& cplSiteName &

US vs Huawei/ZTE: The Verdict

Ray Le Maistre
10/8/2012
50%
50%

5:00 AM -- The U.S. House Permanent Select Committee on Intelligence has decided that Chinese telecom equipment vendors Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) pose a security risk and that U.S. companies should not engage in business with them. (See More Chinese Whispers and Huawei, ZTE Probed by Intelligence Agency.)

That, reports Bloomberg, is the general conclusion of the Intelligence Committee following a probe that saw members of the investigating team visit China and representatives of both Huawei and ZTE give evidence to the Committee (testimony that included some ill-advised claims). (See Huawei, ZTE Get Grilled in US.)

The Committee's main concern, it would seem, is that it's not possible for Huawei and ZTE to operate without influence from the Chinese government, a claim that both vendors have always rejected and which ZTE has once again denied, reports Reuters.

The verdict should come as no surprise to anyone. The tone of the Committee's statements always suggested that the only thing in doubt was just how damning of the Chinese vendors the final conclusions would be.

That's not to say that the Committee's findings have no validity and, for sure, both Huawei and ZTE have been guilty over the years of having indulged in less than creditable business practices, including industrial espionage and bribery. To what extent those two companies engage in those practices any more than their counterparts is another issue altogether -- international business in any industry is far from squeaky clean.

Once the full report is released it'll be interesting to see the full details of the Committee's decision. What's immediately clear, though, is that this provides a greater opportunity for the Chinese vendors' rivals to win business in the critical U.S. market and that any engagement with Huawei and ZTE by U.S. companies hereon in is likely to be public relations suicide.

Of course, the fallout from the Committee's verdict could be far more wide-ranging. China's foreign ministry has already issued a statement about the verdict, urging the U.S. to set aside any prejudices when dealing with Huawei and ZTE, reports Reuters. It's hard to imagine that the Chinese government's reaction will begin and end with a statement.

— Ray Le Maistre, International Managing Editor, Light Reading

(19)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Rupert_Baines
50%
50%
Rupert_Baines,
User Rank: Blogger
12/5/2012 | 5:19:37 PM
re: US vs Huawei/ZTE: The Verdict


The Economist had a very intersting piece on this over the summer.


 


They discuss a lot of the issues: Huawei's success, the very genuine concerns about security in general, how other countries are facing these issues.


They contrast the US approachj (a panel of politicians) with how UK Govt has invested & involved GCHQ in audits and diligence. 


They also made the point about complacency: merely because a product is US owned is no particular reason to trust it is secure (after all, how much of the technology used in Western Company X's product was developed in China anyway...?)


http://www.economist.com/node/...


That said, there are things Huawei & ZTE could and should do to improve clarity.


Maybe this move will help that - but I suspect the reality may make little difference to US Trade Policy.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:19:36 PM
re: US vs Huawei/ZTE: The Verdict


The bigger issue for Huawei is 60 minutes which did a piece on them last night (but not including ZTE).  I would say the chances of the American Public not being highly suspicious of Huawei after that report are slim and none (and slim just left).  


One of the very interesting bits came to the end when 60 minutes told folks that basically all the comm gear we buy (outside of Cisco) is foreign owned.  Of course that is not true, but Cisco is the only major American supplier out there.  


seven


 

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:19:35 PM
re: US vs Huawei/ZTE: The Verdict


Rgru,


None of those companies are $20B+ like Cisco, Alcatel, Erriccson, NSN, Huawei and ZTE.  The whole point is that the US companies that you listed there are Tier 2 and Tier 3 players.  There are no Tier 1 Telco Equipment Manufacturers left in the US, as Cisco in many ways is more of an Enterprise company.  The only one that the US really had was Lucent but that died long ago.


seven


 

non_linear
50%
50%
non_linear,
User Rank: Light Beer
12/5/2012 | 5:19:35 PM
re: US vs Huawei/ZTE: The Verdict


What about HP's H3C unit? They operate as a completely independent company in China, where HP essentially acts as a reseller (with limited influence on features and roadmap) of H3C gear Rest of World?  Seems to me that this sort of "ruling" should apply to them too, no?

Chhilar
50%
50%
Chhilar,
User Rank: Light Beer
12/5/2012 | 5:19:35 PM
re: US vs Huawei/ZTE: The Verdict


That is extremely inaccurate regarding the origin of telecomm equipment.  Ciena, Infinera, Tellabs, Adtran, JDSU, Oclaro and others...  There are many American telecomm equipment and component companies.

