US Government tells Companies to Stay Away from Huawei and ZTE

Huawei and ZTE

The US House Intelligence Committee announced yesterday that American companies should stay away doing business with Chinese telecommunications hardware companies, in particular Huawei and ZTE (the second and fifth largest manufarturers of telecom hardware in the world).

The U.S. House of Representatives’ Intelligence Committee engaged in a lengthy 11-month investigation of the two companies. It’s now warning they may be under the influence of the Chinese government and therefore could post a national security threat, according to Reuters.

“China has the means, opportunity and motive to use telecommunications companies for malicious purposes,” reads one extract of the report, according to the BBC. “Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems.”

Are these fears justified or completely overblown?

Our immediate inclination is that the House is greatly exaggerating such claims. A ComputerWorld article seems to confirm that.

…[A]nalysts say the committee’s investigation is motivated more by politics, while doing little to safeguard U.S. telecommunication networks…

But analysts have also questioned the congressional committee’s approach in examining only Chinese companies in its investigation. “This is not a problem that is unique to Huawei and ZTE. In fact, if there is a problem, it’s a problem with everybody,” said David Wolf, CEO of Wolf Group Asia, a Beijing-based technology consultancy. “Telecommunication equipment manufacturers that make equipment under China would include about everyone in the industry.”

It’s unclear what evidence the investigation has cited in its findings, with media reports noting that the committee made its conclusion from both classified and unclassified information. Wolf, however, said that in the case of Huawei no hard evidence has been found showing the company’s equipment has posed a national security threat.

“The solution that the [committee] is proposing doesn’t solve the problem,” he added. “One can only be led to believe that there are other motivations at work here, especially since there is no evidence of anything ever happening with the equipment purchased from Huawei. And if there is a problem with information vulnerability, why are we not investigation everything from every foreign information company?”

Matt Walker, an analyst with research firm Ovum, said politics was driving the congressional committee’s investigation. ” It’s election season. Voting is less than one month away in the U.S. And the China threat is a potent political issue in the US nowadays. It’s almost a simple math equation,” he said.

Both China and the U.S. have political rivalries, which spill over into the commerce sector, Walker added. “But my guess is that this issue will fade away significantly in a few months. If it doesn’t, at some point Huawei and or ZTE might be smart to consider whether the US market is worth the effort — for now, anyways.”

If you think about it, this “problem” can be found across the board when it comes to IT hardware. After all, some government organizations still rely on Windows, a proprietary operating system. While some of the more critical bodies such as the Department of Defense, the Army, and the White House run (or have started to migrate to) open-source Linux, those that still use a third-party proprietary system are theoretically vulnerable.

For critical organizations, purchasing hardware from third-parties always carries risks. Safeguards and screening processes are put in place to minimize such risks. But this call for stopping business with Huawei and ZTE is rather narrow-sighted. After all, if we are going to push that for the sake of security, there are probably many other companies we need to take a hard look at.

If, on the other hand, this call is politically motivated by election fever, it makes perfect sense given the hot topic that China has played in the debates between the campaigns of President of Obama and Candidate Romney.

Read the full ComputerWorld piece – Politics, not security, behind Huawei, ZTE allegations, say analysts