Traffic jam - includes related articles on long-distance telco revenues, spamming, an emerging high-quality Internet2 and Internet use by The National Center for Missing and Exploited Children - Electronic Commerce - Internet/Web/Online Service Information

Software Magazine, Nov, 1997 by Deborah Radcliff

Attracted by the inexpensive, ubiquitous reach of the Internet, business is rapidly embracing the Web as the preferred medium for E-mail, marketing, and commerce. Companies like online bookseller Amazon.com, and directory and E-mail service Four11, have predicated their business models on the Web. Brokerage firms are also finding the Web a lucrative place to conduct business.

There's no doubt that online applications have incredible potential. Amazon.com's Q2/97 revenues of $27.9 million were triple those for the same period last year. Four11 has four million registered E-mail users and gets 800 million impressions monthly at its directory section. In Q3/97, online trader E*Trade reported year-to-date revenues of

$37 million, a 138% jump over the same period last year. And, since Schwab introduced the online trading application E-Schwab a little over a year ago, nearly 35% of its customers are trading stocks over its Web site.

Now banks are rushing to the Internet, attracted by the opportunity to reap profits from customers who demand service anytime, anywhere. "We're all betting on the infrastructure of the Internet," says Wayne Sadin, CTO for Michigan National Bank, a subsidiary of the National Australia Bank Group. Still, enthusiasm over E-commerce aside, the Internet is not as rock-solid as businesses like to think. On the contrary, the highly trafficked travel lanes of cyberspace are often clogged with mass E-mailings and, increasingly, capacity-hogging applications transmitting audio and video. Backbone segments are owned by many different long- distance telephone companies, with thousands of Internet service providers (ISPs) at the fringes who provide access to this backbone. Problems can occur anywhere along this network of networks, starting with servers and connections at the ISPs, as well as on old and overloaded routers and switches inside the backbone itself. There's also the sticky problem of bandwidth: The growth of the fiber optic backbone is simply not keeping up with demand.

Is the Internet in danger of crashing? Probably not. After all, the network was designed to survive a nuclear exchange. But if usage continues to grow at current rates, companies betting their businesses on the Web may find that its increasingly sluggish response -- coupled with real concerns about its reliability -- will make it a difficult and frustrating place to engage in commerce.

Bandwidth and Hogs

Today, the biggest problem on the Internet is bandwidth, which is continually being stretched to accommodate new, bandwidth-hungry applications like RealAudio and QuickTime Video. "The future of the Internet will depend on the applications running on it," says Myron Cramer, principal research scientist for the Georgia Institute of Technology in Atlanta.

Even the long-distance telephone companies responsible for building the Internet's fiber optic backbone admit that the network is not ready to support video applications. "Companies are worried about using the Internet for video, especially when they can' t afford to have any interference," says John Gerdelman, president of networkMCI, the business networking division of MCI.

While the Internet may be able to withstand a nuclear blast, its underpinnings are old and were never intended to support today's traffic. Moreover, data traffic bounces around the backbone, traveling from, say, California to New York to Australia to Nebraska, before reaching its destination back in California. This helter-skelter message transport is a double-edged sword.

The positive thing about this redundant routing is that it can find alternate paths around downed routers or blacked-out backbone segments. On the negative side, it ties up bandwidth. And, with the last two years of hypergrowth -- Dataquest reports Internet use rose 71% last year -- the long-distance carriers that make up the backbone have been unable to keep up with demand. Says Gerdelman, "We were seeing 10% to 15% growth per month and fell behind in our planning." In the past two years, MCI's Internet traffic has risen from 1.15 to over 135 terabytes per week.

Leading backbone carriers such as MCI, GTE, AT&T, WorldCom, and InterNIC have been optimizing their fiber to carry more traffic at faster speeds. They've also been reallocating reserve telephone fiber and laying new fiber. It may be too little, too late. Increasingly, ISPs are getting squeezed out of the market because there's not enough fiber for them to lease it from backbone providers -- mostly because telcos are reserving it for their own customers.

Those that aren't getting squeezed out are getting bought up. In August, a large ISP, BBN Corp., was acquired by GTE for $616 million. At the time, BBN saw this as the only real way to guarantee bandwidth for its customers. "There were some real traffic crunches because of fiber shortages," says John Curran, CTO for BBN/GTE Internetworking.

In spite of efforts on the part of backbone providers, bandwidth shortage is a problem that's not going to go away. By 2001, some 360 million devices worldwide will be connected to the Internet, up from the 50 million currently connected. Furthermore, the Internet will be host to more than 4.5 billion Web pages, up from 250,000 pages today, according to IDC. "There's a lot of money being thrown into making sure the Internet scales up. But I think demand will always outstrip supply," says Mike Rothman, vice president of global networking strategies at the Meta Group.