ZTE and Huawei Equipment: Is it a National Security Threat?

Telecom equipment that is acceptable for use in the US is inspected by the FCC. The analog and digital computers that switch connections from origin to destination have the capability to conduct wiretapping or other stealthy monitoring as a court might order to help law enforcement. Those capabilities are well known and operated with proper record keeping and regulation.

U.S. made telecom equipment has these functionalities built-in. One concern is that ZTE and Huawei could sell telecom equipment capable of wiretap and monitoring of customers’ conversations or data exchanges. Some government customers will admit that these monitoring functions are required for public safety and should be built-in for any telecoms switch that a telecom regulator would approve, but it remains a concern.

To alleviate this concern, the Trump Administration has released an Executive Order that can allow any of these products to be banned from the U.S., if a foreign government owns, controls or directs the manufacturing firm. That is the case for Chinese electronic manufacturers. Will a ban be imposed?

The competition by equipment makers for a position in each country’s infrastructure is largely about the 5G network, which is expected to become a large part of all broadband communications. One difference unique to China’s network equipment is that ZTE and Huawei have each violated trade bans on selling telecom equipment to Iran. That is not a mistake, it’s active opposition to U.S. foreign interests.

Another difference between U.S. built and China built telecom equipment is the threat of Chinese governmental control outside China. We know that U.S. law enforcement can obtain court orders to divulge voice or data traffic passing within a telecom operator’s equipment located in the U.S. Such court orders would also apply to ZTE- and Huawei-made equipment operating in the U.S.

Beyond U.S. law enforcement needs, U.S. intelligence officials believe that the Chinese government could force the monitoring and reporting of conversations passing over ZTE and Huawei equipment operated by telecom operators in the U.S. They fear ZTE and Huawei might use covert circuits in their switches that can be activated to perform privacy invasions and even critical infrastructure attacks.

Seven years ago, Britain noted the financial appeal of the low cost ZTE and Huawei telecom equipment, but it has misgivings about the security the state can expect from Huawei’s core equipment. Huawei is clearly under the control of the Chinese government. Huawei offered to open a laboratory for Britain to reveal the internal circuitry and software in their equipment. Britain agreed to the deep dive “show and tell.”

Now, years after the generous offer to reveal Huawei’s purportedly honest circuitry and software, Huawei’s commitment is not fulfilled to Britain’s satisfaction, and many in Britain are leery of embedding Huawei equipment in Britain’s telecom network. At this point, Britain seems resolved to accept Huawei handsets but will continue to ban Huawei core equipment. Given the President’s Executive Order, the US may follow suit, though the threat of a ban may be a bargaining chip in trade talks with China.

Huawei has offered other European countries affordable telecom equipment and assurances that there is no “back door” or secret monitoring circuitry that can report back to Beijing. So far, the decision to risk security in favor of low cost is trending toward favoring security. Australia judged that Huawei equipment could give Beijing the power to shut down Australia’s power grid. Huawei also faces at least partial bans in France, Japan, Taiwan and New Zealand. Hungary has, however, chosen to be the European “hub” for Huawei. The most recent battle was in Germany, where the U.S. put a heavy thumb on the scale, threatening to halt sharing of security information if Germany goes with Huawei.

Battles between insecurity and low cost are being played out across Europe, Canada and Africa. Perhaps, if China would allow its political opponents to supply all its 5G needs, suspicions may diminish.

This piece is coauthored by Alan Daley and Steve Pociask

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