New data (link is external) from the Cisco Visual Networking Index (VNI) Forecast and Methodology 2014-2019 show that U.S. and global Internet traffic continues to grow at double digit rates, that the U.S. is on a path to solidify and expand its leadership in international Internet usage, and that video over fixed networks remains the largest driver of traffic growth. In fact, an analysis of the data indicates that the U.S. is on track to surpass South Korea as the world leader in Internet usage in the next several years as it will generate 36 percent more traffic per user than South Korea by 2019. Leadership in usage could only be achieved with massive investment in broadband infrastructure and the development of compelling content and application. U.S. companies have accomplished this under a light-touch regulatory framework championed by Democratic and Republican FCC chairs.
Public Utility Regulation Poses Significant Risk
This forecast could dim if there is no court relief granted in industry’s challenge to the Federal Communications Commission’s (FCC) recent order regulating broadband as a utility under Title II rules, a move that imposes a long outmoded approach to regulation and introduces significant uncertainty for investors. The FCC’s approach will likely dampen investment over time. If investment suffers, ultimately demand growth will slow, because demand is in part driven by expectations about what is possible given existing and realistically prospective production capacity. As Hal Singer of the Progressive Policy Institute recently wrote in a paper (link is external), the rules are likely to harm innovation “in subtle ways that could largely go undetected to the naked eye as they occur, yet will be felt by Internet users for years to come.”