House Intelligence Committee Warns Against Buying Chinese Telecom Gear

 
 
By Wayne Rash  |  Posted 2012-10-10 Email Print this article Print
 
 
 
 
 
 
 

NEWS ANALYSIS: The U.S. House of Representatives’ Intelligence Committee issued a report urging U.S. companies not to buy products from Chinese telecommunications companies Huawei and ZTE, calling them security risks.

The U.S. House of Representatives Select Committee on Intelligence is recommending that U.S. companies not buy communications equipment from two major Chinese manufacturers, Huawei and ZTE, branding them long-term security risks.

While most people know these companies as vendors of cell phones and wireless hotspots, they are major vendors of core infrastructure equipment including telephone switches and routers. The report, issued by the committee, recommended that U.S. companies find another vendor.

The primary concern by the committee, as outlined in the bipartisan report, is that allowing Chinese companies access to the telecommunications networks in the United States would compromise the nation’s critical infrastructure. A key part of the report (most of which is classified) is that the country’s critical infrastructure is highly interconnected and includes everything from rail networks to water systems. The committee’s report says that a disruption in one could have a ripple effect that would disrupt a lot more.

The Intelligence Committee report makes five recommendations. The first is that government systems and contractors using government systems should exclude Huawei and ZTE, and that acquisitions and takeovers involving these companies be blocked.

The second is that network providers should be strongly encouraged to seek other vendors. Third, unfair trade practices in the telecom sector should be thoroughly investigated, as should Chinese investment in key companies.

The report said that Chinese companies should become more transparent in their operations, while also noting that both companies failed to respond openly and evaded questions by the committee.

Finally the report recommended further legislation to address the risks of foreign state-controlled telecom companies that are in a position to impact critical infrastructure.

The committee report did not specifically recommend a boycott of products from Huawei and ZTE, but it did recommend very strongly that U.S. companies not do business with them. One company, Sprint, recently opened up the bidding on its LTE upgrade, but after a series of closed-door meetings with federal government representatives, dropped the companies from consideration. A Sprint spokesman told eWEEK that the company does not use any equipment from Huawei or ZTE in its network.

The United States isn’t the only country to express concerns about Huawei and ZTE. The UK and Australia have put restrictions on how the companies may operate within their borders. New Zealand is in the process of implementing similar restrictions. A former French defense secretary has strongly recommended that both companies be banned across Europe.

As you might expect, Huawei and ZTE have taken issue with the committee’s findings, saying that they would never do anything that would risk U.S. critical infrastructure. One sticking point is that there’s no conclusive proof (at least that’s available in public) that Huawei or ZTE have done anything that would compromise their customers in the U.S. or elsewhere.

On the other hand, the Chinese government has a long history of using its companies as vectors in the cyber-war against the West, and there’s no compelling reason to think that Huawei and ZTE are an exception. The Chinese government has been an active player in cyber-warfare, and its efforts to steal intellectual property from U.S. companies have been documented many times over.

This continued, long-term assault on U.S. companies at the very least erodes trust in any claims of innocence by Chinese companies. Worse, regardless of whether either company is actually involved in activities that might compromise the U.S. critical infrastructure right now isn’t what matters. Once their telecom equipment is in the core of the communications infrastructure, what’s to keep the Chinese government from taking control at a later date?

And of course there is probably no answer for that question right now. “We have to be certain that Chinese telecommunication companies working in the United States can be trusted with access to our critical infrastructure,” Rep. Mike Rogers (R-Mich.) said in his announcement of the report at a press conference in Washington on Oct. 8.

“As this report shows, we have serious concerns about Huawei and ZTE, and their connection to the communist government of China,” Rogers said. “China is known to be the major perpetrator of cyber-espionage, and Huawei and ZTE failed to alleviate serious concerns throughout this important investigation. American businesses should use other vendors.”

The ranking member of the committee, Representative C. A. “Dutch” Ruppersberger (D-Md.) agreed. “It is our responsibility on the Intelligence Committee to protect our country’s national security,” Ruppersberger said. “That is why we launched this investigation in the first place. We depend on our nation’s networks for so much of what we do every day. As this report shows, we have serious concerns about Huawei and ZTE, two Chinese telecommunications companies looking to gain market share in the United States.”

The House Intelligence Committee report, in and of itself, does not create any new laws. However, the committee’s opinions carry great weight. It’s certain that government regulatory agencies would heavily weigh the committee’s concerns in the event of any corporate merger and in any attempt to include the companies’ equipment in any corporate or government network construction project. Without greater candor on the part of Huawei and ZTE, this is unlikely to change any time soon.

 
 
 
 
 
 
 
 
 
 
 

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