Cisco’s New Standards

Over the past 3 months, Cisco Systems has been behind two new standards in emerging areas of technology: one for wireless data transmission and the other for voice over IP (VOIP). Cisco plans to provide a stake in the ground that other players can use to build products around, and these efforts might have a major impact in both new marketplaces. On October 26, Cisco announced that it was partnering with 10 companies to create a new standard for wireless data transmission. The new standard will allow the interoperability of various vendors’ wireless products. Cisco’s partners include Bechtel Telecommunications, Pace Micro Technology, Motorola, Samsung, Texas Instruments, and Toshiba. With its partners, Cisco will be working on standardizing Media Access Control and Vector Orthogonal Frequency Division Multiplexing (VOFDM) physical layer technologies. Cisco has been making noise in the wireless marketplace for more than a year, filling the news with moves and acquisitions. One of the company's biggest moves came when Cisco acquired Clarity Wireless last year and landed a $1 billion deal with Motorola. Both moves represent Cisco’s attempts to move vertically and horizontally. According to a Cisco spokesperson, the company's acquisition of Clarity will provide a key technology for Cisco’s strategy. Clarity provides Cisco with technology that ends the disruptions to wireless communications caused by dense urban areas. If Cisco possess such a technology, the company would hold a technological edge over Lucent Technologies and Nortel, the two other major players in the US wireless marketplace. These three companies are fighting it out for technological dominance in the cutting-edge arena of American telecommunications. The Motorola deal is the other part of Cisco’s aggressive tactics. The deal is to spend $1 billion over the next 4 to 5 years to develop a global wireless network. Motorola and Cisco plan to unite the wireless standards of the world. Both companies want to develop the technology to support a single wireless device that can function anywhere in the world. Make no mistake—with wireless towers going up all over America like a forest of trees on steroids, there’s a considerable push to play catch up with other parts of the world. (At least in places like Switzerland, wireless microwave towers are dressed up to look like trees.) For the most part, the US federal government has taken control for placement of microwave out of the hands of local planning boards. The government is also pushing for a comprehensive wireless network to be in place within 2 years. Cisco and its partners want to ride this wave, which might be a major delivery system for broadband. When you throw in the next-generation wireless standard, the general picture starts to get a little spooky—a high-tech, globe-spanning standard that Cisco has shepherded through every stage of its development. Of course, Cisco has been telling the press that the company isn't in this race for themselves, but that it simply wants to get the ball rolling and help everybody get a leg up. On September 14, Cisco announced that it was working with 3Com, GRIC Communications, and TransNexus to create an open IP telephony or voice over IP standard called the Open Settlement Protocol (OSP). This standard is meant to mediate IP telephony calls and solve settlement issues for calls that travel over multiple vendors' networks. OSP is finding wide support in the emerging telephony marketplace. Other players (e.g., Ascend, GTE, AT&T, the Internet Telephony Exchange Carrier—ITXC) are supporting this new standard. Although OSP is a relatively simple standard, it solves some difficult problems. With OSP, different carriers can send and receive interdomain communications. Users can authenticate, authorize, and bill calls based on call detail records. OSP’s key features include Secure Socket Layer (SSL) encryption, secure authentication, digital signature technology, and information exchange with extensible markup language (XML). Some analysts expect great things from the voice over IP market, which is now in its infancy but will grow once broadband becomes more prevalent.

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