WASHINGTON Demand for bandwidth to provide emerging services like voice and video over Internet Protocol is outpacing supply by a growing margin, a telecom-industry study warns.
In a survey of more than 50 companies, Multimedia Research Group Inc. (Sunnyvale, Calif.) found that the so-called "bandwidth problem" is likely to persist even as large telecommunications companies like AT&T and MCI WorldCom upgrade their telephone and cable-TV network capacity. "The bad news is that the bandwidth demand continues to grow by some estimates at least three times as fast as supply," the study said.
It also looked at how advances in server technology with the release of the Pentium III chip will affect the bandwidth gap. Either way, said Gary Schultz, Multimedia Research president, there is "no way to provide enough servers at a central location" to satisfy demand.
Growing demand is nevertheless expected to be a boon to server and router suppliers. Increased demand for digital media to homes and small offices is also seen driving the market for digital subscriber line (DSL) and cable-modem services over the next three years.
The two technologies are expected to compete "neck and neck," with DSL gaining a slight edge by 2002. Local exchange carriers are already offering competitive DSL services, and those services are expected to take off beginning next year, the study found.
Elsewhere, the survey estimated the global server market for video and media applications should nearly double in size by 2000 to $1.1 billion. Leading the demand will be audio applications like MP3 and other digital music codecs, video streaming and downloading, as well as Java applications.
Hollywood's Secure Digital Music Initiative could provide a second wave of demand if the encryption plan takes off. Still, the study warned that Hollywood must be careful not to repeat in the digital audio market its Divx encryption scheme for video. The DVD content-protection scheme was shelved by promoters after it failed in the marketplace.
While home and small-office markets will boost demand for digital audio and video, the study said "corporate intranet applications will be a major driver of market growth," with heavy investments in virtual private networks and compatible streaming media applications.
"IBM, Lotus and RealNetworks, for example, are betting this will be very big," the study said. "Microsoft and some of its corporate alliances including Cisco also [are] betting big on the importance of streaming media."
Overall, the study's authors conceded, forecasting the growth of the streaming media market is "unpredictable," much like Internet growth over the past several years. What is predictable is that bandwidth demand will continue to grow as more companies seek to provide streaming audio and video, Schultz said.
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