P2P is using the existing resources of the net more efficiently, and, unless it can be monetized, will never drive the deployment of more fiber to the home [FTTH], more transport bandwidth, and more switching hardware.
I’m convinced that the inflection point for FTTH deployment will come when a killer application requiring large upstream bandwidth arrives. On the surface, P2P fits this bill, as it is the only widely deployed consumer application that stresses upstream bandwidth. The problem is, P2P is a lunatic fringe application built on illegal activity. The nature of P2P’s popularity makes it impossible to monetize.
The frustrating reality for carriers is that as broadband connection speeds increase, the amount of peer to peer traffic grows disproportionately, an effect I wrote about while discussing network neutrality.
In short, when someone gets a faster connection, they are more likely to either start using P2P, or use a lot more than they did before. Traffic increases geometrically with bandwidth, driving up the costs of back haul connectivity and reducing the carrier's ability to do statistical multiplexing. It costs real money to transport.
However, P2P is currently playing a vital role by forcing the media companies to evolve. They must adjust their business models to sell content electronically or die. Without Napster (NAPS) for music or BitTorrent for movies, there would not have been a catalyst for these companies to start selling media electronically.
Media distribution will evolve, and then P2P will fade into the background as an inexpensive best-effort way to deliver content, and a domain for those who still refuse to pay.
Conclusion: P2P isn’t a business. It’s a catalyst. Keep that in mind.
Footnote: Mary Meeker, ex-Queen of the Net, is back in the swing of things at Morgan Stanley. She recently gave a presentation on “The State of the ‘Net” that is filled with good data, including the above chart.