January 10, 2005

A new year means new opportunities for telecommunications companies. And in the Information Era, anything is possible. News@Cisco recently spoke with Jeff Spagnola, Cisco Systems' vice president of service provider marketing, about what's in store for the telecommunications industry in the coming year.

What do you think will be the most significant trends in the telecommunications industry in 2005?

Jeff Spagnola: It's interesting because many of the trends are the same as they were the past year, but now we're seeing them really taking off to levels that previously would have been viewed as too "futuristic" or optimistic. These trends are related to developments in broadband, convergence, managed services, and mobility - all of which are elements of IP-based next-generation networks (IP NGNs). While in 2004 there was a great deal of planning, I think that 2005 will be much more about implementation of these highly promising communications infrastructures.

What are some examples of how telecommunications companies are taking steps to build IP-based next-generation networks?

Jeff Spagnola: First, nearly every major telecommunications company worldwide is adopting IP/MPLS as its foundation for next-generation networks. Beyond that, each segment of the industry is pursuing unique approaches to address the market. For example, traditional phone companies are deploying fiber optic networks closer to the "curb"--bringing the potential for much higher speed broadband access to many residential and business customers. At the same time, they are also expanding the deployment of what's known as Metro Ethernet, which is technology that makes it possible to run LAN-like communications over a much wider area. Cable companies, another segment of the telecommunications market, are actively expanding the capacity of their networks to deliver not only more channels but to also deliver a much wider range of services, such as voice, video-on-demand, wireless networking, and higher speed data connections. Finally, mobile phone companies are rapidly adding new services, so much so that the phone is no longer just a phone but a portable computer, a camera, or mp3 player. They are also intensely pursuing high-speed data services as well; bringing broadband access to anywhere their customers may travel.

What are some of the drivers behind the investment in IP next-generation networks?

Jeff Spagnola: As with most businesses, it boils down to lowering costs and boosting revenues. Broadband, convergence, managed services and mobility all promise one or both of these benefits. Broadband is about creating a network with the capacity to run any type of communication application without running into "bottlenecks." Broadband also relates to how well a network can scale or expand as new applications and customers are added--a key capability given the ever increasing communications demands of the last decade. Convergence addresses both profits and cost reductions, by merging all communications media-voice, video, and data-for new, integrated services, as well as merging the infrastructures for each of these media onto one network. Managed services offer the classic "value-added" business proposition by letting telecommunications operators provide more elaborate support for their customers. In return, they generate business contracts that come with greater profit margins and revenues. Managed services help carriers expand beyond low-margin commoditized services. Finally, mobility is simply something every carrier needs to consider in its game plan. The mobility segment is really at a critical place in this evolving industry. Customers now have come to expect that services should be available anytime and anywhere. I believe that nearly every major telecommunications service will need to incorporate mobility in one way or another.

How is Cisco helping telecommunications companies build their IP next-generation networks?

Jeff Spagnola: That is pretty much all Cisco thinks about! We're constantly working on creating technology that will make our telco customers more successful. Some of our recent innovations for IP next-generation networks include our new "cable wideband" technology that can economically deliver 100 Mbps or more to each home without overhauling existing cable infrastructures. Such technology makes it more cost effective for cable operators to offer high-definition video, IP telephony, and a slew of Internet, gaming, or home networking applications. To help telecommunications companies deploy new services quickly and effectively, Cisco has established the Cisco Service Exchange. This framework provides deep-packet inspection and analysis, self-provisioning of new applications, billing granularity and much more. In effect, this framework links the applications to the network and the network to the consumer in a more flexible way. To assist carriers in the development of managed services, this summer we released a portfolio of Integrated Services Routers, which offer wire speed support for multi-service functions including security, voice and quality-of-service support. These routers are ideally suited to installations at customer locations that are managed by the telecommunications provider. Perhaps most significantly, Cisco has played a major role in the development of IP/MPLS communications infrastructures, the foundation for large-scale, converged, next-generation IP networks. In a watershed event for the company, earlier this year we unveiled the Cisco Carrier Routing System (CRS-1). Not only is it thoroughly innovative in its scale by reaching 92 terabits per second, but it has also proven to exceed the "five nines" of dependability demanded by the telecommunications industry. Such scale and carrier-class capabilities give our telecommunications customers much more capability to bring new, profitable services to market.

While innovation in technology is critically important, it is just one factor in the overall success of the telecommunications provider. More then just addressing the network of our customers, we also spend a great deal of time and resources working with them to conceive, design and deploy new, lucrative services. We also help accelerate demand for those services through marketing and sales programs. Lastly, we work with telecommunications companies to help optimize how they run their business, for example using our specialized partners to deploy a service more quickly or using network-based processes to increase their productivity and improve their bottom line. Such comprehensive support, combined with innovation and unmatched expertise, really sets Cisco apart as the most trusted partner in creating IP next-generation networks.