Blog Post

The Great Internet Buildout Continues

One of the good aspects of returning from a long trip is that you’re forced to catch up on a lot of stuff, which often entails reading emails, web sites and my favorite blogs in a sequential manner. And when you do that, you can sometimes pick up unlikely patterns that help connect the dots. For instance, you can draw a straight line between the popularity of Facebook and a developing boom in Internet infrastructure — like I did once I got done reading.

Earlier this month, Facebook announced that it has 300 million subscribers. The fantastic growth of the company is mirrored by the rapid advancement of Twitter and many other web services that have spawned ecosystems of their own. While these services get most of the media attention, a much bigger story is what lies beneath — the Internet’s infrastructure and the grid that powers it.

“We have entered this new era where essentially everything is on all the time,” Alan Meier, a senior scientist at Lawrence Berkeley National Laboratory, recently told The New York Times. And increasingly, everything is connected to the Internet. The biggest impact is being felt by the electricity grid. The power consumed by servers alone doubled between 2000 and 2005 to about 123 billion kilowatt-hours. Data center power use is likely to increase another 76 percent by 2010, according to Jonathan Koomey, a researcher at Lawrence Berkeley and Stanford University.

I can’t imagine the energy implications of what’s coming next. There are 444.3 million broadband subscribers in the world, according to the Broadband Forum, and that number is only going to increase over the next few years as emerging telecom economies such as India, Brazil and Russia ramp up their Internet efforts. A whopping 250 million people are going to connect to the Internet wirelessly by the end of 2009. Just imagine the bandwidth and computing horsepower needed if all of them started streaming movies from Netflix, listening to music by visiting Spotify, and sharing videos and photos via Facebook.

We are starting to see a spike in demand for everything from data centers to backhaul connections to content delivery networks. In the month of September alone, four new major data centers were announced that would cost upwards of $1.3 billion to add over 750,000 square feet of new data center space.

  • On Sept. 10, details emerged about Apple’s plans to build a 500,000 square-foot data center in Maiden, N.C., that is going to cost over $1 billion spread over 10 years.
  • Equinix, a data center service provider, said it will build two data centers — a 152,000 square-foot facility in Washington, D.C., and a 170,000 square-foot facility in Silicon Valley — that will collectively cost about $245 million.
  • New York Internet plans to open a 40,000 square-foot facility in Bridgewater, N.J.
  • Codera is building a 22,000 square-foot data center in downtown Phoenix.

Just as demand for data center space is rising, we are seeing an increase in the desire for bandwidth. For instance, Cogent Communications, a large Internet service provider, reported that the traffic on its network grew 10 percent from the first to second quarter of 2009 (PDF). Qwest Communications (s Q) recently announced plans to upgrade its long-haul network to 100Gbps. The company recently said that Internet traffic is doubling approximately every 19 months, and that each year, individual Internet users consume approximately 43 percent more bandwidth than the previous year. Mike Hatfield, CEO of Cyan Optics, recently told me that his company’s clients are seeing demand for bandwidth double every 12-18 months. Add all these random tidbits, and you start to see a larger picture emerge.

Network operators added 9.4 terabits per second of new capacity during the 12 months ending July 2009, bringing the global capacity to about 25Tbps, a recent report by Telegeography shows. That compares with 8.7Tbps of new capacity in the 12 months ending July 2008.

Online video is going to help accelerate the infrastructure buildout. At present, we are watching only 3-4 hours of web video a month (vs. over 150 hours of old-fashioned TV), and this number is going to increase as more and more TV Everywhere-styled services go online. Some are predicting 3D-centric video content that would be made possible by gigabit speeds.

What does this all mean? The demand for everything from routers and switches to servers is going to swing up, as will the urgent need for power and the problems that would come with that need. Whichever way you look at it, there is a technology revival taking shape. Get ready for it.

Photo Credit: Barcelona Skyline by David via Flickr.

12 Responses to “The Great Internet Buildout Continues”

  1. It’s not just consumers and social media that are driving this build-out either – the demand for hosted SaaS business applications and other cloud computing services isn’t slowing down. In fact, from our perspective, the recession has only heightened this need, with hosted services being looked to as cheaper, more efficient and, to a certain extent, more secure and stable than building out an in-house network. Just imagine what the traffic figures will look like when a majority of small businesses in America switch to hosted e-mail, cloud-based business suites and hosted unified communications. This will place greater pressure on a more efficient and secure approach to the Internet.

  2. Great post, Om. Although the Internet is growing so rapidly, web companies need to be aware of the impact of their ventures on the environment. Perhaps (and hopefully) we will be seeing more eco-friendly data centers in the not-too-distant future.

    • Anonymous

      Nothing about data centers is Eco-Friendly. They use tons of energy, and thats really the gist of it.
      You can make them more efficient, but that just means you can cram twice as many servers in the same space, and save some money.

      The solution to data center’s using energy is to clean up the production of energy with a source that is reliable 24/7 and can meet the uptime needs of a data center (Nuclear).

      Nothing else is going to reduce their indirect negative influence on air pollutants.

    • That’s exactly what is happening in Iceland where we have 100% clean and renewable energy powered data centers like Verne Global, ThorDC, Midgard etc.

      My company Greenqloud is the world’s first truly green public compute cloud (Infrastructure as a service) that will run on these data centers.

      We will be presenting at GigaOm’s LaunchPad at Structure 2010 in SF where we have been selected as one of the top 10 startups in cloud computing.

      GigaOm’s article on Greenqloud:

      We will open in Q4 2010 and are collecting beta registration at our website:

      Eirikur, CEO Greenqloud