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John Chambers: Broadband Speeds Our Economy

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Now that President Obama has signed the $787 billion economic stimulus package into law, the real hard work begins: using that money to create jobs. If spent wisely, this package has a chance at fundamentally reforming the U.S. health-care system, making our economy energy efficient and providing Americans with the training and skills required to succeed in a 21st century global marketplace.

But the country can’t accomplish these goals unless it has the infrastructure to support them. That’s why the funding for broadband was so vital. Broadband is the ticket for entry to participate in the world economy. It is a fundamental technology upon which other things are built. It enables collaboration, innovation and operational excellence, and positions the U.S. to compete on a global basis.

The impact of broadband has been similar to that of the national highway system in the 1950s. Until then, our nation’s roads were slow and the quality was unpredictable, which hindered commerce and travel. The modern highway system made our country accessible and in the process, created new industries — transforming our economy and by extension, our society.

That is what ultra high-speed broadband does. Think of how far we’ve come in just the last decade, when dial-up was the norm and the Internet was only used to surf, send an email, or order a product or service. Now the Internet is largely defined by video and various levels of interaction among users, such as through virtual meetings with co-workers located in cities around the world.

Increasing our broadband speeds to 100 Mbps from the current U.S. median of 2.3 Mbps will have a transformative effect on our economy and our society. High-speed networking enables new human collaboration at a profound level, and such collaboration will radically change the way we think.

In health care, for example, dynamic collaboration by way of ultra high-speed networks will help researchers find cures for diseases faster. On a more personal level, remote consultations with doctors via our HealthPresence system are enabled when life-size, “HD” images and information are transmitted over such networks to doctors who can speak to directly to patients, view the data real-time and help make a diagnosis hundreds if not thousands of miles away. Indeed, as the Baby Boomers place ever-more stress on our health-care system, telemedicine is the next frontier, but it cannot happen unless all of our connections are fast and reliable, be they in the office or at home.

If 100 Mbps at home seems ambitious, consider this: Japan and South Korea are already reaching that level. According to a forthcoming research paper by the Information Technology & Innovation Foundation, South Korea — a country with 1/6th the population of the United States — has almost as much Internet traffic. That’s because they’re already operating at average speeds of 49 Mbps.

In the U.S., ITIF projects that high-speed connections to the home would increase the number of telecommuters to 19 million by 2012. That would save 1.5 billion hours of commute time — and reduce gasoline consumption by 5 percent. It is a green technology, one that can help us kick our oil habit.

And just as importantly, it would accomplish our goal of creating jobs. Deploying next-generation broadband to 80 percent of U.S. homes would create some 2 million new jobs, according to the upcoming ITIF study. In short, if we invest and build a national broadband infrastructure for the entire country, everybody benefits.

As our policymakers work on maintaining U.S. competitiveness, they should keep in mind that broadband is the vehicle by which our citizens can be more productive, health care can be modernized, our economy can become more efficient and innovation can flourish. To continue our nation’s growth, add jobs and drive innovation, we must invest in broadband.

John T. Chambers is the chairman and CEO of Cisco Systems.

34 Responses to “John Chambers: Broadband Speeds Our Economy”

  1. John,
    Thank you for you post. While u compare the broadband development with real road network, I beg to say that these are two very different things. Men are social animals and need people around. If u r selling the idea of people sitting in a room and ‘socializing/trading/researching/coding/videoSharing’, its another blunder that would push back the whole civilization backwards. Do you think that people would laugh with computers, company with computers?

    It may be your interest to push the deal to take the CISCO further, while, you may not mis-guide the people to change their lifestyle! They need friends, they need face.


    Bal Krishna Jha

  2. John,
    I know you have to bat for your Scientific Atlanta division.
    I do not believe we need more than 2-3 mbps per home for data. Video is a different subject.
    Also, most corporations have had ample b/w for the last 8+ years. I do not see how much more productive they will get than what they got in the last 8 years.
    Agree that applications for health care could be beneficial.
    Japan & Korea are more “geeky” than us. Always have been and always will be. Generally speaking our quality of life and lifestyle is better than both those countries.
    John – Finally, your company has done a lot of good but you guys have developed a culture of forcing enterprises to upgrade their infrastructure without providing too much incremental value. Try to “truly” help the customer or you may encounter the malaise that IBM encountered for an extended period.

