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Huawei customers defend their security after congressional report

Stephen Lawson | Oct. 10, 2012
Three U.S.-based service providers that use equipment from Huawei Technologies said on Tuesday they take strong precautions to ensure the security of their networks, responding to a congressional report on Monday that said carriers should not buy from Huawei or ZTE.

"Telecommunications gear and the components used in making that gear come from all over the world," Level 3 said in a statement. "We follow a stringent set of security protocols that includes extensive testing and monitoring of all vendor equipment."

It's common for service providers to go to multiple vendors for network equipment, to avoid dependence on one vendor.

Cable giant Comcast and two other service providers the report names as Huawei customers -- Suddenlink and Oregon's Bend Broadband -- said they were studying the report. Cox Communications, also named in the report, said it had picked Huawei as a supplier for cellular gear but later dropped its plan to build a cellular network.

Also on Tuesday, the Chinese government slammed the congressional report.

Commerce Ministry spokesman Shen Danyang said in a statement that the report "was based on subjective suspicions and inaccuracies," and that it had made "groundless accusation against China" in the name of national security. He said the report would undermine cooperation between U.S. and Chinese enterprises.

"We hope that the U.S. will abandon practices that discriminate against Chinese companies, and that it will adhere to principles of openness and cooperation," Shen said.

The report further dims the prospect of a Wall Street initial public offering by Huawei, according to one IPO observer. The company has been exploring a possible IPO, partly to provide more transparency that could foster greater trust within the U.S., according to the Wall Street Journal. Sam Hamadeh, CEO of private-company information source PrivCo, said the report probably further discounted the sum Huawei might raise in an offering.

"Even before the news in the last 24 hours, an IPO wasn't likely," Hamadeh said. "That sort of declaration by a Congressional panel is exactly the kind of thing that would frighten off investors." One financial concern may be that the panel's report could cause a domino effect in which other countries raise alarms on the same issues, he said. But Huawei might yet launch an offering in Hong Kong or London, Hamadeh said.

(Michael Kan in Beijing contributed to this story.)

 

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