Cisco CEO Urges Operators to Add Value

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LOS ANGELES -Broadband service providers who gain first entry into the home will have a major advantage over competitors, Cisco Systems Inc. president and CEO John Chambers said at a Western Show panel here last week.

"It all comes down to speed," Chambers said. And although Chambers believes cable, telco and even wireless providers will all gain a healthy market share, he offered several words of warning for the cable industry.

First, cable needs to focus on value-added services that can be overlaid on its broadband plant.

"The cable infrastructure buildout is going well, but it's not thinking ahead enough about valued-added services," he said. "You've got to be very quick to add value-added services. If this goes slowly, I think the ILECs (incumbent local-exchange carriers) will have the advantage."

Chambers also said the world is moving toward an Internet protocol infrastructure. He demonstrated an interactive-TV set-top for both cable and digital subscriber line providers that uses an IP infrastructure.

"I think you've got to go to an open architecture," he said.

Local-IP telephony may be two years away, but IP-based long-distance service is moving closer to reality, he said. Chambers said he wouldn't deploy circuit-switched technology because IP is so close.

"Circuit can only deliver voice," he said, and that's why the stock market is hammering companies in the voice or voice-equipment business. "I think the stock market gets it."

Chambers believes voice communications will soon be a commodity, and may even become available for free. Data transport will also likely become commoditized in the next few years, he said, forcing service providers to generate increased revenue from value-added services, such as video-on-demand, virtual private networks and applications hosting.

Cable will keep up with the demand by building out its network. "You'll see fiber pushed further into the networks," Chambers said. Content will be pushed further into the nodes, he added, and "you'll see compression techniques improve."

Chambers also disputed that the current downward trend in the stock market has created a credit crunch.

"If you have the right profitability plan, venture capital is available," he said.

Established companies may have a year to maneuver before a new wave of start-up companies return, he said.

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