Cisco unveils ultra-fast Internet technology

NEW YORK (CNNMoney.com) -- Cisco unveiled a new Internet technology Tuesday that it says will provide the ultra-fast data speeds necessary to stay ahead of users' rapidly growing online video demands.

The new technology, known as "CRS-3," is a network routing system that will be able to offer downloads of up to 322 Terabits per second, according to the company.

Translation: Well in Cisco terms, the router will be able to provide download speeds of 1 Gigabit per second for everyone in San Francisco, download the entire printed collection of the Library of Congress in 1 second and stream every movie ever created in less than 4 minutes.

Cisco Chief Executive John Chambers acknowledged that many skeptics will say that those speeds and network capacity are not necessary, but he argued that the fast-growing media usage on mobile phones will ultimately demand it.

"I know this is not that exciting to the average consumer right now, but it is the foundation for future speeds," Chambers said in a Web cast Tuesday. "When it comes to mobile devices, I want to get any video, anytime and be able to share that on any device in your living room. The foundation of that is the CRS-3."

Wireless providers have reported a sharp increase in data downloads as more consumers buy smartphones, and they are quickly scrambling to update their networks to increase capacity for growing data traffic. AT&T (T, Fortune 500), which saw its network traffic grow 40% in 2009, said Tuesday that it has run a successful test of the CRS-3 under a partnership deal with Cisco.

It's not just mobile that's growing. Streaming video services like YouTube are now offering high-definition video, and broadcast networks and cable companies continue to put more of their content on the Internet.

"Cisco has set a new bar for network performance," said Zeus Kerravala, research fellow at Yankee Group. "Many may think we'll never need that much bandwidth, but the enterprise future of mobile TV, streaming media, YouTube, telepresence and 3-D HD TV surely demands it."

Cisco said the CRS-3 will triple the speed of its predecessor, the CRS-1, and it will offer speeds of up to 12-times faster than the next fastest product on the market. The company invested $1.6 billion in the technology and will begin selling the routers at $90,000. The networking company said it expects the CRS-3 will be available in the fall.

The announcement comes a week after Google (GOOG, Fortune 500) announced it would test a super-fast broadband network in a U.S. city, and it is a week before the FCC will reveal its plan to increase broadband speeds and access for Americans.

Shares of Cisco (CSCO, Fortune 500), which were up 4% on Monday ahead of Tuesday's announcement, fell about 1% in midday trading. Shares fell sharply immediately following the announcement in a "sell on the news" move, but managed to recover some lost ground.