Future bright for providers, says Cisco

SAN JOSE, Calif. – Despite increasing competition from Internet TV, there’s good news for service providers, a Cisco Systems executive told industry analysts here last month.

Demand for bandwidth is up as the desire for video content soars, said Bob McIntryre, chief technology officer of the company’s service provider group.

In fact Cisco believes Internet traffic will triple or quadruple over the next four years largely due to video. “There is not a better time to be in the service provider business,” McIntyre concluded.

The annual conference is aimed at giving analysts an idea of how Cisco sees the industry and its strategy for the next few years. McIntyre and his boss, senior vice-president Tony Bates, made it clear they believe that by being able to offer everything from carrier-class routers and content delivery systems to Scientific Atlanta settop boxes, Cisco is in shape to take advantage of the video wave.

“Video content will absolutely dominate in the next 10 years the type of traffic” on the Web, said Bates. For the consumer market, “the bundle is working,” declared McIntyre, whether it’s triple play (voice, Internet, TV), quad play, or what Cisco says will soon come, “any play.” He rhapsodized over how bundled services work: “You hook the customer – you give them a very attractive bundle, and in many ways it’s buy more and pay less. Once locked in you treat him really, really well for the first six months until they’re comfortable with you, and then the upsell begins.”

The popularity – and competitiveness – of bundles is illustrated by the fact that a provider in France offers one for 20 euros [$28CDN] a month.

The settop box, to McIntyre, is a “Trojan horse” for offering more services. For example, he said, the provider offers free access to video on demand. Then the customer finds new premium channels. The provider offers a free one-month trial, which turns into a subscription.

From buy more and pay less it becomes buy more and get more, “and the consumer loves it,” McIntyre said. Meanwhile, market penetration of digital video recorders (DVRs) will continue, he said, offering customers the ability to perform such tricks as watch a three-and-a-half hour football game in one hour. (Here’s how, he explained: Tune in at the beginning of the fourth quarter, scan for highlights of the earlier part game for 45 minutes and watch the last 10 minutes in real time.)

Looking ahead, he said, Cisco is preparing to deliver the ability to playshift programs – allow a person in Philadelphia, for example, to watch a baseball game from Los Angeles. One way that will be done is through the upcoming Cisco Eos (Entertainment operating system) hosted service it will sell to media companies, such as sports leagues, looking to sell streaming video broadcasts through their Web sites.

“The more video you put on the edge of the network the more bandwidth you need and the more routers and capacity you need,” McIntyre said. Understandably, at Cisco “we kind of like that.”

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