The Evolving Internet: A look ahead to 2025

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An interdisciplinary team led by Cisco and GBN have examined the driving forces and uncertainties that will shape the Internet - and the $3 trillion market (… and counting) it enables - from now through 2025. Their findings culminate in four illustrative scenarios, designed to help decision-makers in both technology companies and government understand, anticipate, and manage key changes, risks, and opportunities so that the Internet's potential to create economic and social value can be realized globally.

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The Evolving Internet: A look ahead to 2025

  1. 1. DRIVING FORCES, UNCERTAINTIES, and FOUR SCENARIOS TO 2025
  2. 2. TABLE OF CONTENTS Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Five Premises for the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Axes of Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The Scenario Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 FLUID FRONTIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 INSECURE GROWTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SHORT OF THE PROMISE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 BURSTING AT THE SEAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Using the Scenarios and Exploring Their Implications . . . . . . . . . 31 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Appendix 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 INTERVIEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Appendix 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 AXES OF UNCERTAINTY AND DRIVERS OF CHANGE . . . . . . . . . . . . . . . . . . . . 44
  3. 3. FOREWORD is report is a collaborative e ort between as vendors, suppliers, service providers, device Cisco, the global leader in Internet architec- manufacturers, and application developers. ture, and Global Business Network (GBN), the e other is a broader group of stakeholders, world’s foremost scenario consultancy. especially policymakers who are shaping the rules of engagement that a ect the Internet in It is o ered as a contribution to ongoing discus- order to best serve their constituents. sions and e orts to harness the huge potential of Internet and IP networks to drive economic and e measure of a successful set of scenarios human development around the world. is is of is twofold: by getting us to imagine di erent particular relevance to emerging-market coun- paths that the future may take, they help us to tries where the relatively low level of Internet use be better prepared for long-term contingencies; today reveals a wide opportunity gap in terms of by identifying key indicators, and amplifying economic productivity and social inclusion. signals of change, they help us ensure that our decisions along the way are exible enough to We hope that our discussion of key driving accommodate change. With this report, we have forces and uncertainties a ecting the Inter- attempted to meet these objectives in ways that net’s evolution and the scenarios that we’ve are far-sighted and provocative on the one hand, developed to illustrate how these factors may and practical and action-oriented on the other. unfold by 2025 will be a useful source of We hope these scenarios will inspire broader insight for even the casual reader. But we conversations and wiser choices so that broad- had two primary audiences in mind for this band and the Internet realize their potential to report. One is business and technology lead- enhance global prosperity and well-being. ers who are actually constructing the Internet DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 THE EVOLVING INTERNET 1
  4. 4. INTRODUCTION It’s 2025. Imagine that the Internet has under- the Internet has made since the rst email mes- pinned a new wave of global prosperity. It is now sages were sent over the ARPAnet in 1970, and as central to the lives and opportunities of peo- the massive changes it has triggered in how we ple in the outskirts of Mexico City and rural Sri live and work. Yet despite its explosive growth, Lanka as it is to people in Tokyo, New York, and especially in the last 15 years, the Internet is still London. Myriad new applications cater to most in its youth, maybe even its infancy: only one- of the world’s population and to businesses of all third of the world’s population has ever ”surfed” sizes and shapes. online (almost 5 billion people haven’t) and fewer than one- h of those who use the Internet do Or maybe not. so regularly. Maybe the Internet has become a victim of its Just as the architects of the ARPAnet never own success, with the explosion of Internet anticipated the Internet of today, it’s equally products and services now a source of frustra- hard for us to predict the Internet’s evolution— tion as much as satisfaction and networks over- its future and its impact. at billions more burdened and unreliable in many parts of the people are poised to come online in the emerg- world. Or maybe the Internet has hit a wall, so ing economies seems certain. Yet much remains plagued by hackers and cyber attacks that it’s uncertain: from who will have access, how, given rise to a new digital divide between those when, and at what price to the Internet’s role with access to expensive security measures in as an engine for innovation and the creation of gated Internet enclaves and those who tread commercial, social, and human value. As users, warily across the free but dangerous Internet. industry players, and policymakers, the inter- Or maybe prolonged economic stagnation and play of decisions that we make today and in the protectionist policies have drastically dampened near future will determine the evolution of the demand for new devices and eroded people’s Internet and the shape it takes by 2025, in both willingness to pay for applications and services. intended and unintended ways. All of these worlds are plausible. All of them Hence the need for scenarios—a set of diver- could happen. Are you prepared? gent stories about the future—to help us explore Today, in 2010, the Internet is already an integral and prepare for possible futures of the Internet. To make sure that our scenarios are both rele- DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 part of existence in many parts of the world. It’s easy to forget the incomparably large strides that vant and logically related, we’ve organized this inquiry around two related questions: What forces will shape the Internet between now and 2025? How might the use of the Internet and IP networks (particularly with regard to emerging countries) evolve? THE EVOLVING INTERNET 2
