Thanks to video sites like YouTube, News Corp.'s (nyse: NWS - news - people ) social networking phenomenon MySpace and online videogame services like Microsoft's (nasdaq: MSFT - news - people ) Xbox Live, U.S. Internet carriers saw usage increase up to 90% in the past year, Nortel estimates. It's not that more people are getting on the Web; it's what they're doing when they're on there. A conventional Web site may push a few hundred kilobytes of data across the Internet over a three-minute span, but watching a streaming video clip for the same amount of time requires moving ten times as much data.
The increased traffic demands are forcing giant telecommunications carriers that carry much of the world's Internet traffic to keep sinking billions of dollars into their networks. Research firm Infonetics projects that major carriers will spend $203.1 billion worldwide on capital expenditures this year, up 5% from last year. But unlike the last build-out, when companies buried thousands of miles of long-haul fiber-optic cable under the sea and across continents, today's construction is focused more on connecting local homes and businesses with faster Internet pipes.
"The bottleneck is still in the local and metro areas," says Lisa Pierce, a vice president with research and consulting firm Forrester. "It's not being built out fast enough."
Does this add credence to the arguments of the carriers in the "net neut" debate?
Network neutrality, Internet, Broadband, Forbes, Verizon, AT&T