GRID COMPUTING AND THE GROWTH OF THE INTERNET

1. GRID COMPUTING AND THE GROWTH OF THE INTERNET ROBERT B. COHEN, PH.D. COHEN COMMUNICATIONS GROUP bcohen@bway.net 212-986-7720

2. CONCLUSIONS • INTERNET TRAFFIC WILL GROW 400 TIMES IN 2001-2008 DUE TO THE COMMERCIAL ADOPTION OF P2P APPLICATIONS RELATED TO GRID COMPUTING - 8x MANY OTHER FORECASTS • GRID COMPUTING ADOPTION WILL BENEFIT FROM: • HUGE DECLINES IN THE PRICE OF BACKBONE BANDWIDTH DURING 2001-2002; WHEN PASSED ALONG TO CUSTOMERS, COSTS COULD DECLINE BY 75% PER YEAR • OPTICAL TECHNOLOGY IN METRO & BACKBONE NETS - THIS NEW TECHNOLOGY WILL ALSO LOWER BANDWIDTH COSTS

3. P2P FORECAST VS. McKINSEY FOR INTERNATIONAL IP TRAFFIC

4. DIFFERENT FORECASTS • McKINSEY-JP MORGAN STUDY FINDS THAT TRAFFIC GROWTH IS SLOWING AND WILL DECLINE TO 63% ANNUALLY BY 2005 • RICH MEDIA & STREAMING GROW MOST RAPIDLY • ANDREW ODLYZKO CLAIMS TRAFFIC IS DOUBLING IN THE US ANNUALLY • LARRY ROBERTS CLAIMS TRAFFIC IN US NETWORKS IS GROWING 3X ANNUALLY, SLOWER OVERSEAS • IBM & GRID ADHERENTS BELIEVE PEERED SERVERS WILL DRIVE GROWTH IN THE NEXT 12-18 MONTHS.

5. P2P MODEL METHODOLOGY • A DELPHI-LIKE SERIES OF INTERVIEWS WITH NETWORK ENGINEERS AND EXPERTS TO DETERMINE CURRENT & FUTURE TRAFFIC FLOWS • EXPLICIT ADJUSTMENTS FOR PRICE CHANGES, USING A MEASURE OF DEMAND ELASTICITY FOR BANDWIDTH (%DEMAND/%PRICE] • MEASURES OF CAPACITY AT THREE POINTS IN TIME FOR MOST INTERNET ROUTES • ADJUSTMENT FOR THE ECONOMIC DOWNTURN

6. 1 Pbps 100Tbps New Measurements 10Tbps 1Tbps 100Gbps 10Gbps 1Gbps 100Mbps ARPA & NSF Data to ’95 10Mbps 1Mbps 100Kbps 10Kbps 1Kbps 100 bps 10 bps 10 bps ROBERTS’ FORECAST - HISTORICAL AND FORECASTED U.S. INTERNET TRAFFIC Limit of same % GDP as Voice Future GrowthProjected at 2–3/year TDM Voice Traffic 3/year 1970 1980 1990 2000 2010 Source: Roberts et al., 2002 SOURCE: LARRY G. ROBERTS ET. AL., “INTERNET TRAFFIC MEASUREMENT 2001 AND 2002,” JANUARY 16, 2002. DR. ROBERTS IS WITH CASPIAN NETWORKS.

7. P2P SCENARIO FOR INTERNET GROWTH • GRID COMPUTING BECOMES MAIN DRIVER OF BANDWIDTH USE: INTERNET TRAFFIC GROWS TO 100% BY 2003, TO 150%+ IN 2005-2008 • COLLABORATION USED BY FINANCIAL, R&D & DECISION-MAKING DRAW UPON WIDE RANGE OF DATA RESOURCES • SOFTWARE FOR COLLABORATION BRINGS MORE DATA RESOURCES INTO USE, SERVER-TO-SERVER TRAFFIC GROWS AS WELL • CONSUMERS COULD TURN TO COLLABORATIVE CAPABILITIES. THEY WOULD SHIFT SPENDING TO INTERNET TO PAY FOR HIGHER LEVELS OF SERVICES

8. HOW GRID COMPUTING STIMULATES IP TRAFFIC GROWTH • ENABLE COMMUNITIES (“VIRTUAL ORGANIZATIONS”) TO SHARE RESOURCES AS THEY PURSUE COMMON GOALS • NEW APPLICATIONS ENABLED BY THE COORDINATED USE OF GEOGRAPHICALLY DISTRIBUTED RESOURCES • E.G., DISTRIBUTED COLLABORATION, DATA ACCESS AND ANALYSIS, DISTRIBUTED COMPUTING • PERSISTENT INFRASTRUCTURE FOR GRID COMPUTING • E.G., CERTIFICATE AUTHORITIES AND POLICIES, PROTOCOLS FOR RESOURCE DISCOVERY/ACCESS • ORIGINAL MOTIVATION, AND SUPPORT, FROM HIGH-END SCIENCE AND ENGINEERING • RAPIDLY EMERGING COMMERCIAL INTEREST IN INDUSTRY “PEER-TO-PEER” AND OTHER SECTORS SOURCESSOURCE: CHARLIE CATLETT, “GLOBAL GRID FORUM: A PRIMER,” March 2000. Http://www.globalgridforum.org.