  3. john’s points are spot on. however there is another aspect, which might need attention from the govt. the service providers have become too fat and lazy. too big to fail (in this case need to innovate). some sort of 1984 breakup or tighter regulation, esp if one buys into the view that transporting bit needs to get cheaper.

    the other part is wireless. usa needs a lot of catching up to do. this is a growth industry worldwide and the main company that (could be) generating jobs in this sector – alcatel lucent has been on a death bed. maybe cisco/juniper need to see wireless as their next frontier…

  4. John Champers has every right to be self serving when it comes to this issue – Cisco just happens to have the right products and talent needed to move us forward fast. While Cisco will benefit substantially, society will benefit more.

  5. Skippy


    The private market has failed, that is why private enterprise is not enough. They are more concerned and obligated to their stock jockey’s for the here and now than to their consumers.

    ISP’s need to be restricted to the dumbpipes they truly are, plain and simple. With that in mind a national fiber network needs to be built servicing every business and home that has oversight by the government. One that any business can reach any customer over with any service they choose to provide and the customer wants.

    The Telecom Act of 1996 gave the phone companies over $206 billion (and more since 2005) in incentives to deploy 45mbps symmetrical network that should be pretty much completed by now and cost consumers between $40-50/month. This was THEIR promise to get what they wanted in the Act and not a single one of them offers this to a single customer today. Most shortly after the act went into effect all completely scrapped their fiber rollout to consumers. Only Verizon picked this back up since.

    Do you even know that broadband was originally defined as 45Mbps symmetrical by the phone companies and the FCC? It was defined as a service capable of carrying high quality video each way and 45Mbps was define as adequate a speed for such. We have our ridiculous standard of 200kpbs now through the whining and feet dragging of the “private enterprise”.

    THAT is why private enterprise is not enough. Private enterprise will continue to take and take and take while giving as little as possible to keep regulators and consumers off their backs. The national infrastructure is like the highway system and should be built accordingly by on a larger national scale.

  6. @Om

    Great work getting John to post on this blog!!!


    – Why hasn’t Broadband speed picked up?
    – What is it that is stopping ISPs to up the ante and roll out higher speeds? Isn’t private enterprise enough to get this going?

    Economic growth for the next few years will be driven by the following:

    – Mobile Internet
    – Healthcare
    – Infrastructure spend (part of it would be Broadband)

    And while I agree that Broadband would help – I think getting the US companies to go and invest in developing markets where broadband penetration is in single digits is very important! Think of all the equipment that needs to be rolled out in countries like India if there is a push for increasing broadband (both wired and wireless) !

  7. A national broadband infrastructure that offers 10s of Mbps if not 100s, is a must-have to ensure that America produces the next Google, Amazon, Yahoo, Facebook. Many of these game-changing innovations and the infrastructure that powers them would not be possible if not for the ecosystem created by one of the best govt-industry-government collaborations in the form of networks that eventually grew in to the Internet.

    I cannot find a single reason why we will not take the next logical step of enabling more innovation. I hope there are multiple efforts like CleanSlate @ Stanford ( where some seed funding from the Govt is necessary to start the effort before industry and venture/PE economics come in. This is not a ‘bailout’ of any kind. This is an investment in the future with quantifiable returns to us, the taxpayers, and the nation.

    And yes, ‘natural economics’ and industry efforts alone will get us there too – but it may be too late and the next few years are critical to getting a headstart in the right direction. The right amount of seed funding and picking the right set of goals will make billions of bitful flowers bloom.

  8. @rjjrdq Cisco may benefit from some stimulus spending in some areas, but it is more accurate that everyone will benefit when there is ubiquitous broadband.

    And, as per “outsourcing” jobs, Cisco has operations all over the world and, therefore, needs people all over the world. If you had to break it down, roughly 50% of our sales come from U.S. and that is where roughly 50% of our headcount is.

    Broadband is not a panacea, but I must agree with @Narendra who quotes from Om: “more bandwidth means more creative applications, many which are not even imagined just yet.” And, when applied to healthcare, education and energy, we can gain much as a country.

