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End of Internet? What Cisco's Exodus From the Russian Market Means

© REUTERS / Nacho DoceThe logo of networking gear maker Cisco Systems Inc is seen during GSMA's 2022 Mobile World Congress (MWC) in Barcelona, Spain February 28, 2022. REUTERS/Nacho Doce
The logo of networking gear maker Cisco Systems Inc is seen during GSMA's 2022 Mobile World Congress (MWC) in Barcelona, Spain February 28, 2022. REUTERS/Nacho Doce - Sputnik International, 1920, 04.03.2022
Dozens of foreign companies have suspended business or stopped operations in Russia over the Kremlin's 'special military operation' in Ukraine, which western governments describe as a military "invasion".
American telecommunications giant Cisco will stop "all business operations in Russia and Belarus", a report by Market Watch said, citing a letter by the company's CEO it obtained. One day after its publication, however, Cisco has still not confirmed the report, but if it does, it won't be the only big US company to halt its services in Russia over the special operation in Ukraine.
But What are Risks for Russia If Cisco Ends Its Presence?
Since Cisco officially remains mum, it is difficult to tell how severe the impact will be. The company's telecommunications equipment was installed in around 60% of the Russian internet and communications (such as cell) networks in 2014. Its equipment in the core systems, which direct the main internet data streams, held the lion's share of around 90%.
But at the same time, Cisco's market share in Russia was declining due to a policy of import substitution and diversification with Asian alternatives. By 2019, four foreign telecom equipment providers, Huawei, Cisco, Nokia and Ericsson, held around 50% of market in Russia, according to the Russian Ministry of Communications.
Should Cisco shut down its hardware installed in Russia, it would severely impact some cell networks and the ability of ISPs to provide broadband internet to users until they are able to substitute the gear with alternative foreign routers.
According to Cisco in Russia, the company's local subsidiary, the telecom giant's equipment is used in one of the four major cell services providers, Beeline, and by one of the country's main ISPs – Rostelecom, which operates government websites. The rest of the service providers might not be affected by Cisco's looming Russian exodus.
Even if the Cisco telecom equipment remains operational, repairs could force ISPs to spend money replacing the hardware with, for example, Chinese alternatives including Huawei or ZTE.
So, is This The End of Internet for Russia?
As Cisco has not yet commented on the report, it is unclear which, if any, products could be affected. Apart from selling routers and other telecommunications hardware, Cisco has a large line of software products distributed via licences and subscriptions.
According to some information channels in Telegram, Cisco sent a 24-hour notice warning that its clients in Russia will be disconnected from "smart accounts" while all of its products will undergo a license check – meaning that users in Russia will likely see their gear go dead. The same report claimed that only Cisco's software products would be affected by the move - Cisco ISE, Cisco ASA, Cisco UC and the line of Software-Defined Networking tools.
While many customers in Russia, including Internet service providers, rely on Cisco software, code is easier and cheaper to replace than hardware and disruptions in service are likely to happen in the short term. The same reports in Telegram information channels suggested a temporary fix to the problem that might win between a one- and three-month grace period for Cisco users in Russia.
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