My last blog looked at the long-term trajectory of broadband speed. It’s clear that the historical growth of broadband speeds has been at a continuous growth rate of 21% per year – which equates to a 100-fold increase over the last 25 years. Today’s blog looks at the trajectory of demand for broadband usage.

Consider the following statistics that come from OpenVault showing the nationwide average amount of monthly broadband consumed by businesses and residences over the past five years. These numbers combine download and upload usage.

Admittedly, the growth in 2020 was extraordinary due to the pandemic. But there is no question, just like with the bandwidth speeds, that broadband usage has been growing for both homes and businesses. For the last five years, business broadband usage grew by 311% (25.5% per year), and home broadband usage grew by 236% (18.8% per year).

The challenge of looking into the future is predicting the future growth rate of usage demand. The following table looks at two different growth rates. The first two columns assume that future growth is at the same rate of growth from 2022 to 2023 – 11.7% for businesses and 9.4% for residences. The second set of columns looks at a 12.5% growth rate. This table might be one of the best ways to show the incredible impact of compound growth over many years. The residential growth rate of 12.5% is only 33% larger than the 9.4% growth rate, but over 25 years the higher growth rate more than doubles the predicted future demand.

To be conservative, I’ll use the growth from the first two columns in my additional analysis below. But even those growth rates show a 16-time increase in average business usage and a 9-time increase in average residential usage over 25 years. Most folks probably buy the story that in a decade, the average business will use a terabyte of data per month while the average home will use 1.6 terabytes. However, I suspect most people are uncomfortable with a prediction that homes and businesses will use over 5 terabytes per month in 25 years – due to the difficulty of grasping the impact of compound growth.

What do these numbers mean in terms of the amount of bandwidth that our networks have to carry? The following table applies the predicted broadband usage to the number of homes and businesses in the country. The 2018 and 2023 count of homes and businesses comes from the Federal Reserve, and I’ve predicted future homes and businesses on a straight-line growth.

For those not familiar with the term exabytes, the calculation of 90.5 exabytes in 2023 starts with the number of monthly gigabytes being used nationwide, as shown below. Each successive measurement in the table below reflects a difference factor of 1,024. For example, 1 terabyte equals 1,024 gigabytes. The 90.5 exabytes for 2023 could also be stated as:

The table above predicts an overall 12-fold increase in broadband usage over 25 years. Don’t forget that these numbers only come from residential and business broadband usage. There are a lot more sources of broadband, which means that usage on networks will be higher than shown in the table above. Not included in that table are things like data generated from mobile devices, data generated by governments and universities, data generated by outdoor sensors and farming, data generated by self-driving cars and robots, data used to monitor and operate the electric grid and green energy production, and data used to monitor and operate broadband networks. There is good evidence that these other uses of broadband are growing faster than home and business use.

We understand the factors that have contributed to the growth in broadband over the last five years. This includes things like the following:

• Most of the software that homes and business use is now located in the cloud. A good example is the Microsoft Office suite of software. Five years ago, users ran Excel, Word, Outlook, and PowerPoint on software loaded in home and business computers. Today, the majority this software operates in the cloud – meaning the computing is done in Microsoft data centers using a broadband connection.
• The delivery of online news and similar content has largely migrated to video.
• A huge percentage of homes and businesses have Internet-connected devices that connect to the cloud. This can be a wide range of devices like computers, tablets, smartphones, TVs, appliances, gaming consoles, burglar alarms, cameras, smoke detectors, etc. A recent survey by Parks Associates reports that the average U.S. home has 17 connected devices. These devices connect to and communicate with the cloud without active intervention from users. This is what is defined as machine-to-machine traffic, meaning devices talk directly to the cloud, and is the fastest growing segment of broadband usage.
• 30 million homes cut the cord and dropped traditional cable TV in the last five years. These homes now get all video entertainment from online sources. Additionally, the quality of the video has increased significantly as video quality has increased from standard definition, to high definition, to 4K.
• Other entertainment markets like gaming have moved to the cloud.

Nobody has a crystal ball that can predict how we’ll use broadband 25 years from now. We’re always on the verge of new uses that consume more bandwidth. The migration to high-quality video continues, with web services starting to use 8K video. Spatial computing from devices like the Apple Vision Pro shows the potential for combining virtual and augmented reality with the real world. Probably the biggest change to bandwidth on the immediate horizon is the use of AI throughout the economy.

But it seems inevitable that the demand for broadband usage will continue to grow. It’s hard to imagine a world where the growth in demand would stop. Using a conservative growth rate for broadband demand would increase overall broadband usage by 12- to 15-fold over the next 25 years. It’s not hard to imagine new technologies that could double that future predicted demand.