Networks are Lightly Utilized, and Will Stay that Way

Abstract

The popular press often extolls packet networks as much more efficient than switched voice networks in utilizing transmission lines. This impression is reinforced by the delays experienced on the Internet and the famous graphs for traffic patterns through the major exchange points on the Internet, which suggest that networks are running at full capacity. This paper shows the popular impression is incorrect; data networks are very lightly utilized compared to the telephone network. Even the backbones of the Internet are run at lower fractions (10% to 15%) of their capacity than the switched voice network (which operates at over 30% of capacity on average). Private line networks are utilized far less intensively (at 3% to 5%). Further, this situation is likely to persist. The low utilization of data networks compared to voice phone networks is not a symptom of waste. It comes from different patterns of use, lumpy capacity of transmission facilities, and the high growth rate of the industry.

JEL Classification: L9