Don't look now, but here comes round two of the Net building boom.

Though sales of core Internet routers -- the big traffic-management devices at key junction points of communications networks -- have been slowing, total revenue for the segment next year is expected to hit levels not seen since the peak of Net construction in 2000.

In the third quarter, core router sales grew 35% from a year ago to $453 million, according to Dell'Oro Group, an industry research shop. But the pace of core router growth has slowed from the recent 50% clip.

After the new century collapse of the telecom industry and the sharp slowdown in network-equipment spending, some niches of the gearmaker market have managed to thrive as the march of Internet expansion continues.

Shin Umeda, an analyst with Dell'Oro Group, says the growth rate "will begin to taper off a bit" next year, but that is largely a function of how big the market has become. Core router sales likely will hit the $2 billion mark in 2006, equaling the 2000 peak, says Umeda.

Two players, Cisco ( CSCO) and Juniper ( JNPR), have dominated the core router market over the past five years. Cisco has been the top seller throughout, but Juniper has gradually chipped away at the lead.

For the quarter ended in September, Cisco's core router market share dropped to 55% from 56% in the prior quarter and 59% a year ago. Juniper, meanwhile, has managed to capture 37% of the market.

"Over the long term, there has been a trend shifting away from Cisco to Juniper, though this year that has moderated somewhat," says Umeda. A good portion of Cisco's solid core router performance this year has been the moderate success of its CRS-1 mega router.

Cisco's router chief Kelly Ahuja said last week the CRS-1 has been sold to 28 customers, and 13 other telcos are testing the system. To date, 100 units have been shipped.

And while new products have helped Cisco defend its turf at the core, where telcos need bigger and bigger boxes to keep up with rising levels of Internet traffic, a more heated battle has broken out closer to the source of Net traffic.

Cisco is the king of the so-called edge router market, with 57% of the business last quarter. But challengers like Juniper and Alcatel ( ALA) have made strong gains lately.

Alcatel is a rising star in the edge, having captured 7% of the market, up from 2% it controlled a year ago.

Alcatel won a $2 billion edge router contract with Australia's Telstra ( TLS) last week, a deal that Cisco, Lucent ( LU) and Nortel ( NT) all coveted.

Last Friday, Cisco agreed to pay $5.3 billion for set-top box maker Scientific-Atlanta ( SFA), giving the company a whole new video infrastructure market to play in and relief from the confines of its stagnant business-networking rut.

"The momentum for Alcatel is pretty significant," says Umeda. "They have a few big customers and that base is getting larger. The main thing for them is to get beyond their base and drive revenue growth over the long term."

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