You can definitely mark Cisco down as not being behind current government spectrum auction rules, which the vendor says is curtailing efforts by mobile telecom operators to bridge the digital divide.

Speaking during a press conference at this week’s Cisco Live event, Jonathan Davidson, SVP and GM for Cisco’s Mass-Scale Infrastructure business, described recent spectrum auctions as being detrimental to stated plans of expanding broadband accessibility.

“I think governments need to stop treating spectrum like a piggy bank because it actually is the opposite of what I think most governments are trying to achieve if we want to close the digital divide,” Davidson said. “Spending $80 billion on spectrum, that money now can’t be spent to put up towers, to drop fiber, to actually bring the connectivity to those people and communities who actually need it.”

Davidson’s financial comment was tied to the recent Federal Communications Commission (FCC) C-Band spectrum auction, which generated more than $80 billion in winning bids. Analysts have noted that the costs will likely hamper the build out of 5G networks.

Analysts at MoffettNathanson noted that the auction will cause “lasting damage” to the balance sheets of all three nationwide operators, especially AT&T and Verizon. “Overspending in the auction — we make no judgment here about the intrinsic worth of the spectrum, only the financial sustainability of balance sheets in light of the money that was spent for it — will impair some carriers’ ability to invest in bringing 5G services to market,” the analysts wrote in a report.

During a later keynote, Cisco CEO Chuck Robbins said that he has had conversations with government leaders about their desire to expand broadband connectivity, but their actions on spectrum auctions have been opposite to that desire.

“I've had conversations, particularly in Washington, D.C., about the desire of governments around the world, candidly, pushing their service providers to move faster on 5G and then at the same time they charge exorbitant amounts of money for spectrum in order to do so and then actually get very involved in pricing that the providers are able to pass through to the consumer,” Robbins said. “Some of the actions are counter to what they desire as an outcome, but that being said, I think what it tells me is that if the service providers are willing to pay that much for the spectrum that says they're committed to building out robust 5G networks, which over time is good for us.”

One way the industry is looking to counter those spectrum costs is by lowering the cost of deploying the supporting networks. This includes a significant push behind open platforms like the open radio access network (RAN) initiatives.

Davidson noted that the telecom industry has spent more than $3 trillion dollars over the past 10 years building out RAN infrastructure, but have been hampered by government oversight over the amount they can charge to access those networks.

“We clearly have got an issue where we don't think we have the right innovation path in place, we're not as open as we need to be and … we're spending too much building up these networks,” Davidson said. He added that Cisco was one of the initial investors in what has become the O-RAN initiative and continues to fund startups in that space.

As Robbins alluded to, Cisco would like to get a bigger piece of that investment opportunity. Davidson said that he was seeing a strong need for orchestration software that can help support edge deployments on these 5G networks. However, the vendor's presence in the more traditional RAN space continues to lag.

A recent Dell’Oro Group report had Cisco as the No. 5 telecommunication market equipment vendor at the end of 2020. The vendor controlled 6% of the nearly $95 billion market, though that was down 1 percentage point from the previous year.

Cisco does lacks some of the revenue-generating opportunities included in the Dell’Oro report. For instance, Cisco does not have a RAN gear division and is instead banking on efforts in the open RAN space that will allow it to drive its software into commoditized RAN equipment. This is in direct opposition to the other vendors in the Dell’Oro report that are more focused on the physical RAN equipment.

Robbins had previously said the company has no plans to build its own RAN hardware for 5G. “We have virtually everything else you need to build 5G networks,” Robbins said in July 2019.

But the company has an almost insatiable appetite for acquisitions, and Robbins has changed his mind before. Analysts have pointed to several startups that could feed this appetite should Cisco want to eat, including Mavenir, Airspan, JMA Wireless, and Parallel Wireless.