On Banning Huawei, ZTE

October 15th, 2012 by · 2 Comments

Ok, enough people have asked me my thoughts on this subject that I will chime in. US lawmakers last week released a report recommending that Huawei and ZTE be banned from the market, which was quickly supported by Canada and a few others. I'm rather skeptical of the whole thing for the following reasons:

  • It's an election season, and hence it's China-bashing time. There are few groups the US Congress can be sure have a lower approval rating than themselves, and are hence good for a quick national security scare to distract with.
  • Forgive me, but the US Congress knows about as much about a router as it does about the internet's construction from a series of tubes.  These are the guys that were pushing SOPA/PIPA after all.
  • The whole idea of sending out routers with backdoors for spying or kill switches seems so utterly stupid. If you're of my generation, you remember a Bugs Bunny and Daffy Duck cartoon where they are outdoing each other with magic tricks in front of an audience. Daffy wins by doing a trick he can only do once: literally blowing himself up. For Huawei and China, playing games with router back doors would be a trick one can only do once. Forever.  Get caught and it's all gone.
  • People have a silly impression of the Chinese leadership. What do they want? In practical terms, look at Bo Xi Lai and his overseas billions. Such things in China come from surreptitiously owning big pieces of large companies, like Huawei via sweetheart deals by family and friends. That is what most of these supposed military connections come from at their source. Using Huawei or ZTE in this way would kill the golden goose.
  • To understand Chinese military influences on a company like Huawei or ZTE, you follow the money not the data. Power certainly resides in the military, but those who wield it have been for decades now doing so primarily to increase their own wealth and commercial power.  They're not Dr. Evil, they're Gordon Gecko.  Who benefits from greater market penetration by Huawei and ZTE? And do they benefit from threatening that by playing James Bond games with the equipment they sell? No.
  • Spying on the US is so much easier than trying to sift through an 8Tbps stream of video, tweets, and Facebook status updates. And it's probably much easier to find a hack for routers already widespread in the internet that will do what you want than to convince everyone to buy them.
Seriously though, ask yourself what would happen to China if it ever got caught trying to plant or use a trojan horse like this?  It wouldn't just be about telecommunications gear, all products would suddenly be suspect.  Their export economy would be annihilated in a matter of weeks, after which the government would surely fall.  China's political compact trades political freedom for economic growth, take away the latter and it all goes to hell very, very quickly -- and they know it too.  In other words, what the US calls a security risk for itself would actually be self immolation for China.

When it comes down to it, this whole thing has always been about commercial interests. Huawei disrupts wherever it goes, underpricing everyone to gain marketshare and engaging in some rather naked commercial spying/copying. Hence, nobody wants them in, and the security question is just a way to do that without looking protectionist.  And nobody wants to talk about the patent system, which is just a legal morass that can't do the job and can't be fixed.

Nevertheless, the valid argument for keeping out Huawei would come from the fair trade and intellectual property point of view. Calling them a security threat is a cop out that is little more than a resurgence of the 'Yellow Peril' scaremongering a century later.  I can only hope that after the campaigns are over, lawmakers will turn their attention back to the domestic issues the US faces yet has been paralyzed to act on for so long.

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Categories: Government Regulations · Telecom Equipment

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2 Comments So Far


  • Femto says:

    I think the main concern with Hauwei and it’s relationship with the Chinese Govt revolves around their long term financing arrangement. If the US Government can block the AT&T/TMO merger they should certainly look to protect an open and important market from predatory pricing which will have long term implications on pricing. Do you think Hauwei will keep their payback models once they have driven ALU and NSN out of business? If Hauwei truly wants to play on an international stage they should run themselves as a public company and accept the transparency expected of a critical infrastructure provider.

  • I’m not so skeptical says:

    they would just deny it, like every other time they’ve been suspected.

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