9. TRAFFIC GROWTH COMPARISON • JP MORGAN-McKINSEY FORECASTS • 55 TIMES GROWTH IN IP TRAFFIC, 1999-2005 • 0.5 EXABYTES IN 1999 TO 11.4 EXABYTES IN 2005 • 60%-65% GROWTH IN 2005 AND AFTER • P2P SCENARIO FORECASTS • 400 TIMES GROWTH IN INTERNATIONAL IP TRAFFIC, 2001-2008 EXCLUDING THE US (US GROWTH IS USUALLY HIGHER THAN GLOBAL) • 78 PETABYTES IN 2001 TO 31 EXABYTES IN 2008 - THIS WOULD ASSUME THE US IS 80% OF TOTAL WORLD IP TRAFFIC IN 2001 • <100% GROWTH 2001-2002, 100% GROWTH 2003-2004 • 150% GROWTH 2005-2008 FOR A MORE COMPLETE PRESENTATION OF THE P2P FORECAST, SEE MY FORTHCOMING ARTICLE IN AMERICA’S NETWORK

10. CONTRASTS IN TRAFFIC FORECASTS • P2P FORECAST HAS TRAFFIC GROWTH REBOUNDING, AVERAGING OVER 150% • MORGAN-McKINSEY HAS TRAFFIC SLOWING TO ABOUT 60% ANNUALLY

11. CONTRASTING THE McKINSEY STUDY WITH A P2P FORECAST • THE McKINSEY STUDY FORECASTS THAT VIDEO STREAMING AND VIDEO FILE TRANSFERS (VIDEOCONFERENCING, MOVIES) WILL ACCOUNT FOR MUCH OF THE INTERNET’S GROWTH TO 2005 AND BEYOND. • THE VIDEO TRANSFERS ARE MOSTLY INTERNAL TO INDIVIDUAL FIRMS. THEY DON’T PUT A BIG LOAD ON DATA BACKBONES. • IF P2P AND S2S DRIVE GROWTH, TRANSFERS CAN BE WITHIN AND BETWEEN FIRMS • ACCESS TO DATA RESOURCES BECOMES MORE IMPORTANT TO BUSINESS. RESOURCES SHIFT TO SUPPORTING THIS. • INNOVATIVE MIDDLEWARE AND APPLICATIONS SPUR ADDITIONAL GROWTH.

12. CONTRASTING P2P SCENARIO WITH THE McKINSEY ANALYSIS • WITH RAPID GROWTH OF GRID COMPUTING, P2P & S2S TRAFFIC ACCOUNTS FOR NEARLY 90% OF TOTAL INTERNET TRAFFIC IN 2008 • IN McKINSEY, P2P & S2S ARE 69% OF TRAFFIC IN 2005 (P2P IS 80+%) • IMPLICATION: IF COLLABORATION SUPPORTS THE GROWTH OF RELATIVELY LOW COST BROADBAND, SERVICES MIGHT BE DELIVERED AT MUCH LOWER COST VIA END-TO-END NETWORKS. • IMPACT: MACHINES SUBSTITUTE FOR LABOR. BIG PRODUCTIVITY GAINS!

13. McKINSEY-JP MORGAN FORECAST FOR INTERNET TRAFFIC • JP MORGAN-McKINSEY - TRAFFIC GROWTH WILL SLOW TO ABOUT 60% PER YEAR BY 2005: • NOT MANY NEW APPLICATIONS • EDGE CARRIERS & BUSINESS CUSTOMERS GAIN CONTROL OVER PRICING, ISPs LOSE REVENUES TO EDGE PLAYERS • IP REVENUES GROW BY 30%-35% ANNUALLY • IN 2005, CONTENT DISTRIBUTION NETWORKS & HOSTING ACCOUNT FOR 66% OF TOTAL REVENUES, CONNECTIVITY/BACKBONE: 34% • BACKBONE PROVIDERS MOVE INTO HOSTING TO BIND CUSTOMERS TO THEMSELVES, BUT ULTIMATELY FACE STRONG COMPETITION FROM IT OUTSOURCING FIRMS

14. BROADER CHANGES SUGGESTED BY P2P FORECAST • IN P2P, COLLABORATION CHANGES HOW BUSINESSES & CONSUMERS PAY FOR THE INTERNET • KEY SERVICES SAVE MONEY & TIME, SHIFT SPENDING TO THE INTERNET • AS A RESULT, RATHER THAN LOSING STRENGTH, THE SURVIVING ISPs GAIN FROM CHARGING FOR ADDITIONAL SERVICES INCLUDING COLLABORATION, PAYMENTS, ETC. • IF ISPs FIND A WAY TO PROFIT BY SELLING TRANSPORT & SERVICES. • TELECOM SECTOR REVIVES BASED ON CHARGING FOR NEW RANGE OF DATA SERVICES - PRICING IS BASED ON VALUE-ADDED FORMULA RATHER THAN OFFERING DATA TRANSPORT AT COMPETITIVE PRICE