Nemertes Research speculates that investment in residential networks isn’t keeping pace with user demand for bandwidth, hence a bandwidth crunch will come about in 2010 or so. Their method is to assume that bandwidth appetite follows Moore’s Law and investment is linear, therefore the lines have to cross.
They may very well cross, but their math is wrong. One of the corollaries of Moore’s Law is that circuits grow cheaper as you pack more of them on a die, hence a linear investment in technology should result in a pool of bandwidth that accommodates Moore’s Law increases in demand. Moore’s Law applies at both sides of the network interface, in other words.
There is a caveat, however: communication networks are hybrid systems, part analog and part digital, and only the digital part obeys Moore’s Law. The way around this is to engineer them to minimize the role of analog, which is what we did when we moved Ethernet from shared coaxial cable to point-to-point twisted pair on a silicon hub. It costs more to upgrade bandwidth on shared-cable systems like DOCSIS than on dedicated cable systems like FTTH. So the real issue is getting a cable plant in place that facilitates Moore’s Law economics.
Predictably, the regulation fanatics fail to deal with any substantial issues in relation to this study, and simply throw poo at the walls of their cages. See: Save the Internet, and DSL Reports. An ad hominem is not an argument, and Nemertes refuted Save the Internet smartly in the comments.
Nobody knows, of course, how fast user demand for bandwidth will grow in the next few years, but it’s inextricably bound with how fast carriers deploy fatter pipes. At some point, we will get our TV shows in HD over an IP network or something similar, and even that (100 Mb/s or so) won’t be the final upper limit.