  9. Narendra

    Thank you John and I must requote Om from above: “more bandwidth means more creative applications, many which are not even imagined just yet.”

  10. Derek Fields

    While Chambers addresses (and Om amplifies) the economic benefits that broadband can have, he misses the positive environmental benefits that will be seen when the need to be physically present is reduced and we become more comfortable with virtual presences. I wonder what will happen to the millions of square feet of office space when people finally realize what they can accomplish without the need for physical proximity. The reduction in fossil fuel needs for lighting, heating, cooling, and maintaining huge facilities, not to mention the reduction in auto emissions and gas use are a huge potential benefit to fat pipes and imaginative collaboration-enabling software.

  11. I start with subjective: Broadband allows me to be a hermit. I had to reorder my life when I retired. Economics rule!

    I’m not buying a new pickup. Gasoline ain’t ever going to be cheap, again. I spend 99% of every week out here in La Cieneguilla. So, how do I stay in touch with the world?

    DirecTV helps with inbound. But, the arrival of cable broadband made all the difference. At this moment, I’m running at 22mbps download, 2.5mbps upload. Everything I can think of for communicating with world is at hand – including HDTV that may not be on D*.

    Objectively: If I choose to I can work for any modern business. I get job offers every few months even though I’m an ancient cranky old geek. The last firm I worked for in construction industries tries to hire me back every year. I even toy with the idea of putting in a couple hours a day as a CSR. The hookup is a piece of cake.

    Historically: Try to track down the documentary about Al Toffler being hired as a consultant for the South Korean government – back when Kim Dae Jung was president. Hired to present an essential design for South Korea to become a major commercial voice in the region, his conclusion was to build a broadband infrastructure and access for the whole nation.

    Which they did. The results speak for themselves.

  12. John is spot on. US doesn’t understand the impact broadband can have on all industries. It should be treated as basic infrastructure. Looking for inspiration, just look at Japan’s national policy on broadband – 100% .. yes 100% broadband coverage is the goal and not 1 or 2 MB/s, 100 MB/s. We make the same case for broadband stimulus package

    Hope someone at WH is reading this post.


  13. Anonymous

    If Obama declears that none of these stimulas dollars will go to buy a product from a company that outsource jobs I wonder what will be the pitch by John

  14. Its wrong to look at Broadband as the solution to all economic problems. Apart from the wealth of multimedia content that has found its way onto the internet, I dont see too much of an improvement in terms of productivity. Thanks to faster internet, the collaboration space has seen tremendous improvements but we are still to find the true silver bullet. Telecommuting is a vision as grand as that of the paperless office of the 80’s, but we all know how that turned out. Similar stories of extinction are also narrated about travel, print media, co-located teams etc but there are inherent properties both social and economic, that will ensure such things don’t happen. Its time that we stop dreaming about the internet as the solution to all of the world’s problems and start looking at it nothing more than means to information and communication.

  15. WOW,thats is beautiful post.I have no idea before that just will only improve access with “better asphalt” american can improve there economy in 1950,it is amazing and that make me vote to support you john,cause I already has test the benefit already.3 months ago I go to japan.and the speed of downloading data is as almost same speed as I copy paste ,data from c:/ directory to d:/directory it just amazing imagine could work at US with still staying at my home country ,that is magnificent and if that will applicable in the next year 2009 ,I hope I can get benefit as well like what American do ,although I am not an American dude

  16. John,

    I think that your sentiments are dead on, and as an entrepreneur, I can’t wait for the day when really good broadband is ubiquitous, but I question the suggestion that this is a segment of the market that requires stimulus dollars.

    Imperfect, sure, but this is an area where the market seems to be working.

    If anything, I would love to see stimulus dollars targeted at funding small businesses that are under the radar of being VC-worthy (i.e., not $100M+ business opportunities) but have the potential to grow into real businesses ($10M+ business opportunities).

    Expanding upon your concept, why not focus these dollars on businesses that fit within a transparent underwriting criteria (including capital efficiency) AND which uniquely leverage broadband as a cornerstone driver of their business.

    As one who believes that the long-term growth of the economy hinges upon small business growth, this is a great way to both provide funding mechanisms to an under-served segment and to spotlight what works in the age of always-on.

