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Peer to Peer – The Stowaway Traffic

Source: Cachelogic

Peer to Peer (P2P) traffic is the stowaway traffic of the net. It is latency and QoS insensitive and happy to fill broadband unused capacity. The big growth rate on the above chart gives P2P the illusion of being important- The reality is it is just being efficient.

P2P is using the existing resources of the net more efficiently and unless it can be monetized will never drive the deployment of more FTTH, more transport bandwidth, and more switching hardware.

I’m convinced that the inflection point for FTTH deployment will come when a killer application arrives that requires large upstream bandwidth. On the surface, P2P fits this bill, as it is the only widely deployed consumer application that stresses upstream bandwidth. The problem is P2P is a lunatic fringe application built on illegal activity. The nature of P2P’s popularity makes it impossible to monetize.

The frustrating reality for carriers is that as broadband connection speeds increase, the amount of peer to peer traffic grows disproportionately, an effect I wrote about while discussing network neutrality. (see Net Neutrality – Tragedy of the Commons).

In short, when someone gets a faster connection, they are more likely to either start using P2P, or use a lot more than they did before. Traffic increases geometrically with bandwidth, driving up the costs of backhaul connectivity and reducing carriers ability to do statistical multiplexing.

However, P2P is currently playing a vital role by forcing the media companies to evolve. They must adjust their business models to sell content electronically or die. Without Napster for music or BitTorrent for movies, there would not have been a catalyst for these companies to start selling media electronically.

Media distribution will evolve, and then P2P will fade into the background as an inexpensive best-effort way to deliver content, and a domain for those who still refuse to pay.

Conclusion: P2P isn’t a business. It’s a catalyst. Keep that in mind.

Footnote – Mary Meeker, ex-Queen of the Net, is back in the swing of things at Morgan Stanley. She recently gave a presentation on “The State of the ‘Net” that is filled with good data, including the above chart.

Discussion

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  1. Pretty much agree, but with two differences:

    “The problem is P2P is a lunatic fringe application built on illegal activity. The nature of P2P’s popularity makes it impossible to monetize.”

    Try ‘Democracy Player’, it’s television delivered by Bittorrent p2p, I watch Democracy Now (the politics program) via it. If Democracy Now had adverts stuck in it, I’d be watching those too. i.e. P2P could certainly work the advertising model if nothing else, and as things like Democracy Player gain in popularity more p2p traffic will be legit. So p2p in future may well be legit p2p.

    “In short, when someone gets a faster connection, they are more likely to either start using P2P, or use a lot more than they did before.”

    We got 20mbps & 30Gb/month (the best option I could find) because my wife watches Thai television & movies (Thai movies cost about $10/month):

    http://obizgo.tv/

    There are plenty of other motivations for getting a fast pipe, and I think Thailand is leading those (because they don’t worry too much about copyright, it’s easier to make a business out of it, like obizgo has). i.e. You mentioned ‘Media distribution will evolve’ and obizgo is my guess as to how that future you describe will pan out.

    Posted by DemocracyNow | December 10, 2006, 4:54 PM
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