  5. 5. INTRODUCTION For purposes of this report, we look at the Inter- today. is includes (under applications and net broadly, from both the mechanical and value content) the margin attributable to the Internet creation perspectives. Technically, the Internet from “e-commerce,” the enormous and rapidly can be thought of as a mesh of digital impres- expanding volume of purchases and services sions, storage systems, ber, radio frequencies, delivered over the Internet, from book sales transmissions, switches, screens, and terminals. to tax preparation. e volume of e-commerce But it is the complex array of relationships across is estimated at US$8 trillion annually, but we technologies, applications, players, and policies estimate the margin attributable to the Internet that de nes the Internet as a creator of economic as a retail channel to be roughly on the order and social value. of US$0.5 trillion. erefore, the grand total for Internet-related revenue adds up to roughly At its base are policies and standards that shape US$3 trillion—and counting. Internet build out, interoperability, and secu- rity. e next tier, network infrastructure or In contrast to this transaction-based value, the backbone, comprises the cables, switches, rout- Internet’s social value remains immeasurable. ers, and towers that are the essential transmis- But we do know it is creating a whole new world sion grid for all Internet tra c. Next there are of opportunity—transforming human interac- the connections—the on-ramps through which tions while at the same time challenging many individual and enterprise users plug in—and existing social and political structures. Although the enabling technologies like individual PCs, this is not the primary focus of our report, it is PDAs, phones, and IP networks that allow users an inevitable and powerful force for change. to tap the Net. Layered on top of that is con- tent: streaming media, data, peer-to-peer (P2P) FRAMING THE $3 TRILLION INTERNET communications, games, voice communica- tions using Internet protocol (VOIP), and text, Use including e-mail. Finally there is usage, the ever- changing ways in which both individuals and Applications enterprises chose to consume Internet content. and Content 0.7tr $ e four middle tiers of the stack (applications Enabling and content, enabling technologies, connections, DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 Technologies 0.6tr $ and network infrastructure) generate about US$3 trillion in annual revenue, more than two- Connections 1tr $ thirds of which comes from advanced markets Network Infrastructure $ 0.7tr Policies and Standards THE EVOLVING INTERNET 3
  6. 6. INTRODUCTION Making sense of these possibilities calls for uncertain and most important in shaping the scenarios—stories of the future that are inten- path of the Internet in the next 15 years (see tionally diverse and stretch our thinking to Appendix 2 for a full list). ese drivers were accommodate both the expected and the condensed into three axes of uncertainty, unimaginable. By visualizing a broad range of which became the sca olding for framing potential futures rather than making speci c possible scenarios. predictions or following narrow forecasts, sce- • Finally we selected, from the range of plau- narios help to surface new opportunities and sible scenarios, four scenarios to develop in new risks and to explore plausible outcomes depth. We chose these for two reasons: rst, that could be game-changing. they challenged our assumptions, individu- Our process involved the following components: ally and collectively, about what might tran- spire; second, they suggested business and • We began with a broad review of open policy implications that were meaningfully source and proprietary research and projec- di erent. e scenarios were then tested and tions (see Appendix 1 for a description of the re ned with a range of subject matter and range of topics explored). is was followed scenario authorities. by interviews with experts and leading think- ers from within and outside Cisco, including members of GBN’s Network, to identify the drivers of change that might fundamentally alter the Internet’s future. ose interviewed were diverse in terms of perspective, loca- tion, and expertise. • rough our research we identi ed a set of premises that provided a foundation for all the scenarios. We then prioritized the change drivers according to those that were most DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 THE EVOLVING INTERNET 4
  7. 7. FIVE PREMISES FOR THE FUTURE The future of the Internet will be driven, at least in part, by many dynamics that can already be seen today. Hence, we believe that there are features about its evolution that we can count on with confidence. Below, we offer five premises about the future of the Internet, drawn from our research, interviews, and analysis. These themes appear repeatedly in the scenarios, leading to quite different implications when combined with other possible developments that are more speculative in nature. A major shi in global market structure will BY 2025: result from three factors that have compound- 1 Most growth in the Internet-related ing and accelerating e ects. e rst will be market will have occurred outside economic growth: the di erential between GDP of today’s high income, or “advanced,” growth in advanced and emerging countries economies. overall will be signi cant and persistent—in 2 Global governance of the Internet will excess of 3 percent per year. Second, the pattern remain substantially unchanged. of growth in many of these emerging countries 3 “Digital natives” will relate to the will result in rapid expansion of their middle Internet in markedly different ways classes—both in numbers and in purchasing than earlier generations. power. ird, Internet usage and, fast on its 4 Today’s keyboard will not be the heels, broadband connections will grow quickly primary interface with the Internet. in emerging countries, but will reach a plateau 5 Consumers will pay for Internet soon in the advanced countries, characterized connectivity in a much wider range by slower growth and aging populations. of ways. e impact of these three factors is represented Each premise is described in greater by a metric we call the “Internet economy,” DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 detail below. which approximates purchasing power in the 1 hands of Internet users. Advanced market Growth in the global economy and middle class will occur primarily countries accounted for about 85 percent of the outside today’s “advanced market” Internet economy in 2005; their share is esti- countries. Transactions for Internet- mated to have fallen to 70 percent in 2010. Our related products and services will premise is that emerging countries will account increasingly take place in countries that for more than half of the Internet economy by we now characterize as “emerging.” 2025, re ecting their extremely rapid economic THE EVOLVING INTERNET 5
