US committee warns operators not to trust ZTE and Huawei

The US House Intelligence Committee has warned the nation’s telecoms operators not to trust Chinese equipment vendors ZTE and Huawei.

The government committee issued the warning after conducting an investigation into the corporate operations of both firms. Huawei had requested the investigation into its operations in February 2011 after denying that there was any justification for US security concerns

The committee said that it had undertaken hours’ of interviews with the firms’ executives, made repeated document requests, reviewed open-source information, and held an open hearing with witnesses from both companies, but that it still remained “unsatisfied with the level of cooperation and candour provided by each company.”

In its conclusion to the investigation, the committee wrote: “The United States should view with suspicion the continued penetration of the US telecommunications market by Chinese telecommunications companies.

“Private-sector entities in the United States are strongly encouraged to consider the long-term security risks associated with doing business with either ZTE or Huawei for equipment or services. US network providers and systems developers are strongly encouraged to seek other vendors for their projects.”

It added that Huawei and ZTE cannot be trusted to be free of foreign state influence, and therefore pose a security threat to the US and to its systems.

ZTE responded to the report by pledging to work with the committee to address all cyber security concerns and insisted its equipment is safe for US telecom infrastructure.

David Dai Shu, ZTE’s director of global public affairs, said it was noteworthy that, after a year-long investigation, the committee rested its conclusions on a finding that ZTE may not be ‘free of state influence.’  He argued that this finding would apply to any company operating in China, and that the committee had not based its challenges on any evidence of unethical or illegal behaviour.”

Speaking to Telecoms.com this morning, Dai Shu said: “If you look at the top five infrastructure vendors in the world, two of them are Chinese, and the other three are Western companies. Of the five vendors, they are mostly manufacturing their equipment in China. So if you strip out the location of the vendor, the equipment is similar. We don’t think it is fair it is only ZTE or Chinese companies are being investigated for national security issues.”

Huawei issued a whitepaper earlier this year, written by the firm’s global cyber security officer and SVP John Suffolk, who was formerly the chief information officer for the UK government. In the whitepaper, he wrote:

“We have never damaged any nation or had the intent to steal any national intelligence, enterprise secrets or breach personal privacy and we will never support or tolerate such activities, nor will we support any entity from any country who may wish us to undertake an activity that would be deemed illegal in any country.”

Fears over China’s vendors seem less intense in the UK. Huawei announced in September 2012 that it will invest £1.3bn ($2bn) in the country, and create 700 new British jobs by 2017. Huawei already employs over 800 people in the UK.

“The British Government values the important relationship with China, both countries have much to offer each other and the business environment we are creating in the UK allows us to maximise this potential,” said Prime Minister David Cameron at the time.