News Release

Cisco Systems Introduces New Packet Telephony Solutions and Scaling Breakthroughs to Enable New Revenue Generating Services for Service Providers

Cisco's OPT Framework Enables High-Margin Packet Telephony
cisco_building_corporate_002-jpg-1889882-1-0
May 25, 1999

Cisco's OPT Framework Enables High-Margin Packet Telephony Services; Cisco Rated Leader in VoIP by Prominent Research Firms



SAN JOSE, Calif. -- May 25, 1999 -- Cisco Systems, Inc., the worldwide leader in networking for the Internet and the leading provider of New World voice services, today announced new solutions for the deployment of high-margin packet telephony services. These H.323-based solutions include distributed prepaid calling, Internet Call Waiting (ICW), click-to-dial, and settlements for clearinghouses. When added to a Cisco H.323 network, service providers have access to new revenue streams over their existing packet-switched networks.

Cisco also announced new product scaling enhancements including the Cisco AS5800/Voice Gateway, higher density for the Cisco AS5300/Voice Gateway and Cisco AccessPath-VS3/ Voice Gateway, and enhancements to managed services for the Cisco MC3810. With two T3 capacity, the Cisco AS5800/Voice Gateway leads the industry with the most voice ports in a single system.

Distributed Prepaid Calling

Service providers can capture non-subscriber revenue and increase their value-added service offerings by offering prepaid calling. Prepaid calling is a high-margin service, often serving alternate markets while allowing the provider to avoid consumer credit risk. Prepaid calling services are a rapid growth telephony service with expected revenues of $4 billion in 2000, according to the 1998 Multimedia Telecommunications Review.

Cisco's new solution utilizes the intelligence of the IP network to distribute the prepaid calling application functions throughout the network. This allows the service provider to implement the service logic once in a centralized prepaid calling application, while the bandwidth-intensive call connections are established at the network edge. This complements Cisco's existing IP-based service node solution for pre-paid calling applications based on the Cisco VCO/4K. The new Cisco prepaid calling solution will be available on the Cisco AS5300/Voice Gateway and the Cisco AccessPath-VS3/ Voice Gateway using Cisco IOS. software and third-party call rating, accounting and billing applications from Belle Systems, GRIC, MIND CTI, Portal Software or Solect.

"We are very pleased about Cisco's new prepaid calling application which is one of the value-added applications we are deploying in the VIP Calling Network, the largest IP telephony-based Cisco Powered Network in the world," said Ofer Gneezy, president and CEO, VIP Calling. "This deployment underscores the power of Cisco's Open Packet Telephony framework and enables New World service providers to shorten time to market."

Internet Call Waiting

Internet Call Waiting (ICW) enables dial-up users to use a single phone line for both voice calls and Internet access, with the user receiving incoming call indication on the PC while logged onto the Internet. The user has the ability to either disconnect the Internet session and pick up the call, transfer the call to another telephone (for example a cellular phone), transfer the call to voicemail, or pick up the call on the PC using voice over IP (VoIP) technology. This service offers an effective solution to consumers and businesses with limited lines for dial-up and phone service.

For service providers, ICW provides added revenue - both from monthly service charges and increased call completion. International Data Corporation (IDC), a market research firm, recently forecast that more than 26% of online households will use Internet call waiting by yearend 2000 and that percentage could increase to 43% by 2003, representing approximately $400 million in potential service revenues.

The Cisco ICW solution is a distributed, scalable solution. Cisco VoIP gateways at the edge of the network connect to the Public Switched Telephone Network (PSTN) and convert telephone calls into standard H.323 VoIP calls. Gatekeepers control the gateways and provide call routing functionality. Centralized application servers contain the subscriber database, administration, and call control logic, with the PC-client that provides the end-user interface. Cisco is teaming with eFusion, InfoInteractive and NetSpeak to deliver the ICW solution.

Click-to-Dial

A third enhanced IP voice service offering service providers additional revenue is click-to-dial. Click-to-dial enables an online shopper immediate access to a sales agent during a purchase transaction and the ability to talk to that sales agent, with the agent able to view the same Web page that the prospective buyer does. Click-to-dial can be marketed by service providers in the same way as 800 services, so that PC-to-sales-agent calls can be reverse charged to the e-commerce company rather than the consumer. The service can boost VoIP traffic, and can provide a "sticky" service that helps retain businesses and e-commerce providers as customers. Software partners including eFusion will offer the click-to-dial software logic and servers, with Cisco delivering VoIP gateways and packet network infrastructure.

Clearinghouse Settlements

Packet telephony service providers interested in expanding their geographic coverage have been faced with limited options. To help alleviate this problem, Cisco has implemented the Open Settlements Protocol (OSP), a client-server protocol defined by the ETSI TIPHON standards organization. OSP allows service providers to exchange traffic with other service providers without establishing multiple bilateral peering agreements.

The clearinghouse provides route selection, call authorization, call accounting and intercarrier settlements for member service providers. Cisco has worked with the two leading OSP clearinghouses, GRIC and TransNexus, to ensure interoperability with their OSP server applications. OSP-based clearinghouses provide least cost and best-route-selection algorithms based on a variety of parameters their subscriber carriers provide, including cost, quality, and specific carrier preferences. This new solution is available on the Cisco AS5300/ Voice Gateway, the Cisco AccessPath-VS3/ Voice Gateway, the Cisco 3600 series and the Cisco 2600 series using Cisco IOS software. Prepaid calling, ICW, click-to-dial, and clearinghouse settlements can be offered over the same packet infrastructure.