  8. 8. growth, compounded by the desire to “catch ere will also be forceful arguments against up” in Internet use. is will be true not just in any such attempts on the grounds that they places like China or Brazil, but in a wide range of are likely to do more harm than good. But the countries small and large. absence of any viable global governance formula or persuasive alternative in terms of institutional Yet the dramatic shi in the composition of the structure will keep the set of rules currently gov- Internet economy is just a quantitative proxy for erning the Internet fundamentally unchanged an even greater qualitative impact. is will be between now and 2025. caused by the dynamics triggered as the poten- tial of networks to improve productivity reaches e evolution of the Internet in the past 40 years virgin enterprise territories and as consumers has underscored the notion that it is in the net- of content from everywhere are located every- work’s nature to evolve organically and con g- where. Although Internet tra c will continue to ure freely as opposed to being determined by be heavier in advanced markets with higher per strict, static designs. is will remain a powerful capita levels of expenditure in and around the assertion going forward, leading governments to Internet, the dynamics and global composition focus their e orts on preventive measures a ect- of the market will be dramatically changed by ing the use of the Internet in their sovereign ter- emerging countries. ritories and possibly producing disparities not unlike those observed in nancial regulation. While our scenarios incorporate variations on this premise, especially in terms of di erential e bodies that have so far been involved in growth rates between advanced and emerg- proposing and promoting Internet standards ing economies, they all have in common a will remain a feature of the landscape, but they profound shi in the global geography of the will not acquire a more formal mandate than Internet economy. they have today. In large measure this premise 2 re ects the lack of alternatives and the hurdles Governance of the Internet will that would impede progress toward anything remain substantially the same. It will retain the loose structure that has more binding on the international level. characterized it all along, despite pressures for greater control that will arise from occasional Internet disruptions, including 3 “Digital natives”—who have been raised on the Internet since the late 1990s—will relate to the Internet in malicious ones. markedly different ways than do most of today’s adults. Willful disruption and illicit use of the Inter- net—electronic fraud, the , and deception— Members of these web-savvy “Net generations” will be as common in the future as they have will tend to view the Internet as an extender of DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 been in the recent past. Brown-outs and black- their own cognitive capabilities and as a portal outs will happen as a result of sabotage, vandal- to virtual experience. (Whether this also leads ism, terrorism—or system malfunctions. ese to a signi cant shi in brain function, as some breakdowns will elicit sporadic and sometimes studies suggest, is beyond our purview here.) loud calls for enhanced international control of ey will interact with the Internet as part of the the Internet. ambient environment in which they live; indeed, THE EVOLVING INTERNET 6
  9. 9. FIVE PREMISES FOR THE FUTURE the Internet is likely to become much more deeply embedded, even invisible. e notion of “connecting” could disappear almost entirely. 4 Today’s QWERTY keyboard—and the language and interface hurdles it represents—will no longer be the primary means of relating to the Internet as new ese digital natives will be less inclined to dis- technologies transform that relationship. tinguish between suggestions made to them vir- tually by Internet peers and suggestions made e QWERTY keyboard is a relic of another era. by peers with whom they have had face-to-face Its logic (minimizing jams in the hammer arms contact. ey will also be more likely to respond of mechanical typewriters for English language comfortably when the Internet asks them unso- typists) became obsolete long before the start of licited questions or invades their privacy. But the twenty- rst century. Yet English-language most importantly, digital natives will think computer keyboards still feature QWERTY and about the Internet as a general service platform, nothing else. like conversation or thinking—part of what e keyboard, however, is about to be over- makes us who we are and something we just do. thrown by a combination of voice recognition, As they reach the labor force, these digital bio-sensing, gestural interfaces, touch-screen natives will accelerate the trend among enter- versatility, and other technologies that will allow prises of all sizes toward relying on networks us to input data and commands without keys. as the multi-dimensional platform for business. e keyboard will fade away gradually as the One question that remains in the scenarios is people who learned to type on it age. the extent to which there will be signi cant lags One major consequence of this change will be in the emergence of these digital natives across an explosion in the number of people who can the world: how large a minority of young people use the Internet, as well as in the types of things raised alongside the Internet will be required they can do with it. A post-QWERTY world is a to trigger a Net generation e ect, especially future in which we don’t have to put something in countries with lagging adoption rates? e else down in order to pick the Internet up. e sequencing of Net generations emerging in Internet will be a constant parallel processor— countries that today have low Internet penetra- without QWERTY’s implicit Western bias. tion will have a signi cant impact; the relative size of those in the overall population will also matter and compound the e ect of demographic DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 di erences across the world. THE EVOLVING INTERNET 7
