It’s a simple thesis, really: Wealth is created by real economic growth, not smoke and mirrors.
Real growth, in turn, has historically been created by new technology.
Compare the average per capita economic output and standard of living before the industrial era with what came after the invention of the steam engine. The gains were enormous.
In all areas, as the developing world has caught up to more-advanced nations in the use of technology, we have seen the differences in wealth between the two shrink or disappear altogether.
A cursory look at the history of science and technology reveals one glaring fact: The rate of change is constantly accelerating. More has been accomplished in the last few decades than in the previous few thousand years. Investors often say, ‘The trend is your friend.’ Technological innovation, therefore, is the mother of all friendly trends.
One of the biggest opportunities is profiting from the obsolescence of the ‘old internet’.
The internet and its user base of billions worldwide are in the middle of a crisis — a bandwidth crunch that impacts us all. Every single year for the past five years, internet traffic has doubled with no signs of slowing down.
Since the internet boom of the 1990s, Internet infrastructure has not had a major upgrade in carrying capacity. Now, for the first time in more than a decade, we are on the edge of an immense spending cycle aimed at upgrading those ‘old pipes’.
The critical shift in standard necessary to keep those ‘pipes’ from clogging is from decade-old 10G (10-gigabit) bandwidth capacities to the faster, higher-capacity 100G network. This new network bandwidth will become a global standard, running underground from city to city and undersea from continent to continent.
As with all creative destruction, there are innovators leading the way. Earlier this month, Facebook unveiled ‘Backpack’, a 100G optical switch they hope will support the usage of its nearly 2 billion users. With streaming video and virtual reality on the rise, Facebook is going to need the bandwidth to back it up.
But Facebook’s efforts wouldn’t be possible without the darling behind faster internet: fiber-optic networking.
The fast lane of the information superhighway travels on pulses of light, moving primarily through fiber-optic cables and secondly through satellite. Over long distances — and increasingly over short ones — fiber-optic technology supplies the communications medium of choice.
The need for fiber-optic innovation is critical as the use of Internet of Things and ‘smart’ devices rise.
There is no device that can’t turn ‘smart’. All that means is that if a device can benefit from an Internet connection, it’ll inevitably be connected to it at some point in the future.
We’re talking about:
- Every appliance in every house, fighting with laptops and TVs for Internet access.
- Every car you see on the road, downloading maps…and uploading vehicle data.
- Every hospital bed, sharing patient data with doctors.
- Your clothes, full of biometric threads that record data for your doctor.
- Every scrap of data on every computer, getting backed up to the cloud.
- Every plane in the sky, sending in sensor data of all kinds.
- Every thermostat, street light, and piece of factory machinery, logging in.
- Every vine in every vineyard or corn stalk in Kansas, talking to farmers.
According to one report, you could see as many as 50 billion connected ‘things’ online by 2020. Compare that to less than 9 billion today. Morgan Stanley puts that number much higher — at 75 billion.
That’s over 10 times the number of people walking the planet. I can’t emphasise that enough.
At a potential of value of $19 trillion, that’s more than double the size of China’s economic boom…it’s triple the size of Japan’s output…it’s even bigger than the whole US economy.
Imagine taking all of our economic output and demand…along with all the wealth Americans have generated to get here…and tacking that onto the global market…in just a few years’ time.
The point is big data cannot be stopped. And somebody is going to need to build internet infrastructure that can handle all the growth. At this rate, bandwidth infrastructure will become as important as road, water and electricity systems within the next decade.
Editor’s note: The above article was originally published in Tomorrow in Review.
From the Port Phillip Publishing Library
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