Submitted by Ann Lau - November 2003

Resolution

The stockowners recommend that the board prepare a report to the stockowners on Cisco hardware and software products that can (a) allow monitoring, interception, keyword searches, and/or recording of the Internet, or (b) act as a "firewall" by which selected Internet traffic can be prevented from reaching its addressee outside the country of origin or by which downloading of information from selected sites outside the country of origin is prevented.

This report would be limited to hardware and software provided to government agencies and state-owned communications/information technology entities in any country. The countries shall be identified, but only a total of each such product in each country shall be reported. The report shall cover each fiscal year of Cisco, starting with fiscal 2004. The first report shall include a cumulative provision of such products from 1995 to the date of the report.

If Cisco has entered into any contracts by which it has pledged to keep secret from its stockowners the existence or content of such contracts for the above hardware or software products to the above customers, then the required reports shall not need to include those products for those countries, but shall need to note that secrecy-against-stockowners contracts exist and list the products which they cover.

Supporting Statement

Anything that stifles the Internet can discourage its use. Cisco should be promoting the use of the Internet to the maximum, so that its hardware and software sales can reach the largest market possible. Government monitoring, control, or censorship of the Internet can chill public enthusiasm toward Internet and computer use. Freedom of speech is threatened by such practices, not only in the country involved but for the rest of the world.

Based on published reports, I believe that one country that has used technology effectively to monitor its people is the Peoples Republic of China. The objectives of the PRC apparently are:

1. To prevent people of the PRC from accessing certain political and/or religious sites.
2. To monitor the discussion of certain political and/or religious topics by people of the PRC, especially in their e-mails.
3. To block or delay the transmission of information or e-mail that the government disapproves of.
4. To inhibit the growth of Internet discussion groups.

We stockowners deserve to be informed if Cisco's sales policies are promoting or inhibiting Internet use and its potential for growth.

Opposition by Cisco 2003

The Board of Directors believes this proposal does not serve the best interests of Cisco or its shareholders and recommends a vote AGAINST it.

Cisco and its Board of Directors are committed to freedom of speech. Furthermore, we are a proponent of the vast potential of the Internet to advance and propel the dissemination of information among people throughout the world. Nonetheless, we believe that the proposal will not further these social principles, will unnecessarily expend Cisco resources and could interfere with our customer relations.

The product capabilities described in this shareholder proposal meet fundamental and legitimate needs to protect the integrity of Internet communications networks. Cisco products, whether used by a private business, a telecommunications service provider or a government agency, have these capabilities, as do the products of our competitors. These capabilities are legitimately used by network operators and by governmental customers for those purposes and are also used by the United States and other countries for law enforcement, national security purposes and to protect their citizens against the threat of terrorism. In the United States and other countries whose governmental systems are based upon the rule of law, the exercise of these powers is subject to constitutional and legal protections and respect for individual rights.

This shareholder proposal would require the proposed report to cover all hardware and software sold to any government agencies and state-owned communications or information technology entities which allows monitoring, interception, keyword searches, and/or recording of the Internet, or which acts as a "firewall." Because the capabilities listed are inherent in a wide range of products that we sell to anyone, and because we sell our products to government agencies and state-owned communications or information technology entities in most of the countries of the world, this proposal is seeking a report that would list most of the countries of the world and would require us to list a substantial portion of our products. The report sought would result in substantial expenditure of company resources, in both funds and staffing, without furthering the freedoms that Ms. Lau addresses in her supporting statement.

Outside of the United States, we sell our products almost exclusively through resellers, with direct sales to some telecommunications service providers (both government owned and otherwise) but rarely if ever directly to governmental agencies or entities. In some cases, we do not have visibility into the names of, and products purchased by, particular end-users. We believe that this shareholder proposal would require us to set up inquiry procedures with our distributors and resellers to determine those countries in which sales are made to government agencies and state-owned communication or information technology entities and which products are so sold. The board is concerned that the mere gathering of this information could have an impact on our relations with reseller customers.

In the supporting statement to this shareholder proposal, Ms. Lau discusses the actions of the Government of the People's Republic of China. In the past few years, we addressed our activities in the People's Republic of China as they relate to freedom of speech and association over the Internet with the U.S. China Security Review Commission. As we informed the Commission, the products that we sell to any customer in the People's Republic of China, government or otherwise, do not contain any detection or monitoring capabilities which are different from the products we sell to anyone anywhere else in the world.

While we understand the cause Ms. Lau espouses, and vigorously support freedom of speech and association and the role of the Internet in providing opportunities to all the peoples of the world, the Board of Directors believes that this proxy statement and the meeting are not proper forums for this debate.

Recommendation of the CISCO Board of Directors

For all the reasons set forth above, the Board of Directors recommends
a vote AGAINST Proposal No. 4.

Related articles about the Great Firewall in China

• Wired.com
• NewsMax.com
• BusinessWeek Online