Zayo’s Investment Thesis starts with a basic but critically important fact. Bandwidth is growing. It is not growing just a little bit, it is growing a whole lot. Exactly how much is hard to measure. Below is a chart that references data from 1997 through 2006 from a January 2008 report published by the Discovery Institute and uses the 50-60% growth rate as an estimate for 2007 to 2011 (The Minnesota Internet Traffic Studies showed year end 2007 growth at 50-60%). It suggests the growth from 2006 to 2011 of ~800%.
*Original Source: Estimating the Exaflood, Bret Swanson & George Gilder, January 2008, Discovery Institute, Seattle, Washington
*Original Source: The Minnesota Internet Traffic Studies
In the graph, bandwidth requirements in the years 1996 to 2006 look insigificant. This is misleading, of course, as the Internet went from nothing to everything in this timeframe. Bandwidth growth each year, even during the meltdown, was strong. The only reason these years look unexciting is because of the staggering growth in 2007 and beyond.
So that is the first part of Zayo Group’s Investment Thesis. Bandwidth is growing rapidly; and this will persist.
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