  10. 10. FIVE PREMISES FOR THE FUTURE 5 Consumers will pay (or not) for Internet connectivity in a much wider range of ways, both direct and indirect, entiated competitive o ers—will appear around the full range of transaction variables: bundling, a la carte, as you go, o peak, tiered, introduc- compared to today’s predominant flat-price tory, balloon, pay for quality, pay for mobility, subscriptions. billing cycles, publicly supported pricing, terms As high-bandwidth applications explode, the and conditions, guaranteed, banded, bulk, spe- need to allocate available network capacity e - cialty, and so on. ciently across time and users will be a major Almost everything that can be variably priced issue. e spread of wireless connectivity will will be. One-size- ts-all bandwidth options will also open up many new pricing models for be the exception rather than the norm. Current network access, such as easily bundling con- at-price plans will seem quaint in retrospect. nectivity and services. Capacity management e presumption that content delivery and considerations will force a major reshuf- connectivity should be considered as separate ing among pricing models (indeed, similar value propositions will also be subject thinking by service providers is already quite to experimentation. advanced). For the Internet, price elasticities have not yet played the role that they have We see the demise of one-price- ts-all, usage- assumed in virtually every other market. Avail- impervious pricing for connectivity as a given, able bandwidth or network capacity will have but the extent of technical progress on the to be allocated more e ciently—and pricing is wireless front and the nature of capacity con- a well-proven tool for that. straints in the network (sporadic or sustained, widespread or spotty, policy-driven or sponta- Rapid proliferation of new tolling and mon- neous) will have major implications for how etization schemes will also respond to increas- this plays out. ingly ne consumer segments appearing across geographies, age groups, genders, and personal desires. Pricing preferences—and highly di er- DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 THE EVOLVING INTERNET 8
  11. 11. AXES OF UNCERTAINTY ese ve premises for the future of the Inter- In order to o er a reasonable range of plau- net provide a foundation of relative predictabil- sible and provocative alternative futures for the ity but still leave ample room for uncertainty. Internet in 2025, we synthesized the 14 critical From our research and interviews we identi ed uncertainties into three axes. is allowed us to 14 critical drivers of change that span a vari- construct a sca olding to explore a number of ety of economic, social, policy, and technology BUILD-OUT LIMITED NETWORK possible scenarios: EXTENSIVE dimensions. ese drivers are also highly uncer- • Will broadband network build-out be exten- tain, suggesting a range of possible outcomes sive as a result of the combined e ect of pri- that could play a major role in the evolution of vate and public investment, or more limited? INCREMENTAL TECHNOLOGICAL PROGRESS the Internet through 2025. Exploring the pos- BREAKTHROUGHS sible impact of these change drivers (listed and • Will technological progress be characterized explained in Appendix 2) was a key step in the more by breakthroughs or mostly represent development of our scenarios. incremental advances? CONSTRAINED USER BEHAVIOR UNBRIDLED is breadth of coverage is important to our • Will user behavior (including the appetite for purpose, yet playing with too many uncer- ever-richer Internet applications) be unbri- tainties and scenarios can be overwhelming. dled or more constrained? THREE AXES OF UNCERTAINTY LIMITED NETWORK BUILD-OUT EXTENSIVE DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 INCREMENTAL TECHNOLOGICAL PROGRESS BREAKTHROUGHS CONSTRAINED USER BEHAVIOR UNBRIDLED THE EVOLVING INTERNET 9
  12. 12. AXES OF UNCERTAINTY bargaining power of various stakeholders and NETWORK BUILD-OUT create opportunities for, or barriers to, compe- What will the global broadband tition between entrants and incumbents, wired network—its breadth and capacity— and wireless, and short-term and long-term look like in 2025? objectives. Approaches to policy and regula- tion will be forced to evolve with technology is axis of uncertainty focuses on key and Internet use—but how quickly? To what characteristics of the global network, including extent might more dynamic, far-sighted licens- carrying capacity, speed, and other quality fac- ing approaches overcome the historical inertia? tors. How these characteristics di er around the How much “regulatory competition” will take world will signi cantly in uence what the Inter- place across countries and will it result in the net will look like in 2025—and how much of convergence or divergence of approaches? its promise of productivity, economic growth, social inclusion, and enjoyment will have Responses by market actors will also vary. How been realized. will investors and network operators react to the shi ing policy and regulatory landscape? Will e interplay of government policies and pri- di erences in market accountability and in the vate investment decisions will be a major fac- time horizons for investment payo lead to dif- tor in determining how this axis of uncertainty ferent private investment decisions in response plays out in time and space. Choices made by to the same government action? governments, national and local alike, will have a direct and indirect e ect on network build- out and on the spread of wireless options. TECHNOLOGICAL Direct actions might include public investment PROGRESS in backbone or gap- lling networks, spectrum Will there be widespread technology allocation, and aggressive action to ensure that breakthroughs or will progress be more other types of infrastructure are available to be modest and incremental? shared by ber deployment or wireless trans- mitters. Indirectly, governments will in uence is axis addresses the range of new options cre- network build-out through policies that a ect ated by the evolution of the Internet. While fail- the incentives for network operators to invest ing to invest in R&D guarantees that there will be in expansion and improvements to both xed no technological progress, there is an asymme- and wireless networks. try, as R&D investment does not ensure techno- DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 logical breakthroughs. is axis re ects the large Decisions that seem unrelated or tangential to element of unpredictability (even randomness) the objective of network build-out could have associated with e orts to develop new technolo- major e ects on private investment decisions. gies. e adoption rate of new technologies is Some of these policy, regulatory, and licensing also not easily predictable. National objectives, decisions will also in uence the mix and relative THE EVOLVING INTERNET 10
