A virtual hit parade of broadband bankruptcies, WorldCom, being the latest, has put the entire future of the Internet at risk. It is time to worry about the gradual degradation of the quality of the Internet and the digital lifestyle we have all become accustomed with.
The crisis in the boardrooms not withstanding, data collected by AT&T Labs, shows that the Internet traffic is growing at between 70-to-150 percent per year, and most of that growth is coming from corporations who are increasingly dependent on the Internet to conduct their affairs. In addition, the number of Americans connecting to the Internet using broadband connections such as cable modems will increase to 84 million 2005, four times the current number. These folks when they start exchanging photos and downloading music or even swap emails will take the network even more.
Any increase in traffic taxes the existing equipment, which needs to be upgraded in order to maintain a smooth flow of emails, word documents, mp3 files and even your photos. The cash-strapped giants have little or no money to spend on buying equipment that can keep the Internet humming smoothly. In addition, they are struggling to cut costs by firing workers who maintain this network. WorldCom will lay-off 17,000 employees and a few hundred smart ones will be in search of financial security (and are unlikely to focus on the job on hand).
The fallen giants such as WorldCom, Enron Broadband, Qwest, 360Networks and PSINet spent billions on building a top quality Internet backbone where your emails and photos zipped to-and-fro at light-speed. According to data accumulated by RHK, a South San Francisco research firm, the spending on telecom topped $108 billion in 1999 before falling to $77 billion in 2001.
Things are exactly the opposite right now, as companies continue to cutback their expenses on buying new equipment. Capital expenditures are expected to drop to $47 billion in 2002 and are likely to stay flat for near foreseeable future. And that means they will have less money to spend on simply maintaining and operating their networks.
Imagine a scenario, where a device called a router, which essentially is like the post office for all data traffic fails. Some of these monsters can cost over half-a-million dollars are complex devices and only a few hundred in the world know how to install and manage these devices. On top of that Cisco Systems or Juniper Networks, (two key makers of routers) are unlikely to sell any more gear to say a WorldCom, Global Crossing or a Qwest if they are being stiffed on existing bills. Router is just one tiny part of the overall network, which is a complex beast made-up of many layers.
It will be like a power-plant fire in New York City where Con Edison cannot replace any of the damaged gear. The situation is no different on the Internet. Scary enough. And those of you who think it cannot happen, just type-in network outage reports in Google search engine and you can read for yourself how many network outages happen every year. Given the inherent architecture of the Internet, most of us do not notice the impact, because data tries to jump to the best route possible and ends-up in the final destination.
The reason for ringing the alarm bells is because of the alacrity with which main data carriers are going into bankruptcy. WorldCom’s UUNet, KPN Qwest, Global Crossing (all in Chapter 11) and financially strapped Qwest and Genuity account for nearly 75 percent of the total Internet traffic. It is quite obvious that will struggle in coming months if not years to keep up their quality of service. They are all financially and if you are a logical person, operationally on a quicksand.
Many on Wall Street have overlooked the ¶peering factor.¾ According to technology encyclopedia, Techtarget.com, peering is ¶the arrangement of traffic exchange between Internet service providers.¾ These carriers allow each other’s traffic on their networks, but if the traffic on one network is more than the traffic on the other network, some sort of cash compensation settles the differential. The bankrupt carriers face the risk of being locked out of other networks, since their financials are weak, and that can cause havoc. One such incident happened when Cable & Wireless (C&W) turned off its peering connections with the bankrupt PSINet in mid-2001.
There are other implications go beyond just degradation of service. The so-called Wall Street gurus are calling for a consolidation in the telecom industry and predict that the likes of now bankrupt WorldCom will be snapped-up by cash-rich baby bells.
That scares the hell out of Allan Tumolillo, the chief operating officer of Cedar Hills, NJ-based telecom consultants, Probe Research who suggests that if that happens then the future of the Internet will be completely different. The baby bells are slow to move, they upgrade to new technology only after being cornered, and it can really slow down things.
Whatever the outcome of the WorldCom and broadband debacle is going to be, you can count on one thing ? brownouts on the Internet. Perhaps it is time to take-up the forgotten and almost Victorian art of letter writing.