Soupafly
50%
50%
Soupafly,
User Rank: Light Sabre
12/5/2012 | 5:19:34 PM
re: US vs Huawei/ZTE: The Verdict


The leading headline is questionable journalism...imho. Its fair to say that LR & its parent company have commercial revenues and concerns to consider, so I understand that.


However, certain lines & journalistic integrity will always remain important.


This topic is going to rumble on.


The article alludes that the UK approach is better than the US. Am not sure I agree. Whilst its true that the UK process is arguably more transparent, I don't assume that the US process is wrong and baseless, just because they have not published their sources & rationale. There may be reasons that we are not aware of, as to why they have done that.


I do think that Huawei's top team including Ren got complacent & arrogant in regards to the US and breaking into the NA marketplace. They have fallen for too many fast talking texans and hustlers instead of paying careful attention to the environment & basics. ZTE are relatively inconsequential outside handsets and have immature tech, so not really worth commenting on - in detail. The alliance with Cisco in china is a counter-tactical play against Huawei, based on the frenemy principle, amongst others.


NA is strategically important on multiple levels, so whilst this will lead to another rounds of strategic reviews, the NA market is a no retreat, no surrender territory. AL, Ericsson, Cisco, Ciena, HP, Apple, IBM - all the big global players are there and that is something that cannot be understated.


Will they break through? No question. Yes.


Only 1 US carrier needs to break & be seduced by free or very cheap tech that is world class (and there R&D has done an amazing job on the tech!) and the floodgates will open. If 1 major operator gains a strategic cost advantage that will cross contaminate the balance sheet for all & lead to price war.


Thats what has happened in the EU market place and numerous others. The NA market is in no way special, in that regard.

sam masud
50%
50%
sam masud,
User Rank: Light Sabre
12/5/2012 | 5:19:34 PM
re: US vs Huawei/ZTE: The Verdict


Saw the 60 Minutes "report" last evening--it was hilarious, but not in a light, funny way. 

exon
50%
50%
exon,
User Rank: Light Beer
12/5/2012 | 5:19:33 PM
re: US vs Huawei/ZTE: The Verdict


no doubt the verdict is highly political and way too influenced from lobbyists. Nevertheless is good for US interests. I wish the europeans could have the courage to do something similar rather than watching Huawei (mainly) and ZTE reaping one after the other the deals through price damping & other obviously illegal practices. They could have possibly saved some major tech firms (and many thousand jobs) from going under.

Rupert_Baines
50%
50%
Rupert_Baines,
User Rank: Blogger
12/5/2012 | 5:19:32 PM
re: US vs Huawei/ZTE: The Verdict


I'm not sure that protectionism is ever a good way to save jobs. Trying to use laws to keep out technology, to try to protect uncompetetive domestic amnufacturers is not usually recommended...


Indeed, in contradiction to your point, it is Europe that has accepted the challenge from Huawei & ZTE, with European operators buying from them.


But looking at the Tier 1 OEMs (Ericsson, Huawei, NSN, ALU, ZTE - and sort of Cisco) it does not seem to have hurt European business.


So what exactly is it that Europe should listen too?

lightmonkey
50%
50%
lightmonkey,
User Rank: Light Beer
12/5/2012 | 5:19:30 PM
re: US vs Huawei/ZTE: The Verdict


I agree seven.


 


I think the US Govt. is finally waking up to the fact that there is no big US supplier in a key strategic industry.  It's clearly a problem. 


People here talk about protectionism, it's not about that so much.  It's really about the ability of a foreign government to essentially turn off or disrupt the communications infrastructure of the United States.  In any war, the very first thing that's targeted is the communications infrastructure. 


And BTW, the US is not alone here, the Germans came to the same conclusion.


http://www.lightreading.com/bl...


 


 


 

Page 1 / 2   >   >>
More Blogs from AsiaBlog
Staff humiliation strategy goes viral in China
Are you watching, Europe?
Security concerns scupper China Mobile investment in Taiwanese operator
Major carrier plans a near 50% hike in annual spending, with LTE TDD getting a healthy chunk
The Chinese vendors hike their intellectual property investments and ask everyone to play nice with patents
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Custom TV
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
WiCipedia: Short Skirts & Back-Up Plans
Eryn Leavens, Special Features & Copy Editor, 5/20/2016
Eurobites: Be More European, EU Tells Streaming Services
Paul Rainford, Assistant Editor, Europe, 5/20/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.