  13. 13. AXES OF UNCERTAINTY such as the protection of domestic champions xed ( ber) networks for conveying rich content or the creation of information and communica- and other demanding applications? tion technology (ICT) clusters, can also have an e ect (o en negative, at least in the short term) USER BEHAVIOR on the speed of technology adoption. How will enterprises and individuals Advanced uses of technology have a role to play relate to the Internet and how will their and breakthroughs that a ect business-relevant preferences evolve? functionalities could have a major impact. But given the masses of potential Internet users is axis of uncertainty is about the choices waiting in the global wings, functionality is not that users—both individuals and busi- the only consideration: a ordability will also be nesses—will make and that will, in turn, decisive. Technological progress that reduces shape overall demand for Internet access, costs (as experienced over the last two decades devices, applications, and content. Tradeo s in connection with computer processing power and sensitivities center on price elasticity, and storage capacity) could have dramatic ease of use, security concerns, and con- e ects on the shape of the Internet in 2025. Will vergence or divergence in demand patterns technology innovation result in rapid, steady across regions and user segments. declines in the costs of Internet-related hard- Global economic prosperity, GDP growth, and ware, including smart phones, netpads, and new income distribution trends across and within connection devices? countries will be major factors in translating Other areas of uncertainty—and opportunity— broader preferences into actual choices—and for technological progress include network e ective demand. e economy will remain an capacity, wireless capabilities, and security pro- important backdrop, against which many of the tection. Will new security technologies emerge choices will be in uenced by perceptions of need to better protect against both unintended and and by the evolution of preferences—including willful Internet disruptions? How will storage, generational di erences. compression, and miniaturization technolo- How current users in high-income countries gies evolve and interact to expand quality and (where Internet tra c is now growing at expo- reduce bandwidth needs at the same time? nential rates) respond to evolving options and How about interoperability? with what kind of price elasticity will also have a Finally, wireless is an area where technological major e ect. But how the masses of new Internet DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 progress, or the lack thereof, would have a criti- users react to their new experience with di er- cal in uence. Will wireless technology evolve ent business and consumer preferences will be rapidly enough to ensure reliable high-speed equally important. Will the bare-all tendencies quality, thereby o ering a real alternative to found in much current social networking, for THE EVOLVING INTERNET 11
  14. 14. AXES OF UNCERTAINTY example, emerge among the next 1 billion users? or will increasingly rich, multi-sense o ers How about among the billion a er that? Criti- keep expanding the global appetite for virtual cal conclusions will be drawn by opinion lead- experiences? How will Internet use evolve ers about the overall security of the Internet among corporate IT departments and small- as a mechanism for trade, value creation, and and medium-size businesses—and where? How information exchange. How di erent will those will the Net generations change their approach conclusions be in Mexico, Russia, Turkey, and to the Internet over time, and how activist will Indonesia, or across states in India? they be regarding government and corporate policies that a ect their Internet use? To what extent will users trade o handsets for embedded access portals: on automobile dash- boards, on home walls, or in articles of cloth- ing? Will we experience a pendulum swing away from digital experiences (driven by tech fatigue or cultural discomfort with virtual life), DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 THE EVOLVING INTERNET 12
  15. 15. INSECURE GROWTH CONSTRAINED USE* TECHNOLOGY BREAKTHROUGHS* EXTENSIVE NETWORKS EXTENSIVE THE SCENARIO BREAKTHROUGHS FRAMEWORK UNBRIDLED SHORT OF THE PROMISE Using the “axes of uncertainty” as the basic scaffolding, we CONSTRAINED USE* created a scenario “cube” to visually depict the full range of INCREMENTAL TECHNOLOGY EXTENSIVE NETWORKS* possible future states, or scenarios, suggested by permutations of network build-out, technology progress, and user behaviors. LIMITED NETWORK BUILD-OUT EXTENSIVE BREAKTHROUGHS TECHNOLOGICAL PROGRESS INCREMENTAL CONSTRAINED USER BEHAVIOR UNBRIDLED DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 e future could turn out to be anywhere in the notional playing eld represented by the intersection of the three axes. Among the many combinations of outcomes, we chose four to develop into scenarios. e choice of scenarios was not driven by how probable we felt the scenarios were, but by our attempt to provide a set of novel and divergent—yet plausible— stories of the Internet in 2025. In each scenario all three axes play a role, although their relative importance to the trajectory and outcome varies. e four scenarios are: THE EVOLVING INTERNET 13
  16. 16. FLUID FRONTIERS: is is a world in which the Internet becomes pervasive and centrifugal. Technol- ogy continues to make connectivity and devices more and more a ordable (in spite of limited invest- ment in network build-out) while global entrepreneurship—and erce competition—ensure that the wide range of needs and demands from across the world are met quickly and from equally diverse setups and locations. INSECURE GROWTH: is is a world in which users—individuals and business alike—are scared away from intensive reliance on the Internet. Relentless cyber attacks driven by wide-ranging motivations defy the preventive capabilities of governments and international bodies. Secure alternatives emerge but they are expensive. SHORT OF THE PROMISE: is is a frugal world in which prolonged economic stagnation in many countries takes its toll on the spread of the Internet. Technology o ers no compensating surprises and protectionist policy responses to economic weakness make matters worse—both in economic terms and with regard to network technology adoption. BURSTING AT THE SEAMS: is is a world in which the Internet becomes a victim of its own success. Demand for IP-based services is boundless but capacity constraints and occasional bottlenecks create a gap between the expectations and reality of Internet use. Meanwhile, inter- national technology standards don’t come to pass, in part because of a global backlash against decades of U.S. technology dominance. FLUID FRONTIERS INSECURE GROWTH UNBRIDLED USE* CONSTRAINED USE* TECHNOLOGY BREAKTHROUGHS* TECHNOLOGY BREAKTHROUGHS* LIMITED NETWORKS EXTENSIVE NETWORKS EXTENSIVE KTHROUGHS BURSTING AT THE SEAMS DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 UNBRIDLED USE* UNBRIDLED INCREMENTAL TECHNOLOGY LIMITED NETWORKS* SHORT OF THE PROMISE CONSTRAINED USE* INCREMENTAL TECHNOLOGY EXTENSIVE NETWORKS* * Indicates most critical determinants THE EVOLVING INTERNET In the next section we bring each of these scenarios to life. 14
