April 1, 2008

The use of streaming video over the web has more than doubled in the past year, as sites like YouTube and Facebook show no signs of slowing. Similarly, file sharing software has led to an explosion in the amount of large files transmitted over the Internet.

Internet Service Providers (ISPs) and networking companies have struggled to keep pace - and a recent ChangeWave survey of the computer networking industry suggests far more rapid growth lies ahead.

Case in point, nearly two-in-three industry respondents (26%) think the delivery of streaming video has significantly increased the demand for networking technology/products, while 38% say it's caused a moderate demand increase.

In response to escalating demand pressures, some ISPs have resorted to questionable tactics to curb file sharing and online video watching.

Comcast (CMCSA) recently admitted they had blocked file-sharing technologies from San Francisco's BitTorrent and others because the company felt they were using up too much bandwidth. But in an abrupt about face, they now say they'll work with BitTorrent to find better ways to transmit files over the Internet.

Who wins big time from the scramble to modernize an outdated internet backbone? Cisco (CSCO) of course - along with the big fiber carriers like Verizon (VZ) FiOS and AT&T (T) U-Verse. Who loses? ISPs with outdated networks and inadequate bandwidth to keep up with explosive demand.