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Cisco’s New Router: Trouble for Hollywood

Cisco’s New Router: Trouble for Hollywood

By Erik Heinrich, courtesy of TIME 

TIME, Cisco's new routerCisco’s CRS-3 router made a bit of a splash when it was announced on March 9, but the power of this new device hasn’t yet sunk in. Consider: The CRS-3, a network routing system, is able to stream every film ever made, from Hollywood to Bombay, in under four minutes. That’s right — the whole universe of films digested in less time than it takes to boil an egg. That may sound like good news for consumers, but it could be the business equivalent of an earthquake for the likes of Universal Studios and Paramount Pictures.

Most people are familiar with routers, or desktop boxes used to provide connectivity between PCs, laptops and printers in a home or small office. These are tiny geckos compared with theT. rexes used by telcos such as Verizon and AT&T to distribute data among computer networks and provide Internet connectivity to millions of homes and wireless subscribers. 

As it turns out, these megarouters sitting inside data centers of major telcos and cablecos are among the biggest bottlenecks of the Internet, because as bandwidth speed to end users has shot up in recent years, router technology has not kept up, resulting in traffic jams that can slow or freeze downloads.

Cisco’s superrouter is expected to turn what is now the equivalent of a country road into an eight-late superhighway for Internet data traffic, including 3-D video, university lectures and feature films such as Harry Potter and the Half-Blood Prince and The Twilight Saga: New Moon. "Video is the big driver behind all this," says analyst Akshay Sharma of technology-research company Gartner Inc., noting that voice and texting will soon be overtaken by richer multimedia content and applications.

While it’s already possible to stream a feature film in real time, in the best-case scenario it takes about two hours to download to a personal film archive, at home or on a mobile device, for repeat viewing. With the predictable slowdowns and interruptions now so common, the process can eat up four hours or more of computer time — to say nothing of time lost managing the process.

But routers are not the only cause of bottlenecks, and Cisco is not alone in working to maximize the Internet’s full potential. Google is also concerned about the speed limitations imposed by wires that run to the home. Last month, Google, best known for its search engine, announced plans to test ultra-high-speed broadband networks that would deliver Internet content to residential subscribers at speeds of 1 gigabit per second — 100 times as fast as the top speed available today. This would allow consumers to complete a PC download of a Hollywood blockbuster like Avatar in about 72 seconds.

"If Google has real success with this trial, it will percolate, and people will need to copy it," says Sharma, who is based in Fort Lauderdale, Fla. However, such a quantum leap in bandwidth would need the support of Cisco-style routers in the background to deliver on its promise beyond the pilot stage.

The ability to download albums and films in a matter of seconds is a harbinger of deep trouble for the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA), which would prefer to turn the clock back, way back.

Consider that the MPAA, whose members include Disney and Universal, attacked the VCR in congressional hearings in the 1980s with a Darth Vader–like zeal, predicting box-office receipts would collapse if consumers were allowed to freely share and copy VHS tapes of Hollywood movies. A decade later, the MPAA fought to block the DVD revolution, mainly because digital media could be copied and distributed even more easily than videocassettes.

Today the film and recording industries maintain an iron grip over distribution of their intellectual property through megaplexes and national retailers such as Best Buy, Tower Records and Walmart. These bricks-and-mortar distribution channels take a share of the profit, but they provide a steady and predictable stream of revenue. 

By contrast, studios and music labels have experienced limited success and even less profitability in the few instances when they have grudgingly embraced the Internet bogeyman. The prospect of tying their future success to online distribution scares them because it means they will need to develop new distribution and pricing models. (For example, Netflix can stream an unlimited number of Hollywood films for a monthly subscription fee, but this does not include new releases.) They will also need to figure out how to stop people from setting up clone video and music stores with pirated content.

'David and Goliath'.

The MPAA declined to comment specifically on the Cisco breakthrough but said it supports technological innovation. Meanwhile, both the MPAA and the RIAA continue to fight emerging technologies like peer-to-peer file sharing with costly court battles rather than figuring out how to appeal to the next generation of movie enthusiasts and still make a buck. These younger consumers prefer to shop for movies online, watch them at their leisure on mobile devices and desktops and share them with friends. The studios and music labels have to figure out how to fit into that lifestyle, or else risk becoming obsolete.

The hard fact is that the latest developments at Cisco, Google and elsewhere may do more than kill the DVD and CD and further upset entertainment-business models that have changed little since the Mesozoic Era. With superfast streaming and downloading, indie filmmakers will soon be able to effectively distribute feature films online and promote them using social media such as Facebook and Twitter.

The upshot is that the high castle walls built over the past 100 years by the film industry to establish privilege and protect monopolistic profits may soon come tumbling down, just as they have for the music industry. In keeping with the old storyline, the nimble David looks set to vanquish the myopic and overconfident Goliath. 

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