Optical/IP Networks

Cisco Snatches SignalWorks

Cisco Systems Inc. (Nasdaq: CSCO) plans to exchange roughly $13.5 million of common stock for SignalWorks Inc., a small, privately held maker of embedded voice processing software, in a move observers say is well timed (see Cisco to Acquire SignalWorks).

You won't find much about SignalWorks on the Web. The company makes acoustic echo cancellation software that corrects that tinny sound in telephone handsets, including ones built for IP-based voice services. A tiny engineering enterprise, it has just nine employees, of which seven will be taken aboard Cisco. CEO Hugh McLaughlin will report to Cisco's Richart Platt, VP of engineering in Cisco's Enterprise Voice and Video Business Unit.

The deal is a small part of Cisco's grander push into voice-over-IP (VOIP) technology.

"Our latest checks suggest Cisco continues to gain momentum with its VOIP offerings, and VOIP remains one of the most important emerging areas for Cisco, along with storage and security," writes analyst Tim Luke of Lehman Brothers in a note today. "We expect Cisco to continue to make investments and acquisitions in this promising arena."

Up to now, SignalWorks has sold its software to OEMs like Hitachi Ltd. (NYSE: HIT; Paris: PHA) and LSI Logic Corp. (NYSE: LSI), which put it in digital signal processor (DSP) modules for sale to other developers or for use in telephones, PBXs, and the like. Cisco will continue to honor such prestanding contracts, says spokesman Jim Brady. But whether Cisco will choose to support OEMs in the future isn't clear.

Indeed, Cisco is intent on dominating the IP telephony market, not helping others join it. Jeremy Duke, principal analyst at Synergy Research Group Inc., says Cisco owned 41.4 percent of the worldwide $863.8 million market in IP telephony gear, including handsets and PBXs, for 2002. That puts Cisco well ahead of competitors Avaya Inc. (NYSE: AV) and 3Com Corp. (Nasdaq: COMS). Duke sees this purchase as a chance for Cisco to build on its lead.

Specifically, SignalWorks can help Cisco fix a big problem in IP telephony gear: the poor quality that continues to dog many VOIP devices.

"Any IP phone has echo issues," says analyst Irwin Lazar of the Burton Group. He says his firm adopted a VOIP service in-house last year, one that used Cisco phones. (Cisco downloaded SignalWorks software into its phones only within the last six months.) The provider had to add extra echo cancellers in its network to stop noise on the line.

All this took the carrier extra time and talent, Lazar says. If Cisco can perform echo cancellation right in the handset, the considerable cost savings carriers should see might spur them to roll out more services.

Others agree. "We've done a lot of end-user research on IP telephony, and call quality is by far the single biggest concern," says Chris Neil, research director at Sage Research Inc. He says anything Cisco can do in the way of improving call quality and reliability will boost its presence in VOIP -- and doing that, in turn, will help show Cisco's serious about IP voice technology.

Cisco needs a technological edge to batter stiff competition from other big players -- those with lots of carrier influence, such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA), LM Ericsson (Nasdaq: ERICY), and Nortel Networks Corp. (NYSE/Toronto: NT). Nortel, for one, had its own recent flurry of VOIP announcements (see Nortel Targets Carrier VOIP Migration).

Cisco's shares were trading at $14.29 early this afternoon, up $0.09 (0.63%). Separately, the company today announced a plan to buy back $5 billion of its common stock, an extension of the $8 billion already committed for buyback (see Poll Paints Bright Future for CWDM). The repurchase is seen as positive by at least one analyst. In today's note, Lehman's Luke calls it "a constructive approach, given the indications of a continued softness in general business conditions."

— Mary Jander, Senior Editor, Light Reading

Dr.Q 12/5/2012 | 12:24:34 AM
re: Cisco Snatches SignalWorks Two technical questions about echo cancellation, for which I would be grateful if anyone can provide information or point to website where they are addressed.

1) Why is echo more significant in doing voice over IP than in conventional land line digital networks?

