Cisco Turns Traffic Cop

Networking gearmakers are eager to help telcos erect some toll booths on the Internet.

Videos, Net calling, music swapping -- so much traffic, so few direct proceeds flowing to the phone companies providing the fast connections. And if the old-line phone giants had their way, some Internet titans like eBay (EBAY), Yahoo! (YHOO) and Google (GOOG) would pay for all the volume they're getting ready to pump through those pipes.

As the debate over whether telcos should provide an unfettered Internet or be free to pursue revenue opportunities like selling first-class vs. coach transport, tech shops like Cisco (CSCO), Juniper (JNPR) and Nortel (NT) have stepped forward with some solutions.

Under the heading of security and quality assurance, network operators have already installed equipment that can identify and prioritize traffic. This gear helps speed along bits of conversation that are obviously time-sensitive, as well as isolate viruses and intruders looking to cripple networks.

The success of this Internet gear has helped support Net calling upstarts like Skype, a unit of eBay, and Vonage. The rise of these so-called voice over Internet protocol shops has in turn taken a big bite out of the core calling business of titans like AT&T (T) and Verizon (VZ).

The increased competition, while offering more choices and lower prices for consumers, has dramatically quickened the pace of revenue erosion in telecom. So big telcos see little upside as so-called dumb-pipe operators forced to transport new digital services like video calls and TV-on-demand chip away at their businesses.

To fight back, the telcos are buying network-control technologies that allow tiered service for premium applications like video and interactive gaming. Using tech like deep packet inspection, the telcos can identify the source, destination and type of traffic on the network. Using that info, the telco can sell guaranteed service quality or priority delivery to make sure the event goes off without a hitch.