Cisco sets sights on service provider networks

Cisco Systems today plans to make a major push into the service provider space, which is currently dominated by rivals Lucent Technologies and Nortel Networks. Cisco's announcement is expected to detail the company's optical networking strategy for service providers.

"The core of the service provider network in the future will no longer be routers but will be optical circuit switches," said Dave Passmore, research director at NetReference, in Sterling, Virginia.

Passmore said a majority of Cisco's revenue currently comes from supplying networking gear for the enterprise, but the company's fastest growing revenue stream comes from service providers. According to Passmore, Cisco officials think service providers will be a major source of the company's future income.

The optical networking market has heated up recently as technology developments, such as dense wave division multiplexing (DWDM), allow more data to flow across fiber-optic networks. DWDM technology enables multiple optical signals to be passed on a single fibre.

Cisco is expected to leverage technologies that it gained last summer when it acquired Cerent and Monterey Networks for $US7.4 billion. Cerent made optical transport products, and Monterey Networks developed optical cross-connect technology used to increase the capacity at the core of service provider networks.

At the time of the acquisitions, Cisco officials said that they expected to use the Cerent and Monterey technologies to provide service providers an accelerated migration from traditional circuit-based networks to cell and packet-based networks.

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