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Our Take on the Top-3 Trends at This Week’s Cable Show in L.A.

Three trends seem remarkably clear as we head into this year’s Spring Cable Show: IP video, cloud-based services, and mobile broadband.

Put them all together, and you have what we at Cisco call “medianet” – a catch-all phrase for our all-IP, next-generation network components. Several of them will be on display in executive suite ES-78. We welcome you to come in and see!

For those readers who perhaps aren’t in L.A. for the Cable Show, here’s an overview, starting with IP video. It’s big, we think, for two reasons: Consumers want to watch Internet video on their TV, and they want to watch their subscription video on screens other than their TV.

To do that, you need IP-based video components. Because we strongly view IP video as the third wave of video delivery (after analog and digital delivery), we’re very excited about our work with cable operators on a unified viewing experience for subscription, on-demand and online video.

In fact, we’re probably the biggest chanters of the mantra that is “the network as the platform,” which is why a second part of our IP video strategy is about enabling ways for operators to monetize over-the-top video traffic, by creating value back into the content eco-system.

As far as “the cloud” – it’s just hard to avoid “cloud talk” these days, and we’re no exception. It’s because we think that cable is a cloud, in its own way. And here at Cisco, we’re on a mission to find ways for cable MSOs to monetize their backbone, regional and access networks.

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The Appearance of Cloud-Based Business Services

Cloud business services are now beginning to rapidly appear, often delivered out of service provider public clouds. Cloud computing offers businesses the ability to increase productivity by enabling their end-users to work anywhere, anyplace, at anytime. Delivering multiple services in a multi-tenant environment also offers Service Providers the opportunity to decrease their data center costs through consolidation and efficiency. This shift from standalone applications designed to work entirely within a silo to a flexible network of information really benefits the end-user.

Cloud-based applications are delivered from the data center across the next-generation network to the user’s fingertips and can scale to business needs, cost less with an on-demand pricing schema, and allow the business to focus on its core competencies instead of figuring out how to deploy the latest applications. What’s great here as well, is a multitude of cloud-based applications and services for consumer mobile platforms are being developed with the corporate world in mind.

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How Fast Are You? There’s an App for That.

Cisco GIST - an application to help you gauge and compare your mobile speed with othersThe need for speed is a dominant requirement for the next generation mobile experience. As that experience becomes richer, more integrated (or “meshy” as I like to say…) with other applications, and certainly more visual in nature, our patience level as consumers, ironically, decreases. Forget that we may be travelling 70 mph on a highway or in the interior of crowded building, our expectation for a great, fast experience is only getting higher. And if we know that we don’t have a fast or robust enough connection to the network, then often it is best to defer using an application until we do (I speak from experience based on my blood pressure readings…) After all, why try to stream a video when you know the experience won’t be a good one (unless you are a glutton for punishment or thoroughly desperate for an escape…like I was on a 2 hour ground delay with a talkative stranger next to me in seat 10A.)?

To help you gauge and compare your mobile speed with others, we’ve made some enhancements to our free Global Internet Speed Test (or GIST) application which is part of our leading Cisco Visual Networking Index program. Cisco GIST currently supports iPhone, iPod Touch and BlackBerry Storm devices and measures network speeds over Wi-Fi, 3G or EDGE networks based on your location and current congestion in the network.

In addition to classifying your connection speed results as web-ready, audio-ready, or video ready and comparing your results against the global average, here are just four of the improvements we’ve made:

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High Definition 3D: Soon on the Screen Nearest to You

numericableEarlier today in Paris, our customer Numericable announced that its customers will soon have available the world’s first true high-definition (HD) 3D video-on-demand service- based on the Cisco Content Delivery System (CDS) platform. It is a visionary and exciting development, and we are delighted that Cisco and Cisco CDS are playing an important role in its advancement.

3D content went through nothing short of an explosion on the big screen in 2009, culminating with the phenomenal success of “Avatar,” with the final box-office results clearly making it the world’s highest grossing movie of all time.

But, 3D films have been around for a long time. Unfortunately, there were several significant hurdles to overcome in order to create and show 3D images.

One problem has been the high-priced hardware and complex production processes that were required for content creation. Another was the costly installation of the systems required to display a stereoscopic 3D images on a cinema screen. Moreover, the apparent lack of a standard format for all segments of the diverse entertainment business also inhibited market development.

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The Power of Recommendation

The retail video rental business and the pay-TV service provider pay-per-view model have a common connection – they’re both heavily dependent upon new movie releases. Here in the U.S. market, that strategy is now being questioned – as the two largest video rental retailers struggle to remain solvent, and as cable companies unite with media companies in an attempt to revive their VoD services.

In contrast, Netflix key performance indicators continue to outperform expectations. They have recently reported that their 2010 first quarter revenue rose by 25 percent, and gross margins by 10 percent – as total subscribers increased by 35 percent year over year. Netflix total number of subscribers (13,967,000) is just behind two major U.S. MSO’s total video subscribers (even though this is not an apples to apples comparison).

consumer video subscribersNetflix offers a monthly subscription-based service. Access to the Internet is an integral part of their offering, since customers must go to a Web site to select from a library of 100,000+ DVDs, which are then delivered via first-class mail. Subscribers can also watch movies and episodes of TV shows (currently over 17,000 titles) streamed online as often as they want.

A significant difference of the Netflix service is how it is designed – by intent – to proactively encourage subscribers to choose from the “full catalog” of quality video content instead of just new releases. Netflix focuses on good vs. poor content instead of new vs. old.

Currently, approximately 90% of rentals from video retail stores and pay-TV pay-per-view are new releases, while Netflix new releases rentals are just about 30%. Let’s not forget that rights to new content are often more expensive than catalog content. Netflix has been very successful in promoting its full catalog, and it is thanks to its sophisticated recommendation engine.

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