Net neutrality guidelines, which are expected to be unveiled next month in the U.S. are set to negatively impact wireline broadband vendors such as Cisco, said ABI Research.
The impact to Ericsson will be relatively less because it has a balanced portfolio.
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Sam Rosen, practice director, ABI Research, said: “Telecom operators or carriers that have a heavy focus on wireline, such as CenturyLink or Cisco, may find it difficult to see growth with some regulatory outcomes, while companies with a more balanced portfolio, including Verizon, AT&T, and Ericsson will simply steer resources to the highest return markets.”
According to Cisco Q1 fiscal 2015 result, Cisco’s service provider revenue dipped 10 percent globally. In fact, Cisco’s Q1 revenue growth was impacted by poor performance by service provider segment. Its total revenue rose 1.3 percent to $12.2 billion, while net income dropped 8.4 percent to $1.8 billion.
If the U.S. telecom regulator FCC comes out with the net neutrality guidelines, Cisco will be forced to change its business plan, the report indicated.
Cisco said its first quarter revenue contribution from Switching was 31 percent, NGN Routing 16 percent, Collaboration 8 percent, Service Provider Video 7 percent, Data Center 6 percent, Wireless 5 percent, Security 4 percent and others 1 percent.
Many companies are allocating resources away from wireline technologies into other areas, said ABI Research.
The networking company earlier said its Q1 fiscal 2015 revenue from Americas was $7,501 million including $5,684 million from products and $1,817 million from services. America is the largest market for Cisco.
The uncertain possibilities of neutrality regulation have already impacted operators such as AT&T and Verizon, and vendors such as Cisco in the wireline broadband space, forcing a shift in priorities until regulations are finalized.
The report said Federal Communications Commission (FCC) Chairman Tom Wheeler is struggling to resolve a moderate proposal with President Obama’s pro-neutrality stance.
Obama openly supported net neutrality to support customers so that telecom operators will not offer two different pricing for the same services.
Groups in Europe and Canada are facing difficult neutrality changes, with the European Council and the European Union parliament, as well as the Canadian Radio-Television and Telecommunications Commission (CRTC) leading decisions for the these regions.
Europe earlier supported consumers during this kind of debates or while preparing such guidelines.
Baburajan K
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