Cisco Systems

(CSCO) - Get Report

is attempting to breathe life into its service provider business with the launch of a new high-capacity router that is targeted at firms that provide online services to consumers.

The company claims that the ASR 9000 router, which sits at the edge of a service provider's network, will offer six times the data processing capacity of competing products from rivals

Juniper

(JNPR) - Get Report

and

Alcatel-Lucent

(ALU)

.

Cisco is looking to establish a lead on its rivals at a time of

shrinking service provider budgets.

Edge routers are used to deliver video and data services to consumers over cable and mobile companies' networks, an area which has grown rapidly over recent years.

Because of their position on the periphery of the network, these routers can boost the performance of online services by using cache data without sending it back to the core of the network.

Cisco, which predicts that Internet traffic will double every two years between now and 2012, is pinning its hopes on the new router.

Suraj Shetty, Cisco's vice president of worldwide service provider marketing, predicts that the ASR 9000 will generate a billion dollars in revenue. He did not offer a specific time-frame.

It took another of Cisco's high-capacity routers, the CRS-1, just three years to generate a billion dollars after its launch in 2004. The debut of the ARS 9000 next quarter, however, comes during a much more turbulent economy.

Cisco noted a significant slowdown in tech spending in its recent first-quarter results. The tech bellwether sent shockwaves through the industry last week when it forecast a

weak second quarter amid tight enterprise and service provider budgets.

The ASR 9000, which will be be priced from $80,000, has one publicly named customer, Japanese service provider

Softbank

, which is testing the router.

"We're in trials in the U.S. and Europe, and we will be announcing more customer names in the next 60 to 90 days," said Shetty.

One technology analyst feels that the ARS 9000 has the potential to boost Cisco's service provider business.

"Obviously there is going to be an impact

on ARS-9000 sales given where the world is economically,

but the service providers are still building out their networks," said Glen Hunt, principal analyst for carrier infrastructure at

Current Analysis

.

With the spiraling demand for Internet TV and fierce competition from other carriers, Hunt feels that service providers have little choice but to grow their technology infrastructures.

"It's kind of 'Catch 22'," he says. "If they don't build out their infrastructure, they are going to be behind the 8-ball."

Political moves may also drive service providers' need for more network equipment. President-elect Barack Obama, for example, has pledged to extend broadband access to all Americans, which could drive service providers' tech spending.

Shares of Cisco fell 45 cents, or 2.56%, to $17.12, in early trading Tuesday.