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House report on Huawei, ZTE raises real concerns, experts say

Antone Gonsalves | Oct. 10, 2012
Chinese telecom equipment makers deny allegations, one claiming the panel's findings based on 'rumors and speculations'

A House committee report that found telecom equipment manufacturers Huawei and ZTE pose a cyber-espionage threat to U.S. communications has legitimate concerns and signals a more aggressive approach towards China, experts say.

The House Intelligence Committee recommended Monday that the U.S. government and corporations not do business with the companies, saying they could not guarantee that their products would be free from spyware. Experts believe China is a hotbed of cyber-espionage activity.

Huawei and ZTE denied the allegations, with the former claiming the panel's findings were based on "rumors and speculations." Huawei, the world's second largest supplier of telecom networking gear, said the committee's 11-month investigation "provided no clear information to substantiate the legitimacy of the committee's concerns."

However, experts believe the report raised important points. "I don't think there's an immediate threat to the level that as soon as Huawei equipment is installed in the U.S., American data will begin to be harvested," John Grady, an analyst for IDC, said in an email. "Rather it's the longer view towards what could potentially happen, which I think is a valid concern."

Dave Aitel, chief executive of penetration testing company Immunity and a former research scientist for the National Security Agency, said the committee indicated that the government was taking a stronger stand against cyber-espionage emanating from China.

"You're starting to see the United States government get much more activist with this," he said. "I'd say software vendors are next. If they catch a software vendor doing similar things, then they're going to blackball them."

The committee report claimed that Huawei and ZTE did not provide enough detailed information or internal documentation to convince the panel that their relationship with Chinese authorities did not pose a threat to the nation's communications infrastructure.

"Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems," the report said.

The Defense Department has claimed that China is home to "the world's most active and persistent perpetrators of economic espionage."

"Chinese attempts to collect U.S. technological and economic information will continue at a high level and will represent a growing and persistent threat to U.S. economic security," the Defense Department said in a report to Congress this year.Ã'Â

China has denied he allegations, and Huawei said there was no proof of its involvement in cyber-espionage. "The report released by the Committee today employs many rumors and speculations to prove non-existent accusations," the company said.

Huawei claimed the report was an excuse to prevent the companies from competing in the U.S. market. "We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the U.S. market," the company said.


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