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Huawei Security Risks Front and Center as West Looks for Alternatives

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Mnuchin Says Coronavirus Will Have Only a Short-Term Impact on US Economy

Treasury Secretary Steven Mnuchin told lawmakers Wednesday that he believed the novel coronavirus would have a limited impact on the economy and praised the Federal Reserve’s emergency interest rate cut. “This is an issue that’s going to affect the next year,” he told the House Appropriations Subcommittee on Financial Services and General Government on March 4, reported The Wall Street Journal. “It’s not a longer-term impact.” Mnuchin also hailed the Fed’s surprise move to slash rates by 50 basis points Tuesday in response to what Fed Chairman Jerome Powell said was a “material change” in the economic outlook caused by the coronavirus fallout. Powell said at a press conference Tuesday that “the spread of the coronavirus has brought new challenges and risks,” adding that “the outbreak has also disrupted economic activity…

Huawei Security Risks Front and Center as West Looks for Alternatives

A bipartisan group of lawmakers led by Senate Democratic Leader Chuck Schumer (D-N.Y.) and Sen. Ben Sasse (R-Neb.) are urging the British parliament to reconsider allowing China’s Huawei a role in its 5G networks amid a slew of multifaceted security concerns.

Nearly two dozen lawmakers strongly urged the United Kingdom to work closely with the United States and to take steps to mitigate Huawei risks. The Chinese regime requires its companies to share its information with the Chinese Communist Party’s intelligence sector.

“Given the significant security, privacy, and economic threats posed by Huawei, we strongly urge the United Kingdom to revisit its recent decision,” they wrote on March 3.

There have been a number of hearings in recent days probing China’s influence in 5G networks and “big tech” companies. The letter came before a UK House of Commons’ debate on Huawei, and on March 4 two hearings took place: a senate subcommittee hearing on 5G supply chain security, and one on the relationship between “Big Tech and Beijing.”

Experts told The Epoch Times that recent talk about propping up Huawei competitors Nokia and Erikkson appears to be an increasingly viable option, saying 5G technology in the United States is highly vulnerable, and emphasized the need to implement security protocols and equipment from trusted vendors. They said the results could be disastrous if the right action is not taken.

In January, Prime Minister Boris Johnson said Huawei will supply up to 35 percent of the country’s 5G communications infrastructure.

U.S. lawmakers said in the letter that while banning Huawei from “core” 5G infrastructure could address some security risks, it would be “very challenging, if not impossible, to separate ‘core’ equipment from that considered to be on the periphery.”

Washington has repeatedly stated that Huawei—founded in 1987 by a former People’s Liberation Army engineer—is an extension of the Chinese regime and that it assists Chinese intelligence in stealing secrets. Huawei, which denies the allegations, did not immediately respond to a request for comment.

5G Security & Huawei Competitors

Sen. Roger Wicker, (R-Miss.) chairman of the Senate Committee on Commerce, Science, and Transportation, said at a March. 4 hearing, “the unfortunate reality is that our networks have already been comprised by foreign adversaries.”

“We are seeing more reports that Huawei can covertly access mobile phone networks around the world,” he said in his opening remarks. “At the same time, some of our close allies are granting Huawei access to their communication systems. These are troubling developments.”

“The absence of a viable and affordable American or European alternative for end-to-end telecommunications components … has enabled Huawei to increase its global influence,” Wicker added.

Multiple U.S. officials have emphasized the importance of finding an alternative to China’s Huawei and of developing potential partnerships with the telecom industry. Attorney General William Barr suggested recently that the United States and its allies should “actively consider” the possibility of backing Huawei’s two main overseas competitors, Nokia and Ericsson.

In the same hearing, ranking member Sen. Maria Cantwell (D-Wash.) described a recent attack on a power system that was brought down for more than 12 hours. “Its no longer just people searching around and looking at our power plants,” she said. “Now actors are starting to bring what is essential services to a halt.”

High level executives from Nokia and Ericsson made the case in testimony that their technology is vastly more trustworthy than Huawei, which is currently the world’s biggest producer of telecoms equipment. Britain has argued that excluding Huawei would have delayed its 5G rollout and cost consumers more.

Jason Boswell, head of security on Network Product Solutions at Ericsson, testified that the company is leading the way on the 5G rollout, noting that they have deployed “65 percent of the 5G deployments in the U.S., including in rural America.”

Huawei Security Risks Front and Center as West Looks for Alternatives Jason Boswell, Ericsson’s head of security in network product solutions, at a Senate hearing on 5G technology in Washington on March 4, 2020. (Charlotte Cuthbertson/The Epoch Times)

Boswell said “we need increased midband spectrum availability” enabled by a robust market of trusted supplies and that the United States “needs to focus on developing a skilled 5G workforce.” In his testimony, he said the company just announced its first 5G equipment from their newly opened $100 million smartphone factory in Texas.

