Around 2005, I remember wondering what sort of idiot would want to look at videos on a tiny cellphone screen. Less than a decade later, I’m one of the people I heaped scorn upon.
The growth in online video is one of the many ways that the Internet has changed the world in the dawn of the 21st century. The implications are huge. A recent report by Boston Consulting Group (BCG) argues that the Internet economy will rise to $4.2 trillion in the G-20 countries in 2016, almost double from the $2.3 trillion in 2010. If the Internet were a country, its economy would be among the top 5.
The Commodore PET my family owned in the 1970s is technically a computer, but it barely resembles what we use today. The speed of innovation is constantly speeding up. Consider how quickly Apple (NASDAQ:AAPL) moved from the iPod to the iPhone to the iPad. BCG makes a persuasive case that the Internet will continue to be a catalyst for rapid change.
“The Internet will change even more in the next five years than it has in its first twenty-five,” according to BCG. “It will have more users (especially in developing markets), more mobile users, more users using various devices throughout the day, and many more people engaged in an increasingly participatory medium.”
The ramifications of this analysis are huge. First, will the existing broadband network be able to handle the growth in traffic? Cisco Systems (NASDAQ:CSCO) estimated in 2011 that that global Internet traffic, which surged eightfold over the past five years, will increase fourfold over the next five years.
That forecast may prove to be way short of the mark. Smartphone sales alone will hit 468 million units, up 57.7% from 2010, according to Gartner. The outlook for tablets is even stronger. IDC estimates that global tablet shipments hit 28.2 million in the fourth quarter, up 155% versus a year ago. The market researcher hiked its 2012 tablet shipment forecast to 106.1 million from 87.1 million.
As the Internet becomes a more ubiquitous part of our lives, people need to figure some things out. Some already argue that the Internet is a human right. It has certainly played a role in recent political events such as the Arab Spring. The U.N. seems to buy that argument even though Google’s (NASDAQ:GOOG) Chief Internet Evangelist Vinton Cerf recently argued in The New York Times otherwise:
“But that argument, however well meaning, misses a larger point: technology is an enabler of rights, not a right itself. There is a high bar for something to be considered a human right. Loosely put, it must be among the things we as humans need in order to lead healthy, meaningful lives, like freedom from torture or freedom of conscience. It is a mistake to place any particular technology in this exalted category, since over time we will end up valuing the wrong things.”
A stronger case can be made, however, that the Internet is a utility. Companies such as Comcast (NASDAQ:CMCSA) and AT&T (NYSE:T) are bolstering that line of thought when they argue that they’re advancing the public good when they throttle customers that they consider to be data hogs to preserve the greater good (Internet access for all).
Even Google isn’t immune from these pressures. Verizon Wireless (NYSE:VZ), the largest cellular carrier, demanded that the search engine giant withhold Google Wallet, its payments technology, from devices sold that use Verizon’s network. The Wall Street Journal noted in December that “Verizon’s move is likely related to its plan to team up with rival carriers AT&T Inc. and T-Mobile USA on a mobile payments venture called Isis, which is expected to begin trials next year.”
The Internet often is likened to the Wild West. As it continues to grow, it will take on the character of the famous Gunfight at the O.K. Corral as battles over digital turf escalate in earnest. The hard part will be in figuring out the good guys from the bad guys.
–Jonathan Berr does not own shares in any of the companies listed here.