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Cisco CEO to cable: Move it or lose it

Cisco Systems chief executive John Chambers urges cable operators to quickly upgrade their networks and to launch advanced services, or risk losing out to larger competitors.

LOS ANGELES--John Chambers has three words of advice for the cable industry: Hurry, hurry, hurry.

The Cisco Systems chief executive urged cable operators Thursday to quickly upgrade their networks and to launch advanced services, or risk losing out to larger competitors such as the Baby Bell local phone companies.

"If it happens fast, cable can win," Chambers told his audience. "If it goes slowly, the people with the deep pockets, namely the (local phone) companies, will win."

There's a simple reason Chambers chose to speak to attendees at the Western Cable 2000 show here: Cisco has made huge bets on the technologies that will serve up the variety of interactive services the cable companies plan to offer in the coming years.

The investments in cable systems, in turn, will only necessitate further purchases of Cisco's bread-and-butter Net routing and switching equipment. Thus, Chambers continues to push his vision of Net prosperity, even amid these times of carnage on the Nasdaq stock market, where many of the Net's brightest stars are having a tough time.

Chambers believes that, although cable, digital subscriber lines (DSL) and wireless technologies offer similar technical features, the cable industry could have an advantage for several reasons.

For one, consumers, already accustomed to hefty monthly cable bills for premium channels and pay-per-view movies and sporting events, will be more comfortable turning to cable operators for entertainment services, rather than a phone or wireless provider, he said.

Another potential advantage over competing technologies is cable's history and core business of providing video services, which are expected to be a huge area of growth among consumers on the Internet.

It should be noted, however, that Cisco also has a large stake in the future of the Baby Bells, with a similar set of equipment to facilitate high-speed DSL networks.

"The home and multiple dwelling units (MDUs) will be the next driver of load on the Internet, and video is the killer application," Chambers said.

However, technically speaking, Cisco executives don't believe cable necessarily has a leg up on competing technologies, making gaining market share now all the more important.

"The video is just as good over ADSL, which a couple of years ago our own engineers weren't sure about," Chambers said.

More than anything, though, Chambers believes the cable industry will have a tough time in the future if it doesn't act fast now.

"Whoever gets there first...that's probably the provider who will own the home," Chambers said. "I believe the natural winners are the existing players if they move quickly."

News.com's Ben Heskett contributed to this report.