Communication Transformation

Transcript

Introduction

Peter Shaplen: Hello, and welcome to this Podcast Series about Trends, Technology, and Business. For Cisco, I'm Peter Shaplen, and today, we're with Tony Bates, Senior Vice President and General Manager of the Service Provider Group, as well as a member of the Service Provider Business Council and Cisco Development Council. So nice to see you again.

Interview

Tony Bates: Very nice to see you again, Peter.

Peter Shaplen: Two years ago when we spoke, we were talking about the burgeoning transformation of service providers and demand, and last year, one of the words that was very much on our conversation was consolidation. Now we're at the eve of Nexcom. What's the state of the service provider business from your perspective?

Tony Bates: What we're seeing is really the continued highly competitive environment that we talked about last year. We're really starting to see the emergence of providers looking to provide a much richer set of experiences. One is a broader set of communication services and, in particular, how that crosses over into the world of video.

When I talk to a service provider and they're really engaging in a conversation about transforming people's lives, transforming the way they think about using telecommunication technology way beyond just traditional dial tone or traditional use of the Internet, that gets me excited, and that's the type of dialog we're starting to have.

Peter Shaplen: When you speak of customers who are transformative, what is it about those companies that makes them so? Is it approach? Is it investment?

Tony Bates: Ultimately, it's about two things. It's having a unique experience for their end customer, wherever the enterprise is; two, transformation in this marketplace is tough because a lot of them have very strong existing business models, so the real transformative companies are the ones who have visionary CTOs in these companies that are willing to push ahead and go outside of the norm.

And Cisco's a great example of someone who's using the power of collaboration to really bring new ideas, new business models, new ways of thinking about the organization as we scale when we move from a $40 billion to a $60 billion company.

And when I get with companies that say, "Take down the barriers of traditional thinking," so in the world of service provider, that often is as a transport group and as a data group, and then there's a commercial services group, when they bring them together and we sit at a table and you really have that informed decision without having to work in silos, they're the real transformers, I think, of the next generation.

Peter Shaplen: What -- at Cisco, what do you see the future looking like? Is video putting us at the tipping point for how the network will change and the demands that are going to be placed on the network?

Tony Bates: I think it is. I think it is for a number of reasons. Video is very complicated because video comes in many different formats. We call it sometimes the glass-to-glass problem of the visual experience. And what I mean by that is there's a glass, which is the camera, and the cameras come in many, many different formats on the input, and then they have many, many different formats on the output. And the network has all this information. The network actually knows the inputs and the outputs. That's what it does very well. And so I think the network has this pivotal role to play not just in terms of transporting high-quality large amounts of bandwidth but also working out how to do that seamlessly.

It took 100 years for the phone to be as simple as, "I dial and you pick up." That needs to happen with video. So when I dial, I have a fancy HD input. You may be on your little mobile phone or PDA device. It should still work seamlessly, and you shouldn't have to go through gateways and work out how to convert it. It should do all of that, and the network's the only thing that can do that.

Peter Shaplen: What kind of changes then have to happen to the network in order for us to be able to use it as you articulated?

Tony Bates: I think we've been on this journey of what we call the IP next generation networking strategy here at Cisco, and the foundation of that is laying out a scalable infrastructure, so they've been doing that. It's got to be aware of certain types of technologies, so that means you need to have real-time nature to your network. It means high quality of service has to have tight tolerances in terms of service capability. So that means that the providers have to really think about managing this as an end-to-end system and not just, "Oh, I'm going to double my bandwidth. I'm going to overbuild." That's really crucial, and I think that's something that they do understand, but they need to work with companies like Cisco to really think about how they engineer and architect for that manageability.

Peter Shaplen: It does seem that there's this rush to bandwidth, but how do people leverage this burgeoning, going back to last year's word, but this burgeoning network usage?

Tony Bates: Think about what sort of happened with voice. Voice went from being a very basic transport mechanism, where it was really about just connecting with each other to then adding all sorts of features -- 800 number, caller ID.

Now, video does change things because it puts a heavy load on the infrastructure, but think about what we already know about video in a traditional entertainment sense. Video drives the highest average revenue per user because you have extensions like video on demand. People -- especially in the U.S., consumers are willing to pay $50 to watch a very unique piece of high-end sports entertainment. The new millennials today, the younger generation, when they come home, they might have taped some piece of video content, and what they do is get together. They call each other or they IM each other, and they say, "Push your DVR," you know, where you've recorded this at the same time, and they have an interactive dialog.

These are services that if they were managed for you in a unique experience, let's say, instead of having to use four or five different devices -- the phone, the PC, it was on my set-top box, if I could do that from my handset directly in my living room, that's just something that I think people are willing to pay.

So my point is that there's an evolution where I think we can monetize in ways we haven't thought about today. Instead of today, where the network is defined as transport -- or in the Internet IP is sort of the underlying layer, let's fast-forward five to 10 years, and I think it's around a 10-year vision I'm talking about, where video is the underlying transport and the extensions are all of the applications that use video.

The best example I can give you is actually what we do at TelePresence. For those who have never used TelePresence, it's an incredibly transformative experience because it's very personal, and it's very high quality. There have been people that have tried to shake the hand of someone on the other side of the screen, thinking that they're actually virtually in the same room.

But the thing I wanted to get to is that it's the video that draws you in, but it's all of the other interactions of that experience that make it what it is. What I mean by that, it's simple to use. It's one button to start the conference. It merges other types of media, so I can share a presentation with you, Peter, as well as have the interactive dialogue, and to be quite candid about it, the audio is absolutely superb.

My point is that it's the video that draws you in, but it's all the applications on top merged in a seamless way through video that really make that unique experience. So when I look out and I say, "Video is the ultimate sort of unifier of the new personalized communication world," it's video that has to be this underlying transport, and then it's what we add on top.

Peter Shaplen: And when you and John Chambers sit and dream -- if we could be a fly on the wall and we're able to hear the two of you dreaming together about this, what would we hear?

Tony Bates: You know, I think the real dream is that we really have an ability to actually transform the world with this type of technology. I really mean that sincerely. I mean it's not just about communication or entertainment. It crosses over into all forms. It solves many issues, from the greenhouse gas issue because we just don't have to travel, but we have that same experience. It crosses over into education. I think when John dreams and he thinks about the transformation, he dreams in that context, and what I dream is helping him enable that to happen.

Peter Shaplen: Tony Bates, the Senior Vice President and General Manager in the Service Provider Group, thanks for speaking with us.

Tony Bates: Thank you.

Peter Shaplen: And thanks to all of you for listening. You'll find an archive of this and other Podcasts, including those with Tony Bates, as well as a wealth of insight about the Service Provider Group online at newsroom.cisco.com. I'm Peter Shaplen for Cisco.