyzko says that MINTS data reflects "a substantial fraction of the world's Internet traffic."

To be clear, total traffic isn't decreasing, as it continues to grow at a rate of about 50 percent per year. But that rate of growth is slower than it has been, meaning that Internet traffic growth is not accelerating, but moderating.

One example noted by Odlyzko and MINTS is the recent trend at Cogent Communications (CCOI), the discount bandwidth provider. In its second quarter conference call, Cogent reported that its data traffic actually declined by 1% during that quarter, which followed a first quarter in which traffic grew 6% in January and was flat in February and March. That compares with a growth rate of about 75% for all of 2007

Noting the slowing growth, Cogent recently slashed bandwidth prices for many customers, with rates as low as $4 per megabit for customers who commit to a 10-gigabit Ethernet connection. "We're in an environment where Internet traffic growth is slowing, and while we believe this is temporary, we want to stimulate Internet growth," said Cogent CEO Dave Schaeffer.

As we noted in June, Odlyzko has seen traffic growth slowing in mature markets like Japan and Hong Kong. Will the US follow this pattern? Stay tuned.