According to a new white paper released this week by Cisco, video currently accounts for one quarter of all consumer Internet traffic and will make up 50% of such traffic within the next 4 years. The demand for online video is a major reason why the U.S. broadband industry invested $70 billion in broadband infrastructure in 2007. By way of comparison, when President Kennedy committed the United States to landing a man on the moon in ten years, the government spent approximately $10 billion per year – in today’s dollars – on the Apollo program. When President Eisenhower committed the nation to building an Interstate Highway System, the government spent approximately $25 billion per year – in today’s dollars.

While the entire white paper is a great read for anyone interested in the dramatic growth of bandwidth demand in general, there are several points that are especially noteworthy:

• IP traffic will nearly double every two years through 2012. Total IP traffic will increase by a factor of six from 2007 to 2012. Driven by high-definition video and high-speed broadband penetration, consumer IP traffic will bolster the overall IP growth rate so that it sustains a steady growth rate through 2012, growing at a compound annual growth rate (CAGR) of 46 percent.

• Peer-to-peer (P2P) file sharing networks are now carrying 600 petabytes (equivalent to 600 million gigabytes) per month more than they did this time last year, which means there is the equivalent of an additional 150 million DVDs crossing the network each month, for a total monthly volume of over 500 million DVD equivalents, or two exabytes (2 billion gigabytes)

• Last year was a year of phenomenal growth in IP and Internet traffic. Total IP traffic grew 55 percent during 2007, and is estimated to grow by 63 percent in 2008. Internet traffic grew 46 percent in 2007, and is estimated to increase 51 percent in 2008.

• Internet video will account for 50 percent of all consumer Internet traffic in 2012. Internet video-to-PC will make up the majority of Internet video at 40 percent of total Internet traffic, but Internet video-to-TV will grow rapidly to 10 percent of the total in 2012.

More analysis of the paper is available at the official Cisco blog from John Earnhardt, Om Malik at GigaOm, and from the folks at Slashdot.