In the near term, Cisco System's $6.9 billion acquisition of Scientific-Atlanta gives the routing kingpin an instant and significantly larger footprint in the cable TV market. Longer term, though — and more significant to the telco environment — the deal puts Cisco in position to play a much larger role in IPTV and challenge large system integrators such as Alcatel, Lucent Technologies, Nortel Networks, Tellabs and even Microsoft.

As part of the purchase, Cisco acquires the SA SciCare Broadband Services group that acts as a system integrator. Thus far, the organization has mostly been limited to putting together piece parts for traditional cable operators, but it also has played a significant role in the video element of SBC Communications' Project Lightspeed. In fact, as the IPTV market develops, the combined companies plan to do a lot more in IPTV.

“As we get into this area of video integration, that unique thing we bring here is how these things work on an end-to-end basis,” said Dwight Duke, president of SA's transmission group, noting that the company also has years of experience with content producers, something traditional telecom vendors lack.

Exactly what role the companies decide to take on is undetermined, but on the surface, there are plenty of possibilities. Among the reasons behind the merger is the blending of SA's cable customer base with Cisco's telco relationships, said Cisco CEO John Chambers.

Jim McDonald, CEO of SA, added, “You have to realize that a part of the video market is an existing market, but a part of the video market is brand new. This is a massive market segment, and it's clear the video expertise we've brought to the table. That knowledge base is extremely critical to the new customers like telcos.”

Like other vendors' professional services group, SciCare can use that well of knowledge along with Cisco's routing expertise to create an IPTV system integrator.

“That's clearly an area we view as a mutual interest where we can leverage the interest of Cisco and Scientific-Atlanta,” said John Mattson, director of marketing for the cable business unit.

So far, the group has done most of its work in the U.S., including most of the headend integration for SBC. But with Cisco's reach, it certainly could extend both the geographic reach and the scope of activities, according to Dave Davies, vice president of strategy and product marketing for SA.

“With SBC, we're doing the video system integration, and that's everything from the two Super Hub Offices down to the 41 Video Hub Offices,” he said. “It's everything from rack-and-stack to a service that allows you to do dynamic fail-over and move [satellite] dishes around to recapture video. As the networks get more integrated and more complex, as you have more and more different kinds of devices hanging off the network, having a single company that can manage through all of that can be ideal.”

Certainly, Cisco has the heft to play that role, but whether it can crack the tightly knit world of telco suppliers remains to be seen. Alcatel, which is acting as lead system integrator for SBC and BellSouth, refused to comment on the acquisition. Lucent and Nortel, meanwhile, have just recently started positioning themselves for the integrator role in the IPTV world. At the recent Telco TV show, Marcus Weldon, chief technology officer of Lucent's broadband solutions group, said the company has had dozens of requests from middleware vendors to act as a system integrator, a role that Lucent is definitely aiming to play.

“Given the time constraints and the low tolerance of users for a low-grade service, [telcos] are going to continue wanting an end-to-end solution,” he said. “The complete package is an absolute requirement for service providers.”