This paper defines the traffic, network efficiency, and utilization to quantify them and to put these metrics in perspective for explaining the perceived "capacity glut". This paper also identifies key characteristics of Internet traffic that are vastly different from those of traditional voice and enterprise data traffic. Its impact can be seen in network utilization since each type of traffic requires different capacity overheads. Additionally, Internet traffic consumes more transport resources than other types of traffic due to its lack of distance dependence and its directional asymmetry. The impact of increasing share of Internet traffic in the traffic mix on transport networks is examined. The changing characteristics of network traffic can potentially render the current network architectures incompatible with the evolving mix of communications traffic, and if not addressed will continue―all else being equal―to have negative impact on the profitability of current and future communications services. In recent years, most carriers have made a decision to simply deploy line cards in existing legacy architectures to expand capacity, which may be the lowest capex solution on a demand-by-demand basis and a good short term solution when capital is scarce. However, business as usual will continue to increase the opex and is not likely to ultimately improve network-wide economics. Adoption of ULH transparent networks holds promise to reduce network costs, but will materialize only after inter-node traffic reaches the granularity of wavelength channels at least for the major node pairs in the network. Such traffic demands will lead to the adoption of node transparency on the basis of savings from transparent bypass of traffic at intermediate nodes. Since opacity will always be needed at the nodes for edge grooming and other OEO functions, hybrid transparent-and-opaque switching will be the preferred architecture at network nodes. These hybrid switches are, however, not commercially available today, and a small number of carriers have used commercially available optical switches with edge grooming devices to accomplish the same functions. In the mean time, organic evolution continues with added functionality to existing network elements, integration of transport and switching, multi-service interfaces, elimination of redundant interfaces, and introduction of colored (wavelength specific) interfaces. More complex integration is to follow, as well as technologies that increase ease of provisioning, flexibility (such as tunability), upgradeability, modularity, and interoperability through an integrated control plane. Transport networks and the capex associated with it is, however, only a small part of total service provider network cost. Network equipment is only 32% of total carrier capex, and optical networks capex accounts for only 7-10% or total carrier capex. Thus, the broader issue of Internet profitability is beyond the scope of this paper but remains a critical puzzle for the industry to solve.
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