    Food for thought.



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  17. I have to agree with the comments John makes here. It is common sense and draws on some good economic theory

    -) Money is in information these days – in the old days it was in commodities – steel, meat and coal. These days the value of enterprise resides in or is transacted in bits. The precursors to global wealth and civilization in the early days were roads and later man made canals – the faster you could travel the bigger the market for your produce (before it rotted). It makes sense in the age of information to create the roads for that information to travel cheaply and unhindered – the broadband network. Imagine if you had to commute rocky roads to get your work to your boss. Accept no substitute – dial up and even DSL is about as acceptable as a chocolate teapot.

    -) Move bits not atoms – Jonathan Koomey said that one to me and it rings so true – we need to improve the infrastructure to move bits faster and cheaper to wherever we want them to go rather than hopping in planes and cruising in cars. Allied to the US dependence on consumer credit and it’s subsequent consequences we now need to rethink transport infrastructures to be geared for bits rather than atoms. Oh yeah – the side effects would be to help towards saving the planet.

    America needs to let go of its dependence on gasoline, highways and airports and rethink itself out of the downturn by connecting it’s next generation of workforce with the tool it most needs – proper Broadband.

    There may be a silver lining in this downturn after all – the US economy has sunk to it’s lowest and now needs to have a sit down on the stairs and ‘think different”. The crash and the subsequent stimulus proposals may be the much-needed intervention to change our bad old habits.

  18. @Alex

    You are absolutely right in your observation. Why broadband has been equated to the highway-transport infrastructure of the past, I think of broadband as a platform and thus equate the bandwidth to processing speeds. I think we need to start looking at the world through those eyes in order to realize the critical need for broadband.

  19. Reading through this post I started to think that it seemed a bit self serving. However, the plain fact that Cisco has had the vision to participate and continue to invest in these particular sectors shows true vision – Tough for anyone to argue.

    I think that we all agree going forward the USA needs to become more productive. Broadband (including WIMAX) are the main ingredient in the equation. The world is truly flat and without greater access we will continue to let the rest of the world catch up.

    Last month I was traveling through Bolivia and had an opportunity to visit with some software development firms. I was truly amazed at the level of talent that rivals any other place I have visited. I use this example because Bolivia is a tiny country that most people know nothing about. As a matter of fact when people think of engineering talent in South America the countries that come to mind are Brazil and Argentina; and rightfully so.

    The world is truly flat.

  20. Whether broadband is the best answer or not, I think it’s absolutely clear that investment in technology infrastructure needs to be a top priority. And for that to happen, one thing we need more of is technology leaders stepping up and making strong cases like Reid Hoffman did in his Washington Post op-ed today and John Chambers is doing right here blogging on GigaOm. The fact that a major tech leader like John Chambers is posting on GigaOm is evidence in itself of how far technology innovation can come so quickly – as long as the right investments are made to support that innovation.

  21. @John

    Thanks for the post. I think most people fail to recognize the fact that broadband is like processor-power in the PC era. The more you have, the more you can use. In fact, more bandwidth means more creative applications, many which are not even imagined just yet.

    I think given the high degree of innovators and creators in Silicon Valley, it makes a lot of sense for us to have “big bandwidth” in the US. I think you and your peers need to keep pushing to make the future possible for us.

  22. The UK Government has not provided any subsidy/stimulus in the same way as in the USA although yesterday the regulator Ofcom did announce that it would remove any regulatory barriers that might constrain BT’s business case.

    BT has been arguing that it cannot make a sufficuent return on its investment to make that investment worthwhile in the UK. This is becasue up until now, due to BT’s significant market power, the pricing it can charge has been set by Ofcom.

    see post here

  23. @John,

    Your commentary is spot on – though some will likely view it as self serving. To be clear, I not only agree with your arguments, but will add that i’ve run a startup which has employed nearly 10 without any need for a physical office. This includes all aspects of development, meetings, code reviews, etc.

    It is my belief that if american companies placed more trust in their employees (outside of Silicon Valley), and created work and reward systems centered on measurable productive output using broadband networking, we could move american companies into positions of worldwide leadership once again.

    My $.02,