Cisco Chairman and CEO John Chambers weighed in against a proposal to classify service providers as Title II common carriers in an effort to preserve net neutrality. And he noted that just talking about Title II is likely to slow down carrier spending.
Speaking on Cisco Systems Inc. (Nasdaq: CSCO)'s quarterly earnings call Wednesday, Chambers said Title II classification would inhibit rather than encourage broadband buildout, and cut revenues for service providers and for companies that rely on service providers for revenue.
"It would be a very disappointing end result if we moved back to regulation of the Internet as we did with voice years ago," Chambers said. Title II regulations would dramatically reduce the ability of service providers to build out broadband at a time when the US is just catching up.
Carriers are reducing spending on opex and will continue to do so if they can't get payback for their investment, Chambers said. While Cisco's revenue was up year-over-year for the first fiscal quarter of 2015 -- following a 2014 in which revenue declined -- Cisco's revenue from carrier business was down 10%.
The US can achieve the goals of both sides of the net neutrality debate without resorting to Title II classification, Chambers said. The Cisco chief endorsed a proposal by FCC Chairman Tom Wheeler to "split the baby" on net neutrality regulations. (See Wheeler: Between a Rock and a Hard Place.)
President Obama this week urged the FCC to adopt strong net neutrality rules for wireline and wireless service providers, including Title II regulations. Title II gives the FCC substantial power to set rules prohibiting providers from blocking or throttling web traffic, favoring some services over others and charging fees for prioritized "fast lane" service. (See Obama Backs Net Neutrality, Stuns Industry.)
FCC Chairman Tom Wheeler told Silicon Valley business executives he favored a more nuanced approach, according to a report in the Washington Post.
As my colleague, Mari Silbey, noted, Wheeler has previously said that he would consider reclassifying broadband services under Title II of the Communications Act, but he's also given indications that he'd prefer to stick with regulating the industry under the looser Section 706 rules with some additional requirements put in place.
The FCC floated a proposal in May that would allow content providers to purchase Internet fast lanes, but Wheeler said the FCC would not allow a two-tiered Internet system to develop. (See FCC Split on Net Neutrality Plans .)
Cisco plans to work to educate people on the importance of avoiding damaging net neutrality regulation, Chambers said on Wednesday's call. "We do plan to be very aggressive on this in trying to educate people on all sides how this is not right for the country," Chambers said.
The mere possibility of Title II classification will reduce service provider investments for the next one or two quarters, which will have a ripple effect, Chambers said. "I think it's going to have negative impact for all of us that are connected with service providers in the US."