Huawei and ZTE have been effectively barred from infrastructure deals with major US telcos since Sprint was pressurized to drop the former from its network in 2013, when it was migrating from WiMAX (which Huawei did supply) to LTE. While the ban is not definitive in official terms, there are now calls from some parts of the US Congress to make it so.
The continuing climate of suspicion and hostility towards the Chinese vendors was highlighted again earlier this month when a reported handset deal at AT&T, for Huawei’s flagship smartphones, failed to materialize at the Consumer Electronics Show. Officially, the pressure on operators to avoid these vendors is down to national security concerns that they could use their networks to spy on US businesses and telecoms users. But of course, a protectionist climate; the rising competition to US technology firms from Chinese players; and China’s desire to rely less on western technologies and become self-sufficient, are all contributing to the stand-off.
According to a report from Reuters, AT&T came under pressure from US officials to cut any ties with Huawei, including handset deals, or even collaborations in 5G R&D.
Additionally, US senators are opposing plans by China Mobile to operate MVNO and international services in the US. The same report says US companies have been told they could be excluded from government contracts if they work with Huawei or China Mobile. The latter applied for a business licence back in 2011 but its application is still with the FCC, says Reuters.
Last week, Texas Congressman Michael Conaway proposed new legislation that would ban Huawei and ZTE from selling any products or services to the US government, or to operators which service government departments.
The bill, entitled ‘The Defending US Government Communications Act’, would “prohibit the US government from purchasing or leasing telecommunications equipment and/or services from Huawei, ZTE, or any subsidiaries/affiliates thereof.”
Conaway said the security threat from China “receded after the release of an incriminating HPSCI [House Permanent Select Committee on Intelligence] report, but it is now re-emerging as the Chinese government is re-attempting to embed themselves into US technology.”
He added: “Chinese commercial technology is a vehicle for the Chinese government to spy on United States federal agencies, posing a severe national security threat. Allowing Huawei, ZTE and other related entities access to US government communications would be inviting Chinese surveillance into all aspects of our lives.”
Huawei responded in a statement to LightReading: “Huawei has a robust system of cybersecurity assurance and a proven track record. Our products and solutions are used by major carriers, Fortune 500 companies, and hundreds of millions of consumers in more than 170 countries around the world. We have earned the trust of our partners across the global value chain. Huawei has no expectations of doing business with the US government, so such provisions would have no effect on us.”
In October 2012, a draft report from the US House Intelligence Committee recommended that the two Chinese giants should not be allowed to operate in the US because of their suspected links to the Chinese state, and the potential for security risk. It criticized both vendors for being vague about their relationships and regulatory interaction with state authorities and failing to address US concerns.
It warned operators to look elsewhere for their infrastructure deals, and also called on the US intelligence service to provide more information to the private sector about the potential espionage threat. It also wanted any mergers and acquisitions involving the two companies to be barred.
“This puts an established intelligence community stamp on the idea that these are companies that pose a potential serious threat,” Stewart Baker, a former US Homeland Security Department official, told Bloomberg at the time. “They are going to be treated more harshly than other multinationals for the foreseeable future.”
Huawei and ZTE have denied all allegations of present or past espionage. They have also faced security-focused restrictions in some other markets, notably India, but have made significant progress in other western markets, such as the UK. There, Tim Clement-Jones, a member of the UK House of Lords, warned firms in 2012 against overreacting. “In my view, I’m very sceptical about the way the US plays this, and most of all Republican congressmen,” he said. “I’ve sat through many meetings [covering Huawei’s activities] and I think that a lot of this is pure anti-competitive behaviour in the US. They skewed the whole inquiry. They got their facts wrong.”