FCC Working with Lawmakers Who See Chinese Vendors as Security Threats
The FCC is in discussions with Congress members who have raised security objections about the U.S. activities of Huawei and ZTE, fast-growing Chinese telecom vendors, a commission spokesman told us. The Public Safety & Homeland Security Bureau is taking the lead, and Chief James Barnett is the point person, but other commission bureaus and offices also are involved, said spokesman Robert Kenny. A Huawei executive on Friday called network security concerns based on his company’s Chinese origins nonsensical in the global economy and a misplaced reflection of broader tensions between the two countries.
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"There are a number of homeland security matters related to these matters,” Kenny said. “It certainly is a priority to us.” The discussions have been with the following lawmakers who sent Chairman Julius Genachowski a letter in July expressing alarm about the prospect of supply deals with Sprint Nextel or other providers (CD Oct 21 p14), Kenny said: Sens. Joe Lieberman, I-Conn., Susan Collins, R-Maine, John Kyl, R-Ariz., and Rep. Sue Myrick, R-N.C. The FCC would include any other members who asked, he said. Kenny declined to say whether the discussions are aimed at action by the FCC, Congress or other authorities.
The discussions have taken place “within the past few weeks,” Kenny said. Sprint announced a major network upgrade early in December, and the vendors are Alcatel-Lucent, Ericsson and Samsung. Asked about U.S. government pressure on the carrier not to go with Huawei, Kenny said only, “They made the decision to choose another vendor.” Commerce Secretary Gary Locke has said he called Sprint CEO Dan Hesse before the announcement to express “deep concerns” over Huawei’s bid.
Of the letter signers’ offices, only Myrick’s would respond to a question about the FCC talks. “Our office continues to keep a close eye on Huawei and ZTE,” the lawmaker’s spokeswoman said.
The FCC-Hill discussions add to a growing pile of government obstacles to Huawei, especially in Europe as well as the U.S. A deal for Huawei affiliates to buy a minority stake in the U.S. company 3Com had to be pulled from consideration by the federal interagency Committee on Foreign Investment in the United States in 2008.
Huawei expects the committee to make the company undo a purchase of patents from 3Leaf, an American company, the Financial Times reported Friday. The report came a day after Kyl and Myrick, along with Sen. James Webb, D-Va., and Rep. Ileana Ros-Lehtinen, R-Fla., wrote Locke and Treasury Secretary Tim Geithner to check up on the committee’s review and to express strong qualms about U.S. activity by Huawei in particular.
The congressional intervention represents “external pressure” -- contrary to Congress’s purpose in creating the committee -- in a “minor patent transaction,” said Bill Plummer, vice president of external affairs for Huawei Technologies (USA). “Huawei would not presuppose the outcome of the process,” he said.
"Cybersecurity is a legitimate concern,” but it’s independent of any company or country, Plummer said. Forty-five of “the top 50 operators on the planet” are Huawei customers, most of them for network equipment, he said. All of Huawei’s significant competitors are “building and coding in China,” Plummer said. The issue is “security in the supply chain,” Plummer said. “Anybody who tells you they're doing this” -- throwing up roadblocks to Huawei’s U.S. business -- “out of a cybersecurity concern is lying to you.” There are many “tensions in the geopolitical and geoeconomic relationship between the U.S. and China, and to some extent Huawei is being unfairly viewed through the prism of those tensions and not” on “the merits of the company,” Plummer said.
ZTE, like Huawei, supplies U.S. carriers with handsets, which analysts called less sensitive than network equipment in relation to security. We couldn’t reach ZTE. “For Sprint last year, we should have had the qualifications to become their key partner,” the Wall Street Journal quoted ZTE Chief Financial Officer Wei Zaisheng as saying last week in Beijing. “The government should promote a fair, equitable, normal and free commercial environment and it shouldn’t interfere.”