It’s no secret that our need for Internet bandwidth is growing rapidly, but you might be surprised just how fast. Nielsen’s Law of Internet Bandwidth states that a user’s connection speed grows by 50% per year. This is linked to Moore’s Law, which tells us that computing power grows by 60% per year. Nielsen attributes the slower growth of Internet bandwidth to three factors:

Upgrading infrastructure is complicated and expensive.

Users are reluctant to spend money on bandwidth.

The expanding user base includes late adopters who need less bandwidth.

Is Nielsen right? Let’s take a deeper look at those three reasons and some real-life case studies.

Upgrading Internet Bandwidth is Complex and Expensive

Earlier this year, the growth of Internet bandwidth in our Shoreham, Vermont service area caught up with us and we began experiencing congestion in some parts of our network. In order to increase capacity for our customers, we embarked on a lengthy project with three main components.

Increasing the available bandwidth on our Internet backbone connection from 1 gig to 10 gigs. This required upgrading our core network equipment, negotiating a new contract with an Internet supplier, and managing the process of installing the new connection. Given the rural nature of our community in Shoreham, it was challenging to get this connection delivered for a fair price.

Replacing our existing 1 Gig middle-mile transport ring with a new 10-Gig transport ring. This required allocating new fibers in each location, installing new 10 Gig Ethernet switches at each central office, and then migrating customers to the new network, one site at a time.

Building new fiber infrastructure to sites that had previously been served only with copper cable, or deploying special electronics to increase the available bandwidth at copper-fed sites.

All together, OTELCO spent $120,000 in capital on Internet bandwidth projects in Shoreham this year. Even when this work is complete, there is a limit to how much we can grow Internet speed without completely replacing the existing copper network with an all-fiber network. Such a project is very expensive and will take place over several years.

Users Are Reluctant to Spend Money on Bandwidth

We all want a faster Internet connection, but in general, most people feel like they’re paying too much for the connection they already have and are unwilling to pay more to get a faster one. For example, take a look at these availability and adoption rates from one of our Maine service areas taken last year:

Bandwdith Coverage Take Rate Monthly Cost 12Mbps x 1Mbps 54% 3% $43.45 Residential or Business 10Mbps x 1Mbps 62% 4% $38.45 Residential or Business 6 Mbps x 1Mbps 74% 16% $33.45 Residential or Business 4Mbps x 1Mbps 98% 33% $28.45 Residential or Business Less than 4Mbps 98% 4% $28.48 Residential or Business

It’s pretty clear that most consumers are not on the fastest service available to them, even if the differences in cost between packages are as small as $5.

Late Adopters Use Less Bandwidth

The theory here is that as new users come on to the network, they start out doing fairly basic things, and don’t need as much bandwidth. When we think about it, this makes sense. Someone just using the Internet for the first time isn’t likely to disconnect their TV in favor of streaming video. Instead, they’ll most likely start out sending email, browsing websites on topics they’re interested in, and perhaps using social media.

In each of the digital literacy classes we have sponsored for our communities in the past year, these are the basic applications that most are learning to do. Over time, these users may or may not install a VoIP phone or start using Netflix. If they do, it will take time for them to get there.

How the Paradigm May Shift in the Future

It’s difficult to find fault in Nielsen’s logic as to why Internet bandwidth grows more slowly than computing power, but there are some reasons to believe that that trend may change in the future. For one thing, as more and more people jump on the Internet, there will be fewer new users to bring down demand. In addition, new technologies like fiber to the home radically reduce the incremental cost of additional bandwidth, once they are installed. Therefore, the good news is that it’s logical to expect Internet bandwidth to grow more quickly in the future.