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So, what risk does Huawei pose?

TOM PULLAR-STRECKER
Last updated 11:14 09/10/2012

Is Huawei's involvement in the New Zealand telecommunications industry a national security risk?

Sure, it's a risk.

Would the company or any of its engineers do the bidding of the Chinese security services or government if approached, and might it already be involved in spying?

Your guess is as good as mine and quite possibly as good as that of the United States select committee on intelligence.

Does the committee's report, released yesterday, into the "national security issues" posed by Huawei and fellow Chinese telco supplier ZTE, tell us anything new that might prompt the New Zealand government to review Huawei's role as a supplier to the ultrafast and rural broadband networks, as requested by Labour and the Greens?

Not on the face of it, no.

The thrust of the short 60-page intelligence committee report that has caused such a stir is that Huawei and ZTE did not fully cooperate with the inquiry and the committee did not believe the answers they did provide - about their supposed links to the Chinese government, for example.

A cynic would suggest the committee would only have been happy with Huawei and ZTE's responses had they put their hands up and said, yes, they were really branches of Chinese intelligence.

The weakness of the report is encapsulated up in three sentences:

"In sum, the committee finds that the companies failed to provide evidence that would satisfy any fair and full investigation. Although this alone does not prove wrongdoing, it factors into the committee's conclusions." (These were that US firms should avoid buying equipment from the companies.)

"Further, this report contains a classified annex, which also adds to the committee's concerns about the risks to the United States."

In other words, any evidence, rumours or gossip that the committee did uncover suggesting wrongdoing by the companies is secret. It sounds like a case of "guilty of until proven innocent" - a bit like the Chinese "justice" system perhaps.

The troublesome issue for Huawei remains that if Chinese agencies approached Huawei's staff in China and asked them to leave a security "back door" in a piece of equipment or software that they could later exploit to snoop on a foreign business or government, could they realistically refuse and who would know?

"The Chinese economy is not transparent and Chinese politics makes it rather easy to control directly or indirectly Chinese companies and that makes western government uneasy," Australian analyst Paul Budde said, pointing out the obvious.

Huawei's response has been to offer up its hardware and software for independent auditing. Not good enough said the congressional report, which argued such testing only created "a false sense of security".

"A security evaluation of a complex device is useless if the device is not deployed precisely in the same configuration as it was tested" - and never patched, maintained or upgraded.

That rings true. But the United States select committee on intelligence has not caught Huawei red-handed, or we would know.

As Chinese hackers and the Stuxnet attacks on Iran's nuclear facilities (usually attributed to United States and/or Israeli agents) have shown, foreign powers certainly don't need to supply equipment for a network in order to spy on it or disrupt it.

The 2006 Tom Clancy novel Power Plays: Cutting Edge starts with telecommunications engineers in a submersible discovering that a subsea cable had been "spliced" and tapped into, after ostensibly being cut by a ship's anchor, so the traffic it was carrying could be spied on.

US company Access Control & Security Systems says that fiction may already have become fact, citing veiled comments by US National Security Agency engineer John Pescatore and former US Air Force General Michael Hayden with regard to an outage on a Flag Telecom submarine cable in the 1990s.

Researchers have proved that it is not even necessary to tap into the fibre-optic cables that will be used to carry traffic on the New Zealand and Australian ultrafast networks in order to steal information from them. It is possible, and cheap, to read information on such cables by putting a slight kink in them and then trapping the small amount of light that will penetrate the cable's cladding at the point of the bend.

Far from being a solely theoretical risk, at least two US companies, Opterna and Oysteroptics, sell equipment that is designed to mitigate that threat by detecting the resulting drop in the strength of the optical signal.

Faced with those realities, the New Zealand government seems to have concluded there is simply no point in excluding Huawei from supplying equipment for the UFB network based on what appears to be just one more unquantifiable risk.

I argued in an earlier column in April that not only had the horse bolted on Chinese involvement in the telecommunications industry, the field in which it was grazing had long since been ploughed up and turned into a shopping mall. Since then Huawei and ZTE have been busy adding a couple of extra storeys.

WHAT IS HUAWEI?
Huawei is a company headquartered in Shenzhen, China, and was founded in 1987 by Ren Zhengfei, its current president. He was previously an engineer in the People's Liberation Army officer. It is owned by its employees and governed by a board whose directors were only made public in 2010.
How big is it?
Huawei employs about 140,000 people and turned over US$34 billion last year. It claims a relationship with all but five of the world's top 50 carriers and more than 70 per cent of its business is outside China.
And its New Zealand operation?
Huawei opened a subsidiary in New Zealand in 2005 and built 2degrees' mobile network. It has won contracts to supply equipment to Chorus (though French rival Alcatel-Lucent remains its main technology partner) and to ultrafast broadband (UFB) network developers Enable in Christchurch and Wel Networks in Hamilton.

- BusinessDay.co.nz

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