Cisco's Chambers Stumps for Business-Led Economic Recovery

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WASHINGTON — For Cisco CEO John Chambers, one of the more politically outspoken IT executives, the United States is in a precarious spot.

In a far-ranging on-stage interview here at an event hosted by the Association for Federal Information Resources Management, Chambers expressed a mixture of frustration at current policies he sees curbing growth and investment and exuberance over the prospects of a hyper-networked world in which remote education and health care are the norm.

But from Chambers’ vantage point, any optimism is cautious, at best.

“I think presently we’re losing. We’re getting beat on education, we’re getting beat on innovation,” he said. “Business and government — we’re not working together.”

“There are a lot of basic issues we could go after, and I find that we just are not effective on either side, and I hold both sides including myself accountable for doing a better job.”

Chambers, a committed Republican (he campaigned as a surrogate for presidential hopeful John McCain in 2008), might start with reforming the tax code to end the penalty for moving corporate profits earned overseas back to the United States. The repatriation of foreign-source income has been a longstanding priority for Chambers, whose company holds an estimated $30 billion in profits abroad.

Collectively, U.S. firms — including many in the IT sector — hold more than $1 trillion in foreign profits overseas, having opted to keep and often reinvest the cash abroad rather than pay the penalties for repatriation.

The resulting domestic reinvestment from a reform of the repatriation rules, Chambers suggested, could go a long way toward creating the jobs promised by President Obama’s economic stimulus package, a favorite target this election season for Republicans who describe the effort as a bureaucratic boondoggle that has failed to move the nation’s unemployment rate. (Democrats, armed with a different batch of statistics, argue that the stimulus bill saved the economy from falling into a deeper, more protracted recession.)

“The stimulus package was what — $800 billion? There’s $1.2 trillion that American corporations have outside of America that most of us would bring back” under a revised tax structure, Chambers said.

“There’s no reason America can’t lead again in business, although at the present time, we are not only not leading, we are sliding rapidly.”

But if that’s what the country looks like from Washington, things are a lot brighter in Silicon Valley, the vortex of the nation’s IT industry, where Cisco makes its corporate home.

Chambers described his company’s relentless push into next-generation video-conferencing technology, both in the enterprise and at home (and everywhere in between), as something bigger than just a thriving revenue stream for the networking giant.

Indeed, just as the 1990s saw the ascendancy of the first generation of the commercial Internet and Web-based businesses, a period roundly dominated by the United States, IP video and other new collaborative technologies may be poised to usher in a new high-tech bonanza.

“You’re about to see it happen again with this new technology — whether it’s collaboration, the clouds, virtualization and data centers — what they really do is allow any content on any device, often with video, and suddenly you can dramatically drive productivity,” Chambers said.

“I think we have a chance to do this a second time. I think we have a chance to really lead with these new technologies.”

Video conferencing and other high-tech collaboration tools offer the alluring promise of enabling patients in remote areas to receive treatment from specialists in medical centers, for instance, or for students around the country to sit in on a distant professor’s lecture. To say nothing of the business potential of setting up video-conference meetings with clients and partners around the world.

But any hopes for distance learning or the rapid transfer of high-resolution medical images are inextricably tied to efforts to expand broadband infrastructure to provide every household with high-speed access. That debate is playing out domestically, as the Federal Communications Commission moves to implement the recommendations contained in its national broadband plan, though Chambers noted that the buildout of digital infrastructure is a common goal of countries around the world. At the same time, those efforts must be led by the private sector, he argued, calling on policymakers to avoid what he sees as diversions that could deter investment.

“I think the No. 1 goals — whether you’re in India, Jordan, Russia, Mexico, U.S., U.K., it should be the same — it ought to be broadband to every citizen at an affordable cost with at least two technology options,” he said. “That ought to be the overriding objective. Don’t get tangled up in the politics of a net neutrality issue. … The person in Montana who has no wireless capability doesn’t care.”

So Chambers, who sees enough promise in the technology of tomorrow to temper his frustrations with the policies of the Obama administration, did indeed proclaim himself an “optimist about our country,” but much of that optimism is predicated on getting the government and private sector on the same page regarding broadband infrastructure, and myriad other business issues.

“This is where government and business I think have to work much tighter together,” he said. “Technology’s not our problem here. It’s government policy working with business in a way that can be a win-win.”