The $13-Billion-Dollar Second: This is How Tiny Delays From A Bandwidth Crunch Can Sabotage Online Revenues

The $13-Billion-Dollar Second: This is How Tiny Delays From A Bandwidth Crunch Can Sabotage Online Revenues

The overarching importance of adequate wireless bandwidth comes into sharp financial focus when giants like Amazon and Google look deeply into what can happen to their revenues when delays annoy today’s increasingly impatient consumers.

This is especially critical now that massive bandwidth growth is outpacing available electromagnetic spectrum allotments. This is becomes an even bigger issue for wireless carriers already working to roll out 5G technology which is supposed to offer bandwidth that is 1,000 faster than today’s 4G standards[1].

What’s more, exponential bandwidth increases are not waiting for 5G. According to the 2016 CTIA Annual Survey Americans used twice as much data in 2015 as they did in 2014[2].

Significantly, none of the spectrum from the 2015 or 2016 auctions is likely to be available by 2020. This is because, on average, it takes from 13 to 18 years before new spectrum is deployed to consumers[3]. The reasons for these delays will be addressed in the “Solutions” section of this document.

Amazon’s $1 Billion-Dollar Second

Amazon found that slowing page load by just 100 milliseconds (1/10 of a second) resulted in a 1% decrease in sales[4]. With 2015 net sales of $107 billion, a delay of that magnitude would have cost it more than $1 billion.

Google’s $13 Billion Dollar Half Second

An internal Google study (Speed Matters[5][6]) discovered that a half-second decrease in a 10‐result page (loading in 0.4 seconds) to a 30‐result page loading in (0.9 seconds) decreased traffic and ad revenues by 20%.

Given Google’s 2015 ad revenues of $67.39 billion[7] a 20% slowdown for a whole second would have cost it approximately $13.48 billion for FY 2015.

Are Internet Users Really THAT Impatient?

Yes. And getting more so every year. According to Akamai Technologies[8], at least 30 percent of consumers expect a page to load in one second or less.

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And, according to an article in the New York Times[9]:

“The reason is that data-hungry smartphones and tablets are creating frustrating digital traffic jams, as people download maps, video clips of sports highlights, news updates or recommendations for nearby restaurants. The competition to be the quickest is fierce.

“People will visit a Web site less often if it is slower than a close competitor by more than 250 milliseconds (a millisecond is a thousandth of a second).

““Two hundred fifty milliseconds, either slower or faster, is close to the magic number now for competitive advantage on the Web,” said Harry Shum, a computer scientist and speed specialist at Microsoft.”

Some Perspective On What 250 Milliseconds Means

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Right-click chart to view a larger image.

“These days, even 400 milliseconds — literally the blink of an eye — is too long, as Google engineers have discovered. That barely perceptible delay causes people to search less[10]. ‘Subconsciously, you don’t like to wait, said Arvind Jain, a Google engineer who is the company’s resident speed maestro. ‘Every millisecond matters.”

Speed is even more important for wireless e-commerce (m-commerce) because, mobile shoppers spend more money than fixed-point Internet users[11].

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  1. “The race to 5G: Inside the fight for the future of mobile as we know it,” TechRepublic, http://www.techrepublic.com/article/does-the-world-really-need-5g/ Accessed May 26, 2016.
  2. “Americans’ Data Usage More Than Doubled in 2015,” CTIA, http://www.ctia.org/resource-library/press-releases/archive/americans-data-usage-more-than-doubled-in-2015. Accessed May 26, 2016.
  3. Spectrum Timelines, whitepaper, CTIA, http://www.ctia.org/docs/defaultsource/default-document-library/072015-spectrum-timelines-white-paper.pdf.No longer available at that URL, but .pdf obtained from archived sources.
  4. Online Experiments: Lessons Learned,” Ron Kohavi and Roger Longbotham, IEEE Computer, Vol 40, issue 9, p. 103-105, Sept 2007. This and other relevant materials found at: http://ai.stanford.edu/~ronnyk/ronnyk-bib.html. Accessed May 25, 2016
  5. “Speed Matters,”Google Research. http://googleresearch.blogspot.com/2009/06/speed-matters.html. Accessed May 25, 2016.“Speed as perceived by the end user is driven by multiple factors, including how fast results are returned and how long it takes a browser to display the content. Our experiments injected server-side delay to model one of these factors: extending the processing time before and during the time that the results are transmitted to the browser. In other words, we purposefully slowed the delivery of search results to our users to see how they might respond.“All other things being equal, more usage, as measured by number of searches, reflects more satisfied users. Our experiments demonstrate that slowing down the search results page by 100 to 400 milliseconds has a measurable impact on the number of searches per user of -0.2% to -0.6% (averaged over four or six weeks depending on the experiment). That’s 0.2% to 0.6% fewer searches for changes under half a second!“Furthermore, users do fewer and fewer searches the longer they are exposed to the experiment. Users exposed to a 200 ms delay since the beginning of the experiment did 0.22% fewer searches during the first three weeks, but 0.36% fewer searches during the second three weeks. Similarly, users exposed to a 400 ms delay since the beginning of the experiment did 0.44% fewer searches during the first three weeks, but 0.76% fewer searches during the second three weeks. “Even if the page returns to the faster state, users who saw the longer delay take time to return to their previous usage level. Users exposed to the 400 ms delay for six weeks did 0.21% fewer searches on average during the five week period after we stopped injecting the delay.“While these numbers may seem small, a daily impact of 0.5% is of real consequence at the scale of Google web search… .”
  6. “Marissa Mayer at Web 2.0,” Greg Meyers, http://glinden.blogspot.com/2006/11/marissa-mayer-at-web-20.html. Accessed May 25, 2016.
  7. Google/Alphabet, Securities and Exchange Commission, Form 10-K for the fiscal year ended December 31, 2015, p.25, https://www.sec.gov/Archives/edgar/data/1288776/000165204416000012/goog10-k2015.htm, Accessed May 25, 2016.
  8. “2014 Consumer Web Performance Expectations Survey,” Akamai Technologies, Inc.PDF available at: https://www.akamai.com/us/en/campaign/performance-matters.jsp. Accessed May 26, 2016.
  9. “For Impatient Web Users, an Eye Blink Is Just Too Long to Wait,” New York Times, http://www.nytimes.com/2012/03/01/technology/impatient-web-users-flee-slow-loading-sites.html. Accessed May 26, 2016.
  10. “For Impatient Web Users, an Eye Blink Is Just Too Long to Wait,” New York Times, http://www.nytimes.com/2012/03/01/technology/impatient-web-users-flee-slow-loading-sites.html. Accessed May 26, 2016.
  11. “2014 Consumer Web Performance Expectations Survey,” Akamai Technologies, Inc.PDF available at: https://www.akamai.com/us/en/campaign/performance-matters.jsp. Accessed May 26, 2016.