I was a little sloppy yesterday and several people have questioned my comment about latency. I was reacting to slide by Herman Wagter of Amsterdam's Citynet in his presentation at F2C 2009. His slide said:
From his discussion it was clear he meant "Latency is the cause, bandwidth is the cure." At the time he was talking about real-time person-to-person communications and illustrating it with a housebound person in Amsterdam who wanted to play cards with friends in other places (not nearby). Verbally he mentioned the issue of sending large files. In short he was addressing the real reason for high capacity Internet access links.
Why people want more "bandwidth"
It's not because they need or want to send and receive 100 Mbps of data all the time or even a significant part of the time. The issue is delay, specifically serialization delay. If I have a 1 Mbps upstream Internet connection and I want to send an email with a 5 MB Powerpoint file attached, it will take more than 40 seconds (5 MB ~= 40 Mbits). On a 100 Mbps link, the same email is delayed only a fraction of a second.
Serialization delay also effects media streams, although much less. If I want to send 500 Kbps of continuous video over that 1 Mbps uplink, serialization delay will cause added latency. IP is a packet protocol and the 500 Kbps video stream will be broken into a stream of packets, typically ~1500 bytes (12 Kbits) each. While the serialization delay is only 12 ms on the first link, there is serialization delay on every link. If there is another 1 mbps link at the other end, that's another 12 ms of delay. And here, 12 ms is significant. For a natural interaction between two people, you'd like to keep the round trip delay below 200 ms. Nothing goes faster than the speed of light so transoceanic links introduce many 10s of ms of delay, each way. It is very easy to eat up a 200 ms budget, so saving 12 ms at each end is significant.
Burst rate versus continuous
For me and for most people, the issue that drives demand for high speed access links is delay, not the amount of information that is to be sent or received. Indeed, I'd love a service offered only a few Mbps average over a month, if I could be guaranteed 1 Gbps on a burst rate basis whenever I wanted.