  17. 17. FLUID FRONTIERS In this world the Internet becomes pervasive and centrifugal. Technology continues to make connectivity and devices more and more affordable while global entrepreneurship—and fierce competition—ensure that the wide range of needs and demands from across the world are met quickly and from equally diverse set-ups and locations. changing the structure of human interactions and lifestyles in the process. e early tip of a big iceberg was the arrival of e-books and Apple’s iPad, augmented by the availability and popular- It’s ity of open-source so ware and applications for 2025, all sorts of new devices. Pricing innovations also and the Internet is ubiqui- spread with a vengeance, with providers o ering tous, extending its power and impact far and “menus” to individuals and businesses that feature wide. It’s being used by 5.5 billion people now, a startling number of o ers and combinations. 3.5 of them since 2010, meaning that more While investment in network build-out remained than two-thirds of the world’s population has relatively modest (in many countries, mixed regu- newly experienced the Internet. e exponen- latory signals discouraged private investment at tial growth in Internet tra c was fueled by both various points in time), technological progress an explosion of cloud services on the business was breathtaking. Wireless technology generated side and a mounting appetite for video and high a frenzy of development in hot zones (no longer bandwidth applications among individual users. “spots”) around the world. e mobile Internet e resulting waves of productivity proved trans- is now a pervasive reality and the range of con- DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 formative for the economic and social develop- nectivity options and combinations has expanded ment of countless countries, creating millions of everywhere. e downside to this booming devel- knowledge-based jobs. opment, however, is that public investment in net- On a more personal level, connectivity allowed works is more di cult to justify. people to discover and act on new a nities that cross old boundaries of geography and culture, THE EVOLVING INTERNET 15
  18. 18. Dramatic increases in data transmission e ciency pelling promise. e arrival of young, Net-savvy enabled tra c to grow at unexpectedly high rates. teachers and nurses made the di erence, how- Yet computing power, storage, bandwidth, and ever, eroding divides and increasing e ciency. devices all experienced radical downward price Widespread adoption of these services also paved movements, if not in absolute terms then cer- the way for more advanced technologies that use tainly as measured by functionality per dollar. multi-dimensional imaging, robotics, asynchro- e geography of innovation—technological and nous interactions with experts, and rich media managerial— also shi ed markedly. Today some that can be adapted in a variety of contexts. innovation still comes from traditional places Given such pervasive access to high-quality com- like Silicon Valley, but most is erupting at dizzy- munications, education, healthcare, and inter- ing speeds in places like Bogota, Cairo, Mumbai, active entertainment, it is nally possible to live Perth, and Zhanjiang. Breakthroughs in compres- and work anywhere. Otherwise remote areas are sion, screen, or interface technology seem to hap- now more attractive, partially reversing the trend pen overnight. Much of this innovation and growth is being driven by “digital natives” (those under 35 in Some innovation still comes 2025), who have taken the workforce by storm, from traditional places, but bringing with them the expectations and skills to most is erupting at dizzying accelerate the use of technology. Already pioneers speeds in places like in adopting technology for socializing and fun, Bogota, Cairo, Perth, they are now turning their Internet acumen into a new wave of productivity and creativity. While and Zhanjiang. the generation gap is noticeable in many of the established advanced economies, it is especially toward urbanization and the sprawl of mega- signi cant in the newly prosperous ones that were cities. But cities of all sizes are increasingly appeal- labeled “emerging” back in 2010 but now consti- ing, intensely connected, and reenergized by tute almost a quarter of the global economy. For- national and local “green and clean” policies. New tunately these digital natives are also enthusiastic technologies—and the global dissemination of about easing their “elders” into this brave new best practices and promising experiments via the world as they embed technology into the daily Internet—helped make the integration of sustain- fabric of life in ways we would have considered ability and economic growth not just idealistic but awkward, invasive, or both not so long ago. realistic. is bene tted every part of the planet DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 and especially the Global South. is generational boost also helped leapfrog such technology applications as distance educa- e bottom line is inescapable: technology in tion and remote healthcare, which struggled to general and the Internet in particular, have deliv- achieve critical mass earlier despite their com- ered. From Maputo to Milwaukee to Mumbai, the THE EVOLVING INTERNET 16
