* CRS-3 to be commercially available in Q3 2010

* Aimed at telecom carriers, starting at $90,000

* Cisco shares flat in afternoon trading (Adds CEO quote, analyst comment, product details)

By Sinead Carew

NEW YORK, March 9 (Reuters) - Cisco Systems Inc , introduced a router that it says can handle Internet traffic 12 times faster than rival products, the first upgrade in several years of its product line that directs data traffic over the Internet.

The world's top network equipment maker boasted the new router, called the CRS-3, could deliver every movie ever made in four minutes over the Internet.

The router is scheduled to be sold commercially in the third quarter starting at $90,000, said Cisco.

The product is aimed at telecommunications operators, which have to constantly upgrade their networks to serve surging Internet use, driven by popular smartphones like Apple Inc's iPhone and Web services like Google Inc's YouTube.

"It's a big deal for Cisco and its carrier customers because these things come only every six years," Broadpoint AmTech analyst Mark McKechnie said of the new router.

But he noted that it would be a long time before the product helps revenue at Cisco, which said it invested $1.6 billion into the CRS product line.

"It's probably a long evaluation cycle so it's not something we think will really impact Cisco numbers until 2011 or 2012. It takes a while for these things to ramp," McKechnie said.

That didn't stop Cisco from heralding the new router as a product that would "forever change the Internet" and show "what's possible when networking gets an adrenaline boost."

Shares of Cisco shares were flat in afternoon trading on the Nasdaq, after climbing 4 percent to touch a 12-month high on Monday partly in anticipation of the announcement.

It said on Tuesday the new router could deliver the entire printed collection of the Library of Congress, the world's largest library, in just over a second.

"I don't think this product is going to change our lives in the next six months but maybe in the next two years," said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

AT&T Inc , the biggest U.S. telecommunications company, said it had successfully completed a 100-gigabits-per-second field test of the new router and expects it to be ready for commercial deployment in the next few years.

On Monday, AT&T's biggest rival Verizon Communications Inc and Cisco's biggest rival Juniper Networks Inc said they completed a field trial at a similar speed.

The company has benefited from the rising popularity of bandwidth hungry Web services, which has driven sales of powerful network equipment.

Cisco said on a public webcast that it expects to keep selling the CRS-1 for many years even after it launches the CRS-3.

The news comes a week ahead of the expected announcement of U.S. Federal Communications Commission's National Broadband plan, aimed at boosting high-speed Internet adoption in the country.

The FCC is expected to propose that operators provide minimum Internet data transmission speeds of 100 megabits per second (Mbps) to 100 million homes within a decade. Today's typical speeds are closer to 4 Mbps, according to industry estimates.

Cisco shares were up 13 cents to $26.26 on Nasdaq. Juniper shares were up 8 cent at $29.68. (Additional reporting by Franklin Paul and Rodrigo Campos; Editing by Derek Caney and Tiffany Wu)