Cisco Booted from Chinese Telecom Network

by Matt Klassen on October 30, 2012

So America, you’re ostracizing Chinese telecommunications companies ZTE and Huawei in the name of national security, well two can play at that game.

A report out of China announced this week that Cisco will no longer oversee the operation of one of the country’s key backbone routers, giving the job of running the network to hometown favourite China Unicom. The reason for the decision is, what else? –national security.

This move comes less than a month after the much ballyhooed report by the U.S. House Intelligence Committee that named both aforementioned Chinese telecommunications hardware distributors as national security threats, discouraging American businesses from buying their equipment. It was a warning that Cisco was the first to adhere to, and it looks to be the first cracks in Cisco’s current domination of the lucrative Chinese telecom market.

But is anyone really surprised? Following the controversial decision by the U.S.Congressional committee, the Chinese government all but promised that it would respond in kind, saying that such baseless censure of Chinese companies would certainly hurt the tenuous trade relationship between Beijing and Washington. Now that both countries have fired their initial salvos the next question is, how far will this go?

According to report from China, the company China Unicom was tasked to replace Cisco’s equipment in its backbone network for many of the same reasons cited by the U.S.government earlier this month. The company stated that Cisco posed a serious threat to Chinese network security, citing vulnerabilities and the potential for ‘backdoors’ in the U.S.-made network switches.

But who are we kidding here? The accusations against Cisco are as hollow as those levied against ZTE and Huawei, nothing but knee jerk reactions to foreign competition. In fact, I have yet to see anything conclusive that might suggest that ZTE or Huawei are operating any differently—or covertly—than any other Chinese company operating in North America today.

So here’s a summary of what we’ve seen so far: No doubt listening to well paid Cisco lobbyists, the U.S.Congressional committee blocks two of Cisco’s competitors from the American market. Cisco, thankful for the governmental interference, immediately supports the motion, using all its collective acting abilities to feign shock and dismay over the traitorous allegations against the two Chinese companies. Then, not willing to see its company’s needlessly ostracized, China responds in kind, booting Cisco from its network.

Let’s see, where does that leave us? Cisco eliminates two prospective competitors in the American market only to start losing out on much of the Chinese market…a sound plan if I’ve ever seen one!

That being said, its difficult to truly gauge the effect of this move, given that Cisco equipment makes up an estimated 70 percent of China’s entire network, but that won’t matter much if this little telecom skirmish escalates into an all out trade war.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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