Cisco's Chambers: Telecom entering 'Phase II'

CHICAGO -- The telecommunications and Internet industries are entering their second phase of growth and reinvention, brought about by collaboration and Web 2.0 technologies, Cisco CEO John Chambers proclaimed at the NXTcomm conference here this week.

During a keynote address that kicked off the show, Chambers sought to dash a popular notion that telecom is clawing its way back from the dead after the bubble days of 1999-2002. Instead of a resurrection, telecom and the Internet industries are entering a stage of reinvigoration and evolution due in large part to the upsurge in use of Web 2.0 and collaboration technologies -- like Cisco’s Telepresence videoconferencing systems and recent WebEx Web collaboration acquisition.

Use of these types of technologies will double, triple and even quintuple the traffic loads on the Internet and other IP service networks over the next three years, Chambers said. These trends are increasing traffic loads on Cisco’s internal networks by 300% to 500% per year, he said, and will allow 20 broadband-connected homes in the United States in 2010 to generate more traffic than the entire Internet in 1995.

The increased loads will drive major network upgrades for service providers, enterprises and consumers, as well as drive new value-added service revenue for operators, richer experiences for consumers, and productivity gains for enterprises, Chambers said.

“There’s a productivity opportunity in 2007 for 5-plus years,” he said. “It’s enabled by video on any device, with any capability.”

Chambers used Cisco as an example of the increased productivity enabled by Web 2.0 and collaboration. He said Cisco was able to close its multibillion dollar Scientific-Atlanta and WebEx acquisitions within days through the use of these and other Internet-based technologies.

He also said Cisco’s CRS-1 core router, which debuted in 2004, was developed for video-driven applications and traffic. The router, he said, can process 1 billion calls and tens of millions of video sessions.

But in a reversal of previous trends, consumers are now driving innovation that is migrating up to the enterprise, instead of enterprise innovation trickling down to consumers. That’s due in large part to the social networking, video sharing and wiki-enabled practices of Internet-connected consumers that facilitate collaboration and user-editing.

“Consumers won’t be paying for dumb plumbing,” Chambers said. “They’re paying for the [communications] experience. The next generation [of innovation] is driven from the consumer up” and it will last for the next decade, he said.

Over time, every device in a consumer’s home will be able to connect to the Internet, he said. The challenge for Cisco, its competitors and service provider customers is to take the complexity out of home networking to spur further adoption, sales and enrich the customer experience, he said.

This, in turn, will drive an uptake of Web 2.0 and collaboration applications, which will drive the two- to fivefold growth in traffic that allows all participants to profit – including the telecom industry.

“Telecom is not coming back from the dead,” Chambers said, “it’s entering Phase II.”