Cisco Open Packet Telephony Framework

Cisco Open Packet Telephony (OPT) framework is the foundation for these New World services that unlock service providers from proprietary systems. Cisco OPT delivers control of service development and deployment to the service provider. Another compelling aspect of Cisco OPT is that as part of Cisco's New World Ecosystem, numerous partners are able to develop new and innovative services and solutions on top of a Cisco packet-switched network. The Cisco partners delivering prepaid calling, ICW, click-to-dial, and clearinghouse applications today are working closely with Cisco to offer quick-to-market service solutions based on Cisco OPT. Cisco OPT framework offers carrier-class voice quality and separates call control from the switching functionality. By separating these functions, providers can now develop and deploy new revenue generating services at will. See Editors Note for detail on the layers of the OPT network.

"With Cisco Open Packet Telephony framework encouraging the development of open, third-party applications and non-proprietary telephony protocols, the packet telephony market is set to advance even faster with the introduction of best-of-breed software developers and cross-vendor interoperability," said Jeremy Duke, president of Synergy Research Group, a market research firm.

Product Scaling Breakthroughs: New Cisco AS5800/Voice Gateway and Higher Density Cisco AS5300/ and AccessPath-VS3/Voice Gateways

Cisco today expanded its VoIP leadership by adding voice capabilities tothe Cisco AS5800 universal access server. The new Cisco AS5800/Voice Gateway supports toll-voice quality with market-leading port capacity in a single carrier-class system. The Cisco AS5800/Voice Gateway supports an unprecedented 1344 voice ports (2*T3) in a single system. Cisco has also significantly increased the voice density of its industry-leading Cisco AS5300/Voice Gateway and Cisco AccessPath-VS3/Voice Gateway. The Cisco AS5300/Voice Gateway now supports up to 96 calls for a T1 system or 120 calls for an E1-based system. The Cisco AccessPath-VS3/Voice Gateway now supports over 2500 calls in a single integrated system. With increased capacity and new G723 compression, Cisco now offers service providers and large enterprises new levels of scalability to lower operational costs. The Cisco Voice Gateways enable service providers to more easily offer their customers revenue-generating New World services including those announced today on their existing IP infrastructures.

Managed Services on the Cisco MC3810

The Cisco MC3810 is used by service providers to offer managed voice and data services over ATM or Frame Relay. Two new features further increase the flexibility and scalability of the solution. The addition of FRF.8 (Frame Relay/ ATM service interworking) allows service providers to transparently provide Frame Relay services in some geographic areas and ATM in other areas while using a single device type. Service provider benefits are multi-faceted: FRF.8 provides intrinsically lower overhead than encapsulation methods, it avoids end-point protocol conversion, and it allows service providers to maintain a homogenous ATM backbone. These features equate to improved throughput, lower latency, and overall higher performance.

Support scalability is an important decision point for service providers because of the large networks they deploy. ATM Switched Virtual Circuits support for data, voice, and video on the Cisco MC3810 reduces the service providers network administration overhead. Also, much less bandwidth is needed because it is allocated on an as needed basis.

VoIP Market Accelerating; Cisco Rated Number One by Leading Research Firms

"Like a turbo engine kicking into high gear, the packet telephony market is accelerating at an ever-faster rate," continued Jeremy Duke. "In Q1 1999, Synergy Research Group measured a 67% increase in VoIP equipment revenue over the prior quarter and a 453% increase over the same period last year. Market share results place Cisco as the number one leader in the 1998 and Q1 1999 VoIP market."

Tam Dell'Oro, of The Dell'Oro Group, also reports Cisco's leadership in Q1 1999 in categories which capture devices capable of supporting VoIP. In Dell'Oro's total access router market Cisco captures the number one position representing 84% of the total voice-enabled router market.

Cisco also announced today that according to Frost & Sullivan, Cisco has the leading worldwide VoIP port market share in 1998. According to the research, Cisco has 34% of the service provider VoIP port market and 37% of the enterprise VoIP port market.

Cisco Systems

Cisco Systems, Inc. (NASDAQ:CSCO) is the worldwide leader in networking for the Internet.

# # #

Editors Note

The following defines the layers of the Cisco OPT network:
Connection Layer is an ATM or IP-based function that establishes and manages bearer connections in response to control messages from the Call Control plane. Tightly integrated voice gateways encode and decode voice signals, and the Cisco low-latency packet network supports the QoS that voice services require.Call Control Layer processes call requests and instructs the Connection Layer to establish the appropriate bearer connection. Today, H.323 call-control standards are used. In the future, Simple Gateway Control Protocol/Media Gateway Control Protocol (SGCP/MGCP) and other open standards will be added. All this provides complete interoperability between legacy TDM environments and packet networks.Service Application Layer applies the service logic. Using standards-based protocols, third-party application partners are given access to the full suite of Cisco OPT voice access product capabilities. Developers can therefore create new applications at Internet speeds.

AccessPath is a trademark and Cisco, Cisco IOS, Cisco Systems and the Cisco Systems logo are registered trademarks of Cisco Systems, Inc. in the U.S., Canada and other countries. All other brand names and trademarks mentioned in this document are properties of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any of its resellers.