Cisco invests in P2P start-up

Cisco Systems has invested in a peer-to-peer Internet TV start-up.

The Seattle-based start-up GridNetworks said that Cisco is one of two "strategic investors" that contributed to the company's $9.5 million series A round of funding announced in October. The venture capital firm Panorama Capital of Menlo Park, Calif., was named as the lead investor when the funding was first announced.

GridNetworks, which launched its service in November 2006, has taken a hybrid approach to delivering high-definition movies and TV shows over the Internet. It uses both peer-to-peer technology, which leverages content distributed on users' computers all over the Internet as well as content delivery technology, which essentially caches and stores content in server farms throughout the Internet so it can be served up more quickly to geographically close clients.

GridNetworks' software client called Gridcast Connector is installed on PCs and, when content is requested, it locates peers best suited to serve the content. It uses content delivery technology to buffer the first 30 seconds or so of a show or movie.

Cisco has been focused on video for the last couple of years. Eventually, the GridNetworks technology could work well with the company's cable set-top boxes from Scientific Atlanta and Linksys home routers. On the infrastructure side, Cisco also offers video-on-demand products. In 2006, it bought Arroyo Video Systems for $92 million. Cisco plans to use the Arroyo technology to deliver Internet video directly to set-top boxes. And this technology could help the company distribute high-definition video more efficiently.

Cisco is the largest Internet infrastructure provider in the world. And it's significant that the company is investing in a company that is developing a peer-to-peer video platform.

P2P has gotten a bad reputation for being a damaging technology that allows digital pirates to distribute stolen content. It's also been blamed for clogging broadband networks. Last year, cable operator Comcast admitted that it slowed down some peer-to-peer traffic to better manage its network. Comcast is currently under scrutiny from the Federal Communications Commission, which is looking at whether the company's practices violate Net neutrality principles.

Other carriers have also expressed concern over the use of peer-to-peer technology. Time Warner said it is testing a tiered service to discourage people from using peer-to-peer applications.

But many networking experts say that P2P is actually the best and most efficient way to deliver video, especially high-definition video, which, when streamed, eats up vast amounts of bandwidth throughout the entire network. Cisco's investment in a budding peer-to-peer delivery platform could help speed up developments in the technology that will make even more efficient use of networks.