Cisco's Skype Plan May Chill Telcos

Plenty of reasons to buy video calling giant Skype, but one big reason Cisco won't: Customers would revolt.
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NEW YORK (TheStreet) --A year ago, Cisco (CSCO) - Get Report chief John Chambers said "the way to communicate is video." Since then, Cisco has been eager to make that happen.

In a world convinced that video calling is the future, along comes Skype, liberated from

eBay

(EBAY) - Get Report

and on its way to an IPO, unless Cisco can provide a detour.

To be sure, the

rumored deal for Skype

would catapult Cisco into the mass market of video communications. But the overriding question is how Cisco -- one of the prime networking equipment suppliers -- would adapt to the job of global service operator.

Put it this way. Skype would make Cisco the world's largest Internet calling service and put it in direct competition with its own telco customers like

AT&T

(T) - Get Report

and

Verizon

(VZ) - Get Report

, to name a few.

Clearly with

Google

(GOOG) - Get Report

putting free Net calling service on its Gmail last week, and

Apple

(AAPL) - Get Report

set to

expand FaceTime

its video calling service Wednesday, the so-called battle lines in telecom are starting to be redrawn.

Cisco is no doubt eager to grab Skype's massive worldwide consumer network to complement its WebX and Telepresence video conferencing services to business customers.

Cisco also has Cius, a big tablet plan to turn old-fashioned desk phones into touchscreen video consoles

to rival Apple iPads

in the business market.

Still, while Skype might fit Cisco's video strategy like a glove, it can't help but be seen as a serious face slap to all the phone companies that buy Cisco gear.

--

Written by Scott Moritz in New York.>To contact the writer of this article, click here: Scott Moritz.>To follow the writer on Twitter, go to http://twitter.com/TheStreet_Tech.>To submit a news tip, send an email to: tips@thestreet.com.