Cisco took the wraps off of its new CRS-3 Carrier Routing System, which John Chambers, the company’s CEO and chairman, said would revolutionize the next generation of the Internet.

On a conference call this morning, Chambers said the CRS-3 could handle 12 times the capacity of its closest competitor’s rival product, although he didn’t mention Juniper Networks by name. The CRS-3 has a processing speed of up to 322 terabits per second.

While the CRS-3’s predecessor, the CRS-1, took five years to develop, the newest router took three at a cost of $1.6 billion . A large chunk of that developmental cost was in Cisco’s new chipset. The Cisco CRS-3 is powered by the new Cisco QuantumFlow Array Processor, which unifies the combined power of six chips to work as one. The CRS-3 is three times faster than Cisco’s CRS-1 router.

Chambers said the new router, which starts at $90,000, would unify businesses, IT departments, health care and education entities, and consumers onto a single platform, and that video was the “killer app” of Web 2.0.

“This is not a CRS-3 announcement, it’s about the foundation of the Internet,” Chambers said near the end of the conference.

The CRS-3 is capable of downloading the entire printed contents of the Library of Congress in just over 1 second. It also has the processing power to let every man, woman and child in China make a video call simultaneously, or stream every movie ever made in less than 4 minutes.

Chambers said the CRS-3 moves Cisco out of being a “plumber” at the core of the Internet to a platform that merges devices, applications and services together in a dynamic, scalable and intelligent fashion.

The Cisco CRS-3 enables unified service delivery of Internet and cloud services with service intelligence spanning service provider Internet Protocol Next-Generation Networks (IP NGNs) and data centers.

The router has a “Network Positioning System” that is similar to GPS. It helps scale bandwidth demands between data centers and network clouds by locating “extra” resources. Cisco said the Network Positioning System provides Layers 3 to 7 application information for the best path to content, improving consumer and business experiences while reducing costs.

Also on this morning’s conference call was AT&T Labs President and CEO Keith Cambron, who spoke about using the CRS-3 for a field trial of a 100-gigabit backbone network technology, which took place in AT&T’s live network between New Orleans and Miami.

Cambron said while a 100-gigabit backbone network may be a few years away, “we’ve already seen that 40 gigabits is not enough.”

“The evolution of the CRS-3 is key to our network,” Cambron said.

Cambron said video traffic on AT&T’s backbone has increased by 80 percent, while mobile traffic has had a 5,000 percent increase over the last three years.

The Cisco CRS-3 is currently in field trials and is slated for release in the third quarter of this year.