Yesterday, Ike Elliott had a post on his Telecosm blog that postulated that bandwidth resurgence has not yet happened. I posted the following comment:
“Over the past year, I’ve personally spoken to the vast majority of the fiber-based suppliers of bandwidth in the U.S. Though there are a few exceptions, their bandwidth business is doing well. Growth rates of 15-20% are common and many are growing at far faster rates (30-40% in some cases). As you know, this was not the case in the 2002 through 2005 timeframe…but it began to change in late 2005. We are seeing this first-hand in our Zayo Bandwidth business. Though you show lots of numbers above, I don’t see anything in your ‘analysis’ that leads to the conclusion…you seem to be speculating…do you have any data?”
Ike had a follow-up post (http://www.ikeelliott.typepad.com/telecosm/)today. I follow Ike’s analysis and agree with his many caveats. His earlier “conclusion” of no resurgence, I would surmise, is based on speculation, not on a thorough and reliable analysis. That is, way too many holes can be poked into the extrapolation on his analysis of Level 3. Beyond the many holes he offered, a large one is that he looked only at the IP and Data Services business of Level 3, not the Transport business. I think (though have not verified) he would find that Level 3’s organic transport revenue is growing at a nice clip.
Leave a response (2 so far)
Subscribe via RSS
Dan,
True, I did look at only the IP & Data services segment of Level 3’s business. But then, I was analyzing Internet growth, not transport growth. So, if you are looking for evidence that the overall bandwidth business is growing more quickly, including the market for raw circuits from point A and point Z, then my analysis is not the analysis you are looking for, because it only looks a growth in Internet utilization.
However, people often look for an acceleration of Internet growth as an indicator that there will be a corresponding acceleration in transport circuit installation. I think that is what you were hoping to show in some of your prior posts, that there is a surge in Internet bandwidth utilization growth that will mean good things for Zayo, Level 3, and other facilities-based carriers.
I believe my posts of the past few days have pointed out, with real data to back them up, that the resurgence, at least as measured by Internet bandwidth growth, hasn’t happened yet. Two days ago it was data from the MINTS. Yesterday it was data from Level 3’s quarterly reports. Today it is data from Telegeography. Check it out at http://ikeelliott.typepad.com/telecosm/2008/04/telegeography-a.html.
I’m not saying an Internet resurgence isn’t coming…it just looks like it didn’t happen in 2007. Based on real traffic data.