He said that the company, since 2018, has executed a “supply chain regionalization strategy to place manufacturing and development as close to the customer as possible in order to reduce risks.” Boswell said it would also reduce regional disruptions and overdependence on one supplier or vendor.

“All of our software is scanned, verified, signed, and distributed in and from Sweden. That actually gives us a lot of tight control over our software development lifecycle and the traceability of that supply chain,” he said.

Mike Murphy, Chief Technology Officer of Americas at Nokia testified that it is “incorrect to suggest non-Chinese vendors cannot lead in 5G,” noting how the United States was the first country in the world to launch 5G networks. Of the U.S. equipment Nokia provides, none is manufactured in China, he added.

Huawei Security Risks Front and Center as West Looks for Alternatives Mike Murphy, Nokia’s chief technology officer, at a Senate hearing on 5G technology in Washington on March 4, 2020. (Charlotte Cuthbertson/The Epoch Times)

The Wall Street Journal reported that Huawei has grown with the help of $75 billion in state subsidies, allowing the company to undercut many competitors on price.

“China’s made aggressive use of its development bank to support indigenous suppliers. Payment terms offered, while legal, are unavailable to competitors through commercial banks,” Murphy said.

Dr. James Lewis, Senior Vice President and Director of the Technology Policy Program at the Center for Strategic and International Studies, testified that the root of the problem is the Chinese Communist Party.

“5G is a symptom of a larger problem. We face a powerful opponent who is using espionage and predatory economic practices, including exploiting American patents to gain advantage,” he said, referring to China.

Lewis said that the United States is currently positioned to take the lead over China in 5G.

“American and Chinese deployments are roughly equivalent, with 57 cities in China that have 5G as opposed to 50 in the U.S.” he said.

Just last week, Congress approved a $1 billion bill also known as “rip and replace” that would replace any equipment made by Huawei or ZTE in rural telecom carriers in the United States. President Donald Trump still needs to sign the legislation dubbed the “Secure and Trusted Communications Networks Act.” Administration officials have signaled their support for it, according to reports.

The bipartisan legislation would also remove any Huawei and ZTE equipment in networks currently used by a number of smaller U.S. carriers. The carriers had purchased the equipment years ago because of the low cost.

The United States in 2018 banned Huawei technology from use by the government or any of its contractors. In 2019 the company was also added to the Department of Commerce’s Entity List, which effectively bars U.S. companies from selling components to Huawei without an export license.

Also at the hearing, Sen. John Thune (R-S.D.) previewed new legislation he plans to introduce this week to protect the trade policy of the United States to ensure that “the security of our communications infrastructure is a clear negotiating objective of U.S. trade policy.”

“Unfair trade practices of communications equipment suppliers owned or controlled by a foreign government should not be tolerated,” he said. “Period.”

Prakash Sangam, founder and principal at Tantra Analyst, a research and consultancy firm covering IP strategy, 5G, IoT [internet of things] and AI, told The Epoch Times Huawei has never provided financial details to show they are an independent company not connected to the Chinese Communist Party. 

He said governments are obviously “extremely cautious about allowing any foreign company thought to be controlled by a foreign totalitarian government to work on its infrastructure.”

“The possibility of the U.S. buying shares in Ericsson or Nokia is a realistic possibility,” he said. “I think this is the U.S.’s reaction to quickly address the looming threat of Huawei.”

Sangam said there are other options as well, including encouraging major U.S. companies through financial and political incentives to start playing a key role in 5G. He said the current 5G supply chain could be at risk.

“Anytime a supply chain is so concentrated and many parts are outside of the control of some countries and probably under the influence of others, will be vulnerable,” he said. “The vulnerability is not just because of supply chain … but the complexity of the technology and the huge risk-and-reward equation. 

Tyler Cooper, editor-in-chief of BroadbandNow, which tracks U.S. broadband serviceability data, including 5G, said it makes sense for the United States to be cautious about allowing one company to have an infrastructure monopoly on 5G deployment, “especially when we consider that China has used private business for political purposes in the past.”

Huawei was forced to pause production earlier this month due to the new coronavirus, but has since resumed. Cooper told The Epoch Times via email that the most likely path forward for the United States to advance in 5G “is a symbiosis between the public and private sectors, which we are already seeing take shape in the form of bills like the Utilizing Strategic Allied (USA) Telecommunications Act.” 

He said deploying 5G at scale requires the installation of “small cell” relays that do not have a long transmission range. While this is fine in a dense urban environment, it becomes more challenging in rural communities both economically and logistically. 

“We don’t want all of the benefits going to the major metro areas while rural Americans get left behind in the dust,” he said. “So we need to be incentivizing deployment in these lower-competition areas somehow.”

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