  19. 19. FLUID FRONTIERS Internet has become a fact of life, not just a nice intended to make someone’s transition online to have. More and more machines, compu- seamless. Yet many of the most touted inno- tational devices, sensors, and humans—alto- vations are the product of unusual alliances, gether numbering in the trillions—are now partnerships, and licensing agreements, rather embedded components of the World Wide than traditional R&D. To succeed, one eye Web. In the past decade, we moved beyond must always stay focused on the core—cost, having a conscious relationship with the pro- e ciency, and sustainability metrics matter as cesses, wires, and screens that we rely on; it’s much as ever—with another scanning the hori- hard, even irrelevant, to say when one stops zon for signs of imminent disruption and eet- and the other begins. Whether it’s the carpet ing opportunities. Even the most agile com- that alerts medical services when an elderly petitors struggle constantly to stay ahead of the person falls in her home or the automo- emerging and morphing competition. tive system that adjusts your route based Looking ahead, there is no question that IP on tra c, weather patterns, and food prefer- networks will continue to play a big role in ences, we now take for granted the depth, national, city, and enterprise competitiveness breadth, and consequences of connectivity as well as personal experiences and lifestyles. with everything and everyone. No wonder But in many parts of the world capacity limita- this is such a high adrenaline world, perco- tions are beginning to loom large. e question lating with the buzz that comes from being of how to nance the higher quality, exten- always on, always sensing, always interacting, sive networks that this densely connected, and always changing. rich-bandwidth world needs does not have an is is also an exhilarating—and unsettling— obvious answer. Public-private partnerships world in which to do business. Players prolif- for network build-out are the exception rather erate, rise and fall, and constantly iterate the than the rule and few governments have found value proposition around the Internet. New the courage to prioritize public network invest- technologies, new access models, and new ments. Can the forces of technological progress pricing schemes—concerning both content that enabled the Internet’s explosive growth and bandwidth—dominate the weekly industry from 2010 through 2025 be counted on to con- headlines. e development pipeline is full of tinue doing so inde nitely, or will a major new toys, consoles, sensors, interfaces, and tablets policy approach be required? DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 THE EVOLVING INTERNET 17
  20. 20. Life in the unfolding world of FLUID FRONTIERS Meet Diedra, Mieko, and Slava. There is no way DEIDRA is going to miss her favorite game show, “Date the Globe.” Especially not this latest real-time episode, in which a bachelorette from Reykjavik is posing really clever questions (instantly translated) to single men in Mumbai, Cape Town, Cairo, and a remote research station in Antarctica, in an attempt to find her true love. Deidra started watching the program on her 3D Flex Screen (located on the back of her backpack) while she was on the bus from work. Now she’s home and she’s starving, but she can’t miss discovering who the bachelorette picks! So Deidra “beams” the show onto the side of her fridge, which she can view clearly from her high-speed stove (her pasta water only takes six seconds to boil). Everyone can send real-time comments to the bachelorette and to the bachelors, so Deidra taps a 3D button hanging in the air and says the Cairo contestant’s name. “Hey, tell her you love her eyes!” Three seconds later, he does. Will it work? Deidra takes a final bite of pasta, and waits for the bachelorette’s choice. “I just know it’s Cairo man,” she cries, her fingers crossed. MIEKO, a 39-year-old professor at Tulane University in New Orleans, stands in front of her computer’s 3D scanner in her underwear, hits “record,” and slowly turns around in a circle. Shuffling back over to her keyboard, she hits “send.” Almost instantly, a voice with a Thai accent fills her living room. “Those came through perfectly. Stand by for us to project your 3D dressing room so that we can get started.” Within seconds, she’s in a virtual dressing room with a three-fold mirror. “Stand on the green dot you see on your floor, and here comes your first style—the cocktail dress that you loved.” Suddenly, Mieko is “wearing” the most stunning red dress she’s ever seen, custom-sized just for her. The deep V neckline is as flattering as she’d hoped, and the sequins add just the sparkle she wants for the upcoming banquet. This dress—this look—was why she was determined to “try on” the styles of this particular Thai designer. “Mieko, you look amazing. But let’s try the dress in blue. Just a gut feeling,” says the voice. Suddenly, her virtual dress switches to a deep cobalt. “Oh my God!” Mieko whispers. “Gaston won’t be able to take his eyes off of me!” SLAVA, a 46-year-old Internet executive from Ukraine, loosens his tie, his workday now done. Of course, the end-of-day commute doesn’t take long, given that the business meeting he just wrapped up took place via video- DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 conferencing technology set up in his home office. Technically, Slava works for a firm based in New York City. But thanks to incredible advances in videoconferencing, he can work almost seamlessly—as well as he could if physi- cally in New York—from his new home in Tumbes, Peru. Plus, this Peruvian coastal town has become a major center for solar-powered server farms—and who better to oversee his company’s share of those servers than a man who loves swimming in these gorgeous Peruvian waters? “Slava, can you take a quick client videocall? Something about that new deal with the micro-server firm in Odessa?” he hears through his ever-present (in fact, embedded) ear piece. “Uh, sure,” he says, tightening his tie. The beach can wait. “OK, he says. “Put them through.” THE EVOLVING INTERNET 18
  21. 21. INSECURE GROWTH This is a world in which users—individuals and business alike—are scared away from intensive reliance on the Internet. Relentless cyber attacks driven by wide-ranging motivations defy the preventive capabilities of governments and international bodies. Secure alternatives emerge but they are discriminating and expensive. to the ”information superhighway.” Wireless, of course, was a big part of that story. And so much investment! Network infrastructure came to be seen as a key ingredient of national competi- It’s tiveness. Countries as di erent as Peru, Turkey, 2025, and Vietnam all launched programs combining and the dream of the Inter- public funding and incentives for private invest- net as the great transformer is in shambles. e ment to ensure that networks extended the reach promise of a ubiquitous virtual platform through of broadband across geographies and social seg- which an ever more globalized world would col- ments—fast. laborate and think di erently, and through which And yet our focus on the upside of connectivity all kinds of new businesses would change our lives made it possible to miss something big. As the in unimaginable ways, simply failed to material- world went about busily managing more and more ize. In fact, it’s hard to look back on the 2010s and of its nances, relationships, and business online, not blush. How trusting we were. And, in some everyone just assumed that the platform was fun- ways, how foolish. damentally secure in some capital-S kind of way. Sure, the Internet was home to its share of scams, DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 Even 10 years ago, in 2015, the dream was already tarnishing. Security breaches and data swipes viruses, and stolen identities, but these seemed were becoming more frequent and their conse- more annoying than dangerous. Plus, weren’t quences more serious. Yet network build-out con- there organizations and initiatives dedicated to tinued its march around the world, reaching even policing all that? (Hundreds of them, as it turned the remotest of places where few thought they’d out—but o en poorly coordinated and sometimes ever see a computer, let alone high-speed access at cross purposes.) THE EVOLVING INTERNET 19
