Cisco is investing $10 billion over 5 years into its service provider business, a sum that is close to the five-year R&D budgets of telecom-only giants like Lucent and Nortel. Key areas for that investment are core, edge and metro IP routers and switches, specifically in a range of interfaces for edge functionality such as Ethernet, traditional TDM and Layer 2 data service migration to Layer 3 backbones.

Metro optical is another area of significant investment for Cisco. Over time, Cisco believes TDM-based SONET and SDH rings will take on more packet-oriented capabilities.

Voice is another area of significant investment for Cisco. Managed IP telephony - service provider hosting and management of voice-over-IP networks for enterprises - and greenfield public voice service infrastructures are the key drivers in that category, says Roland Acra, Cisco senior vice president and service provider CTO.

“You can see us team up with the cable industry, the MSO, to build broadband voice capabilities since these guys are clearly on the offensive in that domain,” Acra says. “Having no legacy, they’d be the most likely to say ‘Let’s do it future-proof,’ meaning IP-based from the start.”

That’s not to say Cisco has not had some success in injecting VoIP into carriers with incumbent TDM infrastrutcures. Fifty percent of Telecom Italia’s long-distance voice traffic is now being carried over a Cisco-supplied IP network, Acra says.

But that “success” was more than two years in the making, Acra admits. And it was due to certain outstanding circumstances, such as the will and determination of Telecom Italia to make it happen, he says.

“The good news is, there’s proof that it can be done on a pretty massive, large country scale, even where legacy exists,” Acra says. “However, we are not naïve and we’re not going to say, ‘Well therefore, everyone could do it in a blink anywhere, no questions asked.’ But with the proper focus, willpower and teaming up, it can be done.”

Therein may lie Cisco’s challenge in furthering its IP voice vision: Why would a carrier want to go through that when they’ve had a reliable, revenue-generating TDM infrastructure in place for close to 100 years?

“Cisco has yet to prove its ability to compete effectively for service provider voice infrastructure,” says Joe McGarvey, senior analyst for carrier infrastructure at Current Analysis. “It has not been able to displace Nortel and Lucent in carriers’ voice and non-IP data networks.”