Forecasting the growth of Forecasting the growth of the Internet the Internet

Michael Minges, Michael Minges, Telecommunication Telecommunication

Development Bureau (BDT), Development Bureau (BDT), International International

Telecommunication Union (ITU)Telecommunication Union (ITU)

Market Forecasting in the Telecoms Industry, 25-27 May 1998, Hongkong

Why is Internet Why is Internet forecasting important?forecasting important?

Global phenomenon Growing market Revenue potential

87%

52%

6%Telephone

lines

Cellularsubscribers

Internethosts

Compound AnnualGrowth Rate 1990-97

Source: ITU.

“…the most promising new economic opportunity in decades.”

—Bill Clinton

What Internet numbers are What Internet numbers are important?important?

Network size

Traffic

Market value

Network sizeNetwork size

Host computers Physical connections

Subscribers Paying customers

Users People accessing

267’400Subscribers

57’600Hosts1.9%

500’000Users

Source: TAS, Nielsen, Network Wizards.

Singapore

Internet Profile 1997

8.6%

Percent ofpopulation

16.1%

Internet hostsInternet hosts

“Tight” definition (IP address)

“Scientific” method Regular surveys:

Network WizardsTwice a year counts of all hosts

RIPEMonthly counts of European hosts

Marks minimum size of Internet 0

5

10

15

20

25

30

Oct

-90

Jan

-92

Jan

-94

Jan

-96

Jan

-98

Ho

sts

(m)

0

1

2

3

4

5

6

Pe

r 1'0

00

pe

op

le

Hosts (m)Per 1'000 people

Internet hosts, world

Source: ITU adapted from Network Wizards.

5.07

29.7m

0.06

0.313m

Hosts: How reliable?Hosts: How reliable?

0

5

10

15

20

25

30

Jan

-91

Jan

-92

Jan

-93

Jan

-94

Jan

-95

Jan

-96

Jan

-97

Jan

-98

Adjusted

Old

Network Wizards January 1998 methodology change

Differences between Network Wizards and RIPE

Where do hosts actually reside (e.g., .COM)?

Internet hostsmillion

Source: Network Wizards.

China

16’322

32’272Trend

Actual

1-95 7-97 1/98

Internet hosts: Internet hosts: High growth over?High growth over?

0

5

10

15

20

25

30

1994 1995 1996 1997

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%HostsGrowth

Internet HostsWorld, millions

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1994 1995 1996 1997

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%HostsGrowth

Internet HostsAsia-Pacific, millions

Source

: N

etw

ork

Wiz

ards

.

Internet hosts: macro forecastInternet hosts: macro forecast

55

225

71

37

0

50

100

150

200

250

Jul-

98

Jul-

99

Jul-

00

Jul-

01

Jul-

02

Peak of highest growth

Growthlevels off

Source: Dr. Mario Hilgemeierhttp://tunix.is-bremen.de/~mhi/inetgrow.htm

Internet hostsmillions

S-Curve

Trend

High projection

S-Curve error limit

Source: ITU.

Internet hosts: Micro variablesInternet hosts: Micro variables

IndiaChina

IndonesiaPhilippines

MalaysiaThailand

Japan

TaiwanKoreaAustralia

HongkongSingapore

Internet hosts per 1’000 inhabitants

GD

P p

er c

apit

a

India

China

IndonesiaPhilippines

Thailand

Malaysia

AustraliaKorea

Singapore

Taiwan

HongkongJapan

Tel

eph

on

e lin

es p

er 1

00 p

eop

le

Internet hosts per 1’000 inhabitants

Determinants of Internet penetration:

Income Telephone lines PCs Age, education &

language

R2=0.45

R2=0.56

Internet users: Internet users: How many online?How many online?

0

20

40

60

80

100

120

Jan-

90

Jan-

92

Jan-

94

Jan-

96

Jan-

98

0

1

2

3

4

5

6

Use

rs (

m)

Users per host

Source: MIDS.

Users per host

Internet UsersWorld, millions

Source: NUA Surveys.

Africa &Middle East

1%

Canada & USA59%

Europe20%

Asia-Pacific

16%

SouthAmerica

6%

Internet UsersMay 1998

119.5 million

Internet users:Internet users:Guesswork?Guesswork?

Loose definition makes estimating Internet users difficult

Wide variation in estimates

Previously multipliers, now surveys

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

India

11/97ABS

9/97IDC

11/97Wired

9/97NASSCOM

Australia

Internet UsersMillions

Source: ITU adapted from NUA Internet Surveys.

“There is no way to determine how many users are on the net, besides making guesses and estimates.” —Network Wizards

Users forecastUsers forecast

1.1257

377

707

300

500

1989 1996 1999 2000

MIDS

ITU

Will grow faster than hosts

Limited by various variables (number of PCs, telephone lines, etc.)

Internet usersWorld, million

Source: ITU, MIDS.

Internet commerceInternet commerce

Equipment & software for building the Internet

Charges for accessing the Internet

Advertising Sales of products and

services over the Internet 180

74222.70.1

377

717

1'234

1995 1997 1999 2001

Web revenuesUS$ billion

Source: ActivMedia.

Internet Telephony:Internet Telephony:Threat or opportunity?Threat or opportunity?

Price Quality Regulation Modes

The EconomistMay 2nd 1998

“Future Public Networks will be IP based. Until recently we all have been putting Data over Voice Networks. Now we will be putting Voice over Data Networks.” —Jeff Pulver

Computer to computer Since 1994 Conversation between two similarly

equipped computer users via Internet

Computer to telephone Since 1996 Internet user interconnecting with Public

Telephone Network via an intermediaryservice provider (e.g., call-back company) or a service provider’s Website

Telephone to telephone Since 1997 Telephone carrier routes telephone or

fax message via a data network (Internet, frame relay) rather than viathe Public Telephone Network

Internet telephony:Internet telephony:Different modesDifferent modes

Telephone TelephonePublic Switch

Internet

Phone Gateway Computer

Phone Gateway Computer

Phone Gateway Computer

TelephonePublic Switch

Internet

Internet

Phone Gateway Computer

Phone Gateway Computer

IP Telephony traffic forecastIP Telephony traffic forecast

325

46'870

0.41%

25%

0

5'000

10'000

15'000

20'000

25'000

30'000

35'000

40'000

45'000

50'000

1997 1998 1999 2000 2001 2002 2003

Mil

lio

ns

of

call

min

ute

s

0%

5%

10%

15%

20%

25%

30% % In

ternatio

nal call m

inu

tes

International IP call minutes

% of international call minutes

Source: Analysys (www.analysys.com).

SummarySummary

“It is not possible to determine the exact size of the Internet, where hosts are located, or how many users there are.” —Network Wizards

www.itu.int/ti