Why Movie Fans Should Love Cisco's New, Supercharged Router

(MoneyWatch)  It might appear that Cisco CEO John Chambers over-promised to "forever change the Internet" when unveiling a new high speed, high capacity router system to support unbounded wireless video.

But don't be fooled by the high tech jargon. The CR-3 router has all the makings of a game-changer for video download junkies depending on how service providers (aka the middle men) use it.

If the new system can download the contents of the Library of Congress in about a second, can stream every movie ever made in about four minutes, and facilitate simultaneous video calls by every person in China, just think about what it can do with laborious movie downloads!

Unfortunately, Chambers' promise depends on cable operators and their telecom rivals abandoning greedy habits like doling out bandwidth in metered increments and randomly hiking service rates.

So, this could take a while.

Chambers, a tireless evangelist of innovation and teamwork, may have gotten a little too far ahead of the digital curve. Cisco set the stage for its March 9 announcement by forecasting that annual global mobile broadband consumption will explode to more than 40 times today's 1.08 Exabyte (the equivalent of half a trillion MP3 files, according to GigaOm).

Any doubts about the Internet and the digital market becoming video centric can be dashed by new services like Chatroulette, an example of how Internet users are replacing text with video. It gives new meaning to Cisco's new generation route being able to deliver 12-times the traffic of its nearest competitor.

"Video is not just the killer app," Chambers said during a webcast. "It enables new business models, new health care models, and new productivity models."

Chambers envisions broadband solutions to problems in health care, education and government , and enhancing business with high speed virtualization and collaboration. Because he expects college students to use Flip cameras to create class work, Cisco has acquired Flip maker Pure Digital, and is spending $3 billion to buy enterprise video company Tandberg.

Still, digital consumers with short attention spans, seeking instant gratification and results, may fail to fully grasp the long-term need for Cisco's new mega traffic capacity or the experimental broadband service Google is building that is 100 times faster than existing networks.

So, here are three immediate points of impact:

--Comcast has been at the center of controversy charging for metered use of its available bandwidth, penalizing all download hogs. On Tuesday, Comcast said it is raising rates for basic high speed Internet access, even as its costs decline. As long as such random price hikes go unchecked, the lack of affordability will retard broadband adoption and sustain the digital divide, proponents argue. YouTube also is doing its part to be the death of unlimited mobile broadband on handsets by also seeking metered charges.

--Wireless providers including Verizon, Sprint and AT&T are waging competitive price wars and suffering pitifully low three percent revenue growth despite high costs to upgrade strained infrastructure. AT&T, which is especially stressed out by its iPhone support, trial tested but still hasn't contracted for, Cisco's booster router. Wireless Broadband adoption is clearly being driven by mobile users. Two thirds of the world's population has a mobile phone subscriptions, although only 10 percent are covered by broadband service, which is growing by triple digits.

--The FCC plans to release free, low-cost spectrum (reclaimed from broadcasters) to boost mobile broadband adoption as part of a sweeping National Broadband Plan which will be released March 16. Cisco can now multiply the capacity of existing spectrum and help the FCC achieve its goal of 90 percent US broadband use by 2020 -- if Washington and industry politics do not get in the way. An advisory report from Harvard University Berkman Center for Internet & Society, titled Next Generation Connectivity, urges everyone to play nice with shared capacity in order to achieve ubiquitous innovative and competitive services.

Chambers should have said he will "forever change the Internet" -- if all the other sandbox players let him.