Nemertes Research , an IT research firm has published a report that predicts that there will be a major problem with the availability of Internet bandwidth by 2012. They had initially predicted this will happen by 2010, but taking the current economic meltdown, they have modified the date to 2012.
Press Release: User Demand for the Internet Could Outpace Network Capacity by 2010
Another fallout mentioned in the report is in the area of innovation around the Internet. This includes a number of areas that are proving to be the hotbed of new innovations like around mash-ups, SaaS, service oriented applications etc.
Looking forward, Nemertes says that if this capacity issue is not addressed, the Internet will fracture into a tiered system where companies with the most money will pay for specialized network infrastructure that will ensure their content is delivered at higher speeds than non-favored content.
This fractured system -- where certain entities can pay extra money to give their content favored treatment -- is what advocates of network neutrality have been working to avoid by preventing ISPs from discriminating against certain types of content. The Nemertes report gloomily concludes that although the Internet will not shut down entirely, it will experience a dramatic slowdown in innovation because "new content and application providers will be handicapped by the relatively poorer performance of their offerings vis-à-vis those created by the established players."
We are already seeing quite a bit of capacity problem starting with ISPs like Comcast putting in place the so called "Network Management Systems" and putting in place bandwidth caps. There is also talk of different ISPs trying out bandwidth based pricing schemes.
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