2) How does echo cancellation work?

thanks in advance,

- Dr. Q
mclejc 12/5/2012 | 12:24:22 AM
re: Cisco Snatches SignalWorks I can't believe it! Finally - after ten years -
somebody believes that VoIP quality stinks.
(Well - alright - never mind about the Cisco
HR folks who couldn't even keep the connections
up soon after they switched over to VoIP in

There are two fundamental reasons that VoIP
has siginificant problems:

1 - delay. In this case, packet delay. Partially
because VoIP is so stupidly inefficient at
transmitting packets. 20 ms quantization/
inter-arrival times is not optimum for voice. 10
ms is better. 5 ms is almost normal. But
IP gives 50% overhead at around 10 ms. So what
difference does it make, right? I've been hearing
for years that the IP network is all digital
and there's no echo - right? Not! Every single
speaker and microphone has an analog to digital
conversion. In the case of a telephone, the
microphone is connected to the LOCAL speaker.
That's so you can hear yourself. We call it
sidetone. A side effect of this is that the near
end speakers voice is also fed back into the
far end microphone by the far end speaker.
So far - so good. But now
let's put that nasty delay into it. You say
something and you hear it in your local speaker,
but you also hear it in your local speaker delayed by more than 50 ms - noticeable, or
70 ms - annoying, or > 90 ms - can't handle it,
hang up. It's real simple - delay == echo.

Echo cancellers work by remembering what was
transmitted and looking for it in the receive path
and adding a phase reversed signal. Cool huh?
But they only work on PCM signals - not on
compressed signals like G.728/G.729, etc. And
that means an extra encode/decode step wherever
echo cancellation takes place. Now if the EC
function was right in the handset and was
effective and took place before the encode
to G.726??? Sound like some real bucks could
be made. ECs are also expensive because they
have memory to remember the transmitted signal.

Now what was that other reason? Oh yeah.
IP still can't tell the difference between a
porn packet and a wife is calling 'cause
the kid is sick packet. Mother-in-law packets
can be discarded - but IP still can't tell.
In order to really fix this issue, widespread
deployment of something like ATM^H^H^HMPLS
will be needed, but MPLS will need the QoS
mechanisms of ATM. That means that every router/
siwtch will need connection admission control and
policing of incoming traffic and shaping of
output traffic based of QoS parameters. And the
QoS parameters are not those silly COS bits.
That approach was deemed insufficient almost
a decade ago. Gosh - those router/switches are
starting to sound expensive. And let's not talk
about fault tolerance.

So just throw bandwidth at it - right? Not! My DSL
connection has a 128 kbps downstream limit.
Remember that IP overhead I talked about ealier?
128 kbps means I can get two G.726 (32k ADPCM)
calls over AAL1. Put it over AAL5 and it's not
so easy. Now I'm down to just one phone call.
In the access network (where the telephones are),
there is no "throw bandwidth at it." It was all
just a misunderstanding from the beginning.

kbkirchn 12/5/2012 | 12:24:19 AM
re: Cisco Snatches SignalWorks IP Routers (& Intelligent QoS-enabled Switches) are able to determine the type of IP traffic based on the IP Precedence bit pattern in the IP packet header. IP Precedence can be set by the end-device or adjusted by the router itself (using NBAR in Cisco's case).

Once IP Precedence value has been determined, then the appropriate QoS mechcanism is used to ensure proper traffic handling. (Policing, Shaping, Queueing, Reservation, etc..)

Obviously, this doesn't happen automatically (yet).
Garam Masala 12/5/2012 | 12:24:18 AM
re: Cisco Snatches SignalWorks GÇ£Mother-in-law packets
can be discardedGǪGǥ

I try but they keep coming back.
Dr.Q 12/5/2012 | 12:24:18 AM
re: Cisco Snatches SignalWorks What are the 'COS' and 'QoS' in the terms 'COS bits' and 'QoS parameters' of post #2?

-Dr. Q
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