Chambers: FTC probe is small

The Cisco chief dismisses an ongoing probe by the FTC into possible collusion between his firm, Nortel, and Lucent as a "small inquiry."

2 min read
SAN FRANCISCO--Cisco Systems chief John Chambers dismissed an ongoing probe by the Federal Trade Commission into possible collusion between his firm, Nortel Networks, and Lucent Technologies to divide up the networking market as a "small inquiry" today.

Federal regulators informed Cisco, Lucent, and Nortel earlier this month that they were looking into discussions between the firms on possible partnership opportunities. Chambers has long said that a few select partnerships are a key growth component for networking companies going forward.

"The position hasn't changed from the very beginning. It's a very small inquiry," Chambers told CNET News.com at an event focused on an ongoing partnership Cisco has with systems giant Hewlett-Packard. "Most companies would not have announced it, but as I've learned in business and politics it's better to announce something than let it get out a different way.

"It will not be a problem. It has to do with transactions that were made 6 to 18 months ago, which I put on the front page of anybody that would listen, from that end," Chambers said. "I think it's more an issue of education in that area, because if you spend some time with certain government agencies and politicians, people understand the issues. You have to partner here and so this will not be an issue."

Cisco and Lucent halted partnership talks earlier this year when it became apparent that there was too much product overlap between the firms, according to Cisco. The two have since been embroiled in litigation concerning technology patents. A partnership with Nortel Networks has most likely fallen by the wayside since Nortel merged with Bay Networks this summer.

Chambers also used the occasion of an announcement of telecommunications-oriented extensions to the company's partnership with HP to discuss the ramifications of further government intervention on the emerging telecommunications industry. The industry is increasingly relying on data equipment, rather than traditional voice systems, for upgrades in certain network segments.

The so-called "convergence" of voice and data networking is the driving force behind numerous recent entries into the telecommunications services market.

"If the government tries to impose the same regulatory practices, decision-cycle time periods--which are often three, four, or five years--that they did in the traditional circuit voice marketplace, you will see this occur at a much slower pace," Chambers said. "If business leads and government follows, you will get natural competition here, you will drive down prices dramatically."