Mike Volpi, the man leading the outfit's charge into Web-delivered programming says its chief selling point will be access to a whole wide world of content
Mike Volpi is one of the top executives at Internet-equipment giant Cisco Systems (CSCO). As senior vice-president and general manager of the routing and service-provider group, he oversees a large swath of the company's business.
Volpi sat down with BusinessWeek editors on Feb. 6 to discuss Cisco's strategy for gear that delivers TV programming via the Internet, or IPTV, and why the company is spending $6.9 billion on Scientific-Atlanta (SFA) (see BW Online, 11/18/05, "The Tech Beat").
He also talked about Cisco's view on Spanish Wi-Fi startup Fon.com, where he sits on the board as a private individual. Fon is aiming to create a large-scale Wi-Fi hotspot by encouraging individuals to share their Internet links. Edited excerpts from the conversation follow:
What compelled Cisco to acquire Scientific-Atlanta? We want to be an end-to-end provider of Internet Protocol [IP] TV. We've sold certain kinds of IPTV equipment in the past. This deal helps us round out our offerings, in areas such as set-top boxes.
Will consumers notice any difference between IPTV and today's TV? They'll have to. People are generally pretty satisfied with their TV. So if you're simply offering them a similar product for $5 less a month, they won't switch. But if you offer them something new, they might. I grew up in Europe, and I'm a fan of European soccer. If IPTV allows me to watch European soccer games, I'm in.
There's a lot of debate about whether IPTV is on the way. Do you think it really will happen? We can have a legitimate debate about when IPTV will happen. But I think it's a question of when, not if.
How will IPTV be different than what's currently available? It will be different in three ways. There will be a lot more user-created video, especially as consumer video recorders and editing technology get better. Just as we reached a tipping point with digital cameras, we'll soon reach a tipping point with digital video recorders. And there will be a lot more ad hoc video content, which is slightly dumbed down but still feels like it was professionally produced. It will be easy and cheap to make, like reality TV. And there will be professional content, but it will allow much more room for user preferences. People will be able to select camera angles or different endings for a show.
Will IPTV be delivered to the home over wired or wireless networks? Wired networks will always be faster than wireless. The performance of a wireless network really depends upon how much spectrum the operator owns, and there's just so much of it. Wired fiber networks essentially have unlimited capacity. The real advantage of wireless networks is mobility. I think that the loser is satellite. I think that the winner is whoever has a wire into the home, whether it's cable or telecom.
If IPTV is on the way, and if telecom companies are poised to win, why is Wall Street so nervous about companies such as AT&T (T) and Verizon (VZ)? Wall Street is worried about the ability of those companies to deliver a good return on their fiber investment. But we [Cisco] are more accustomed to using our stock to make big bets.
How long will the transition to IPTV take? We're in the early stages of a three- to five-year transition.
Who do you regard as Cisco's biggest rival in IPTV? I think the main rival is Alcatel (ALA). [It's] also focused on providing end-to-end IPTV products.
Which countries will drive IPTV? We think the leaders will be Japan, Korea, and some parts of Western Europe, such as Italy, where FastWeb is a big customer of ours. We don't think it will be the U.S., although AT&T and Verizon are aggressive.
How does Fon work? Fon allows users to create communities of Wi-Fi access points. Members have access to each other's hotspots for free. Guests pay for access. They have funny nomenclature. Members are known as Torvalds, and guests are known as Bills [a reference to open-source Linux pioneer Linus Torvalds and Microsoft (MSFT) Chairman Bill Gates].
But isn't it illegal for people to share Wi-Fi access? That very much depends upon geography. It may be in some places but not in others. But the business model works regardless. Even if members live in areas where they are not allowed to share Wi-Fi access, they can still benefit from fees paid by guests in areas where sharing is allowed. As long as the network grows, it becomes more valuable, even if the rules vary geographically.
Are free, unsecured Wi-Fi networks available in most places? How do you compete with that? That may be true in places like New York. But there's a big difference in urban markets. Where I live in California, homes are built on one-third-acre lots, and neighbors are too far from each other to share access. And if there's any steel in the home, neighbors won't be able to share access at all.
Cisco has invested a lot in Wi-Fi, as part of its Linksys acquisition. How important will the technology be as an access technology? We think that Wi-Fi will be one of several important wireless-access technologies. And the convergence of wireless and broadband will create many different kinds of business opportunities.
Rosenbush is a senior writer for BusinessWeek Online, based in New York
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