Goldman Sachs issued a report last week on online video titled "Broadband 100." The report focused on video viewed on PCs.

In a conference call to discuss its report, Mark Wienkes of Goldman Sachs said online video today is about half the traffic on the Internet, but only accounts for about 2 percent of total video consumption.

Nevertheless, consumer usage of online video continues to grow at a healthy clip. The report predicts a 45 percent compound annual growth rate (CAGR) through 2012, which would make online video advance to more than 75 percent of all Internet traffic.

"We estimate that a minute spent with streaming video consumes almost 20 times the bandwidth of a minute with a typical Web page without video," stated the report. "Today, the average bit rate for standard definition video online is in the range of 500-600 kbps, which has advanced from about 400 kbps 18 months ago, or about a 24 percent effective annual growth rate."

Derek Bingham with Goldman Sachs said on the call: "True HD online is not really being demanded today. We expect video quality to continue to push higher as computing power of PCs expands, which is a needed part of the equation." (For a different take on online HD, click here.)

Content delivery networks (CDNs) could quickly benefit from the growth in online video.

"The dominant vendor of the CDN market is Akamai Technologies (we estimate 65 percent market share in 2008)," said the report. "Other vendors such as Limelight Networks and Level 3 Communications have also entered the CDN market."

As the business of storing and streaming online video expands, telcos are predicted to enter the CDN market themselves.

"In the telco model, content delivery would become part of a broader portfolio of services offered by network operators, including voice, transit, VoIP, Web hosting, VPN, etc.," stated the report. "Level 3 has been the first carrier entrant to have a significant impact …. A number of other carriers are in the early stages of entering the market, either via partnership or internally developed solutions."

– Linda Hardesty

Read more news and analysis on Communications Technology‘s Web site at

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