Cisco Likes IPv6 and VoIP

Cisco purchases an IPv6 innovator with 30 employees and announces a VoIP partnership with Microsoft and the U.K. ILEC, British Telecommunications (BT).

by Michael Singer and Jim Wagner of internetnews.com [July 26, 2002]

Remember all those acquisitions that Cisco Systems (NASDAQ: CSCO) did in the 90s?

It seemed like you couldn't cross the street twice without some networking company being snatched up by the San Jose, Calif.-based giant.

Now with the tech bubble burst, acquisitions are more an exception than the norm. But, Cisco Thursday said it did manage to eke out a deal to purchase Palo Alto, Calif.-based AYR Networks, Inc. The company develops distributed networking services and routing software technologies.

Cisco said it was attracted to the privately-held company because it wants to continue to develop its own Cisco IOS Software, which is the network systems software for Cisco's routing and switching platforms.

Routers come in all shapes and sizes and almost all of them, from the smallest to the largest, run Cisco's IOS operating system. IOS is an extremely powerful and complex operating system, with an equally complex configuration language. There are many commands, with many options, and if one thing is configured incorrectly, the entire company could find itself offline.

The computer-networking equipment maker has said in the past that its IOS software is crucial to the Internet's next incarnation: IPv6.

With the addition of AYR's technology and engineering techniques, Cisco says it will have the power to accelerate the integration of software from multiple sources. That ability could resulting in faster time to market of new or enhanced features and functionality.

Currently, Cisco holds a minority interest in AYR, but under the terms of the deal, Cisco said it exchange its common stock for all outstanding shares and options of AYR that it doesn't already own. The transaction is worth an estimated $113 million.

AYR Networks was founded in October 2000. The 30 employees of AYR Networks, led by CEO, Tom Grennan, will join the Cisco Internet Technologies Division.

The acquisition is expected to close in the first quarter of Cisco's fiscal year 2003.

Meanwhile, Cisco announced a Voice over IP (VoIP) initiative in the U.K. For an as-yet-unannounced monthly fee, MSN users in the U.K. can make PC-to-PC phone calls, it was announced Thursday.

British Telecommunications (BT), the incumbent telephone company in the country, using Cisco's public switched telephone network (PSTN) gateways, will deliver a service called PC 2 UK in the near future.

The service is available only to MSN users in the U.K. logging into their Microsoft Passport account for the time being, though BT is free to sign on other providers in the future.

MSN officials look at the new offering as another value-add service, bringing in another revenue stream to their fixed monthly fee for Internet access. BT officials view it as the same: both companies will divvy up the PC 2 UK revenues, though the percentage hasn't been announced.

BT is looking for new revenue opportunities. Oftel, the U.K. telecommunications regulator (Oftel stands for Office of Telecommunications), announced Wednesday that the ILEC would abide by new price controls designed to open up the telecom market to competitors.

Under the new license conditions imposed by Oftel and agreed to by BT, competitors can offer a complete telephone line package under one bill. The price of the wholesale service will eventually be tied to the rate of inflation. BT officials announced Thursday the implementation of Convergys Corp. billing and rating software to accommodate the Oftel ruling.

BT is using the Cisco PGW 2200 PSTN Gateway to connect voice calls over the PC for MSN users, which routes calls between traditional signaling system 7 (SS7) networks and session initiation protocol (SIP) networks designed for VoIP traffic.

Michael Ansley, Cisco head of voice technologies, said the VoIP service is a good example of three different companies coming together to deliver the latest technologies.

"The project between BT, Microsoft, and Cisco is a clear example of how all the parties are using the capabilities of new technology to bring benefits and services to their customers," he said. "This is a very exciting project for the UK market."

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