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Is the National Security Agency (NSA) killing innovation at Cisco?

The Wall Street Journal has deftly revealed that the National Security Agency (NSA) now approves all network equipment vendors for the telecom industry.

Hummelstown, PA:   Wed, 8/28/13 - 5:22pm    View comments
 

In an stunning news story this week:

U.S. Tightens Grip on Telecom

The Wall Street Journal has deftly revealed that the National Security Agency (NSA) now approves all network equipment vendors for the telecom industry, for example:

"The U.S. secured 30 days' notice before the company uses a new vendor for network equipment, and T-Mobile agreed to resolve any security concerns the government raises relating to new equipment providers, according to a 2013 amendment to the 2001 security agreement.

"The carrier also agreed to provide the two agencies with an updated list of principal network equipment, including routers, switches, base stations and servers, as well as manufacturer and model numbers for hardware and software, a provision that wasn't included in the 2001 agreement.

"The national-security agreement signed by the companies as part of the merger approval gave the government the right to review and approve certain network equipment vendors... The government acquired the right to approve a director to Sprint's board as well as a one-time right to require Sprint to remove and decommission 'certain equipment' used in a network owned by an affiliate. The equipment was Huawei gear, say people familiar with the matter."

The 3 main sources of information used by the National Security Agency (NSA):

Source: The Wall Street Journal

1. This involves information on numbers dialed and call duration for millions of Americans.
2. Data from this program comes mainly from Silicon Valley companies including Google Inc. and Facebook Inc. Several companies have said these orders aren't for bulk data, but implementation depends on the provider.

   PRISM is permitted under the Foreign Intelligence Surveillance Act, specifically an amendment known as "Section 702."

3. This program aims to focus on international communications. It is permitted mainly under the Foreign Intelligence Surveillance Act, specifically an amendment known as "Section 702."

   Telecoms themselves choose streams of traffic based on orders from the government. Program names include Blarney, Fairview, Oakstar, Stormbrew and Lithium.

4. The system can be adjusted according to the NSA's needs.
5. There are processing systems that bring different types of data into different databases. The NSA has a complex database system, with programs varying by the type of data stored as well as type of storage.
6. These programs vary depending on the type of analysis and other factors.

Since the 1984 breakup of the AT&T monopoly and the advent of wireless communications, the telecom industry has undergone immense change, but most alarmingly, immense consolidation too.

A Changing Telecom Landscape:

Source: The Wall Street Journal

It's my personal opinion that with the National Security Agency (NSA) approving all network equipment vendors for the telecom industry, the NSA could be the culprit behind Cisco's falling ranking as an innovative company.

How so?

Well, Cisco was ranked the 5th most innovative company according to the 2009 Fast Company List.

However according to the 2010 Fast Company List, Huawei had replaced Cisco as the world's 5th most innovative company, while Cisco was ranked 17th.

Finally according to the 2011 Fast Company List, Cisco had fallen to the 41st rank while Huawei was ranked the 18th most innovative company.

I mean, in a rapidly consolidating industry like telecom with the NSA approving all the network equipment vendors, how much incentive does Cisco really have to innovate?

Related stories:

Top secret document contradicts Cisco's denial of NSA spy cooperation

The Wall Street Journal: U.S. Tightens Grip on Telecom

Is Cisco behind the U.S. Congressional attack on Huawei and ZTE?

Huawei replaced Cisco as the world's 5th most innovative company
 

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