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Cisco beefs up broadband offering

Networking giant buys start-up P-Cube, a maker of software for controlling, monitoring and billing for IP services.

Cisco Systems announced on Monday plans to buy an IP software start-up for $200 million.

The company is acquiring P-Cube for its IP control software that's designed to make it easier for wireless and wired broadband service providers to control, monitor and bill for IP services, such as voice over IP, interactive gaming, video on demand and peer-to-peer applications.

P-Cube's software uses deep packet inspection technology that helps service providers identify subscribers, classify applications, improve service performance and charge for multiple IP services without costly infrastructure upgrades.

Cisco plans to continue selling and supporting already deployed P-Cube appliances. In the future, it will integrate the software into its Cisco 10000 Edge Services Router, which is used to aggregate broadband traffic at the edge of the service provider network.

"The P-Cube technology is very complimentary to our broadband aggregation routers," said Ned Hooper, senior director of corporate development for Cisco. "While the 10000 manages broadband sessions at the routing layer, P-Cube adds more knowledge about the sessions, which can be used to better manage bandwidth."

Cisco has been focusing on the service provider market for several years, as it looks to diversify its business. Currently, most of Cisco's sales still come from large corporate customers.

"Cisco's acquisition of P-Cube further emphasizes our commitment to service providers and our ongoing development efforts to bring service intelligence into IP data networks," Mike Volpi, senior vice president and general manager for Cisco's routing technology group, said in a statement. "This technology complements Cisco's overall portfolio of Broadband Edge products."

The broadband router market represents a huge opportunity for Cisco, as DSL and cable modem subscriptions continue to grow in the United States. As of July, there were 63 million people using broadband at home, making up 51 percent of the total U.S. Internet population, according to market research company Nielsen/NetRatings. That's a 47 percent jump from last year, when broadband totaled only 38 percent of all U.S. online households.

Under the terms of the agreement, Cisco will pay approximately $200 million in cash and options. The acquisition is expected to close in the first quarter of Cisco's fiscal year 2005.

After the acquisition closes, P-Cube's 118 employees will report to Pankaj Patel, vice president and general manager of Cisco's broadband edge and midrange routing business unit.