Who should invest in 5G and new technologies to support the growth of the internet?

Internet traffic worldwide has steadily grown in the past decade,  averaging a 30 per cent annual increase.  In turn,  teleommunications operators, internet access providers and content distributers have invested heavily to meet demand and anticipated further expansion.  

At the start of the Covid pandemic in early 2020,  a full year’s worth of internet traffic growth occurred in just eight weeks. The pattern of traffic dramatically switched heavily towards residential access, as home working became necessary and home entertainment was not just for evenings.  Remarkably, despite the internet coming under such heavy pressure, there were no systemic failures of the infrastructure.  By contrast, consider how frequently road networks can quickly congest under rapid traffic loads.

The early internet was built as a collaboration of computer networks,  each independently operated. A major turning point in performance and scaling of the internet occurred in 1998 when the US company Akamai noted that traffic from websites does not frequently change.  The company built a global “content delivery network” (CDN) which kept copies of website pages taken from their original sources, and delivered web content to users from whatever Akamai server was closest to them.

Today, internet traffic is dominated by video streaming (such as from YouTube,  Netflix,  Amazon Prime and Apple TV).  Since each video consists of predetermined data,  CDNs for video streaming are key to how the internet successfully scales.  Major search engines, social network platforms and content streaming services have meshes of interconnected data centres. Internet service providers hook up homes and businesses to the internet, whether it be by mobile or fixed connections,  and so control the “last mile” from the internet out to individual users.

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The internet is now reaching another turning point.  With 5G networks,  there is widespread expectation that a myriad new devices will imminently connect and start generating traffic. Sensors are being widely deployed for smart cities and urban infrastructures,  for smart homes and home care, for intelligent driving systems and even for smarter supply chains for manufacturing.  

However the most intense source of new internet traffic is likely to be augmented reality applications,  in which headsets and glasses overlay the view of the real world with content streamed over the internet.  Live imaging of the real world may transform digital social interactions and e-gaming applications.

Augmented reality systems may cause a fundamental shift in internet traffic patterns.  When a video is streamed from a server to a consumer, with the consumer generating little traffic in return,  an asymmetric traffic flow results.  However augmented reality applications may live-stream mixed content, symmetrically peer-to-peer between consumers.  The scaling advantages from CDNs may thus reduce in relevance.

Who should invest in 5G and new technologies to support the growth of the internet?  In May 2022,  the European Telecommunication Network Operators Association (ETNO), representing most of the major operators, published a white paper advocating stronger regulation by the European Commission and in particular proposed charging content providers and video streaming services, who are mainly American, to help defray the cost of new infrastructure investment.  

In turn, Meta (Facebook’s parent) commissioned a response in October, which actively refuted many of the ETNO claims and demands.  The association representing the European Telecommunication Regulators, BEREC, also published a paper, which challenged additional charges to content providers.

How about the consumer perspective?  We are used to paying our mobile and fixed line broadband operators regular fees to access the internet.  What if these access fees were removed,  but the operators injected advertisements instead?   We use websites, social media platforms,  search engines and some video content for free,  accepting that advertising meets the costs.  Would we be prepared to pay to remove advertisements?  Some of us also take out subscriptions to video streaming for films and series,  which are largely without advertisements.  What if these video streaming services were free but started showing advertisements?

Would a “one-stop shop” approach be preferable?  Could we pay a single supplier a subscription fee to then access the internet and interact with all of its content, without any further charges or advertisements?   Such aggregation would involve the supplier negotiating reseller agreements with major content and streaming providers.  The approach is not without precedent:  the music industry underwent a fundamental change two decades ago as consumers largely switched from buying from individual music labels to instead from content aggregators.

Net neutrality is the principle that all internet traffic is treated fairly, without regard to source.  A one-stop shop for internet access would not necessarily preclude net neutrality,  but bilateral relationships could improve scaling and efficiency.

The rollout of 5G networks,  the drive towards even higher internet capacities, and new usage patterns from augmented reality and e-gaming may yet disrupt the current players as new business models for internet infrastructure emerge.