  22. 22. Even so, how were we to know that the security users limited their online activities to the websites wall between our everyday Internet use and the and businesses of known brands—particularly nefariousness on the other side was as thin as the those that had rede ned themselves around safety spyware on any given laptop or PDA? ere we ratings and standards and touted their big invest- all were, typing and texting, forwarding personal ments in security, encryption, and fraud control. documents, accessing YouTube clips, plugging Impulsive Internet shopping was now a thing of addresses and credit cards numbers into online the past. forms, making payments on our mobile phones, Safety was not cheap, and users ocked to expen- and thinking that our anti-virus so ware or our sive private networks and online “gated commu- IT department forti cations were su cient. We nities” that promised bolstered security (even didn’t realize that if we were to put our ears right if they didn’t deliver). For those who couldn’t up against those rewalls, we’d hear the shu ing a ord such services, the only alternative was of thousands of vandals, fraudsters, and cyber- to be super-vigilant and limit online time and terrorists just inches away. activities. For many, once-common practices like In retrospect, the highly publicized attack on downloading so ware updates and iPhone apps Google in 2010—and, equally alarming, Google’s or trading stocks through the open Internet were intimation that it wasn’t sure if it could block deemed too dangerous. attacks from happening in the future—should have made the holes in the rewall more vis- ible. But it wasn’t until reported incidents of Combating cyber-terror and mega-hacks became commonplace—and seem- cyber-crime has become a ingly unstoppable—that we fully realized our continuous, high-cost, low- predicament. Advising users to “install patches return endeavor, much like to operating systems” or “avoid clicking bad links” was like telling someone to duck against the old war on drugs. a hailstorm of bullets. e complexity and clev- erness of these attacks far exceeded the tools e retreat of wary consumers from the Internet available to combat them. In 2015, an issue (or, at least, their new usage patterns) froze many of e Economist asked on its cover: “Who Is IP-based initiatives that had been in the works Foolish Enough to Trust the Internet?” and shook up all kinds of enterprises. In the IT So we all woke up—and rather abruptly—from industry, well-established so ware providers saw DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 our shared dream of an Internet that was funda- their market positions strengthen while upstart mentally “good.” We didn’t give up on the Internet brands and service providers struggled. Mean- entirely; we just adopted a much more wary and while, the world of e-commerce was turned on its circumspect approach. Young, intrepid “inter- head. Many companies that had redirected their nauts” adapted by self-editing what they revealed marketing strategies online swung back toward on social networking sites. Many other Internet more traditional approaches. Alliances of strong THE EVOLVING INTERNET 20
  23. 23. INSECURE GROWTH brands anchored by “bricks and mortar” and delighted by the shi , which holds little appeal secure technology found their footing once for malicious intruders. Still, the Internet could again. Some banks chose to rebuild their street- have been and done much more, if only it could front branches while others invested in super- have been secure. secure networks (and access procedures) hoping ere were other bright spots. Print media— to keep Internet banking alive, at least for high- including newspapers—didn’t die as predicted. value clients. Similarly, “cloud service provid- TV has experienced a renaissance of sorts, with ers” developed new ways to be both fail-safe and limited interactivity that mimics the Internet connected, but this made the cloud prohibitively but is nowhere near as risky. And all that rapid- costly for many smaller businesses. cycle innovation in products and services that All this did not, however, keep malicious once ooded the marketplace has been largely hacking and illicit Internet activities from replaced by quality-assured innovation. In fact, proliferating. It did contain their impact—but a lot of the frenetic pacing of life in the early at considerable cost. Even now, in 2025, it’s 2010s—facilitated by our addiction to con- clear that cyber attacks can’t be stopped— nected devices, ubiquitous access, and instant not outright and maybe not ever. Policing grati cation—has slowed down. e placement the virtual world is harder than policing the of products and services on the Internet is now physical world. Combating cyber-terror and measured in years, not months. cyber-crime has become a continuous, high- Still, there are many enclaves where sophisti- cost, low-return endeavor, much like the old cated use of secure networks does provide major war on drugs. bene ts because the scale of revenues is large ere was a silver lining, though. With connec- enough to bear the associated costs. Many of tivity levels and Internet familiarity quite high the applications thriving in these enclaves could in many countries, the Internet has become less easily be expanded to much wider markets. of a medium for economic activity or high-tech ere is hope that new security technologies will interaction and more of an environment for make that possible (undoubtedly resulting in the community activity, cultural and artistic shar- emergence of the new IT giant of the 2030s). But ing, and political activism. e “back to basics” for the time being, so much insecurity is gravely proponents of this less mercenary Internet are hindering the Internet’s growth and potential. DRIVING FORCES, UNCERTAINTIES, AND FOUR SCENARIOS TO 2025 THE EVOLVING INTERNET 21

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