Cisco has unveiled a new router, the CRS-3. Announced with a string of superlatives, the router offers three times the capacity of its predecessor, 12 times that of its nearest competitor and the ability to download the Library of Congress in 1 second. To be exact, it can handle 322Tbps, or 322 million Mbps. Still, the announcement is somewhat disappointing. Expectations have been building since late February for Cisco to come with an announcement that would change the internet for all time. The announcement is more ordinary, representing a gradual rather than a structural step. No major attack on the consumer market, no answer to the Google fibre plan, no major takeover. Cisco's share price shows the build-up in expectations and the disappointment: after rising since the end of February, the price fell the day of the announcement.
In any event, the CRS-3 is an important development. Cisco says it's now ready for the next decade "and beyond". As the company has long predicted, the internet is increasingly dominated by video. Statistics from AT&T, which is testing the CRS-3, prove the high growth levels: the US operator's data traffic increased 40 percent in 2009 over the previous year. AT&T now handles 19 petabytes per day (19 billion MB, or 1.8 million Mbps), which is three times the amount of three years ago. With the CRS-3 Cisco hands down a challenge to its major competitor, Juniper Networks, which now needs to show it can provide a more powerful router.
The move towards "better" routers underlines that all the elements of the internet must be continuously upgraded in order to meet the growth in data traffic. Not just the access network, but also parts such as the backbones, submarine cables, data centres and routers/switches. There are three important trends to note: 1) Bringing fibre increasingly closer to the end-user, 2) decentralising content in a growing number of data centres and 3) upgrading long-distance networks, where the CRS-3 is already being tested.
As for the first trend, media reports speculated in the run-up to Cisco's announcement about a possible cooperation between Cisco and the American 'Bells' to answer Google's plans to develop fibre networks with speeds up to 1Gbps. Google plans to support deployment of local fibre networks for up to 500,000 households in the US. It now looks like Google as well as AT&T and the other Bells will be customers for the CRS-3. For the second trend, decentralising content, the CRS-3 also offers an answer with its 'Network Positioning System'. This helps data and its users (computers, smartphones, etc.) find the shortest path to each other. For the third trend, backbones are already being upgraded to the latest standard of 40G and trials are under way for the next level of 100Gbps.
Other aspects of the CRS-3 designed to attract customers include reduced power usage (60%) and undoubtedly lower costs per bit per second for acquiring and maintaining the system. In addition, it offers 'backward and forward compatibility', so the 300 customers with in total 5,000 CRS-1 routers deployed have an easy upgrade path to the CRS-3 by reusing certain hardware elements. For the moment the router is so powerful that it's addressable market is limited, but with traffic growth of 40 percent per year at operators like AT&T, many telecom companies will quickly grow to fill these bigger shoes.
