Cisco CEO John Chambers attacks Barack Obama over net neutrality

Just days after US president Barack Obama backed net neutrality, Cisco CEO John Chambers says it will hurt business

Two days after US president Barack Obama came out in favour of net neutrality, Cisco CEO John Chambers used his quarterly results call to reiterate Cisco’s position against the idea, saying it would hurt his business.

Obama said the internet should be a fundamental right, and internet service providers (ISPs) should not be allowed to restrict access or speed. He said such restrictions would give ISPs an unwarranted influence over the openness of the internet, and the free flow of services, ideas and innovation.

However, Chambers said that, in the quarter just ended, he had seen orders for network hardware from three major US service providers slowing dramatically – for which he pinned the blame firmly on the debate over net neutrality.

“That’s an implication, I think, of what you’re seeing in terms of net neutrality and Title II discussions going on where, in my opinion, it would be a very disappointing result if we moved back to regulation of the internet – like we did with voice, many decades ago,” Chambers told analysts.

Joining a chorus of industry voices now ranged against net neutrality, he predicted that Title II regulation would hurt broadband providers' ability to build out fibre networks. Chambers said this would in turn damage the US economy.

AT&T said this week that it will delay its fibre optic network deployment in 100 US cities, pending a final decision on net neutrality.

“It’s very important we send a message, because you are going to see these service providers slow if not pause completely on broadband build-out because, if they can’t make money on broadband build-out, they aren’t going to build it out,” said Chambers.

“We do plan to be very aggressive on this and try to educate people on all sides about why this is not right.”

Read more about net neutrality

Stuck in the slow lane

The US Federal Communications Commission (FCC) has already voted in favour of plans that proponents of net neutrality fear will create a two-tiered internet. Critics say corporate entities with the ability to pay will be able to exploit fibre broadband – with the rest of the world, including start-ups and consumers, stuck in the slow lane.

Advocates of net neutrality would like to reclassify ISPs as Title II telecommunications services, as opposed to information services. This would mean they would be treated as utilities – like a water or electricity company – forbidden from acting as gatekeepers to the web.

Cisco’s official position on net neutrality, as set out on its website, is that it supports free, open, unrestricted and unmonitored access to the internet – but it also supports “the use of network management tools, by internet access providers, to improve the internet experience, as long as there is no anti-competitive effect”; and “the ability of broadband internet access service providers to engage in pro-competitive network management techniques to alleviate congestion, ameliorate capacity constraints and enable new services”.

Cisco said regulating the terms, conditions and prices set by ISPs was unnecessary and harmful.

In its official statement it said: “Many of the internet's benefits come from its open nature and the ability of anyone to develop new and innovative devices and services that connect to it. 

"Such innovation has created entirely new industries and has fostered competitive markets in internet applications and equipment. Allowing broadband service providers to innovate freely and differentiate their networks will enable them to provide consumers with enhanced service offerings and richer content.”

Cisco sales flat in first quarter

Cisco booked flat sales in the first quarter of its fiscal 2015, which closed on 25 October 2014 – the supplier’s 99th quarter as a publicly traded company.

Revenues grew just 1.3% year-on-year to $12.2bn (£7.7bn), its strongest ever Q1 sales performance and, while net income shrank by 8.4% to $1.8bn, its performance was still comfortably above analyst expectations.

Cisco said long-serving CFO Frank Calderoni will step down in the New Year, to be succeeded by senior vice-president of business technology and operations finance, Kelly Kramer.

Read more on Telecoms networks and broadband communications