Research Notes

You ain’t seen nothing yet I -Telecommunications both impacts and is impacted by geopolitics

For more than 25 years, we at Strand Consult has studied the global mobile telecom industry and has published reports about how it will evolve.  We help telecommunications companies navigate an increasingly complex world in which connectivity upholds the modern digital society. An early version of the digital society suggested that communications as a force for good, helping to support the movement for freedom and human rights. Actions from Russian and China to hack and misinform the people and organizations of other nations shows how the same telecom tools can be used for ill.

Last week, I spoke at the 21st Parliamentary Intelligence-Security Forum in Bucharest, Romania where over 400 politicians from 61 countries gathered to discuss the most pressing security problems from money laundering to human trafficking. However severe the global challenges are, the participants in this forum inspire with their commitment to make the world a better place.

Romania is much improved today from when I first visited in 1979, a country under the grip of Nicolae Ceaușescu. Indeed Eastern European countries today have greatly improved since the 1989 at fall of the Berlin Wall. Indeed in the last 30 years, mobile telecommunications has played a crucial role to lift more than one billion people out of poverty.

Following are key observations from Strand Consult on the role of telecommunications in our changing world.

What the world would look like if Huawei was Russian

Growing aggression by Russia and China have put infrastructure security for energy and telecommunications in center stage. Policymakers recognize that the cost of Russian gas and Chinese information communication technology (ICT) is far higher than its seeming low price on the paper. Given the Russian invasion of Ukraine and China’s belligerence on Taiwan, many countries now attempt to curtail their relations with Russia and China. However some political leaders and companies have downplayed the security risks of Russia and China and have even deepened engagement. This puts the rest of Europe at risk.

At the Singapore dialogue meeting last week US Defense Secretary Lloyd Austin told his Chinese counterpart General Wei Fenghe that the US is committed to its One China policy in Taiwan but warned the Chinese military of become increasingly aggressive in the region. After the meeting a Chinese defense ministry spokesman said Wei reiterated Beijing’s firm stance on Taiwan, which is that it is part of China. “The PLA (People’s Liberation Army) would have no choice but to fight at any cost and crush any attempt of Taiwan independence, safeguarding national sovereignty and territorial integrity,” he said. Given Russia’s invasion of Ukraine, policymakers and telecom operators should reflect on the consequences of further instability. Read more.

The biggest taboo in European telecom industry is the cost of cybersecurity – just ask the banks

The security risks posed Chinese telecommunications equipment in networks is a hot topic. This research note breaks down the issue for operators, its political challenges, and the financial consequences. Though cybersecurity is managed on a nation state level in Europe, going forward, the European Commission will likely take a greater role.

The Chinese government and its army of 100,000 hackers is perhaps the leading source of cyberattacks around the world. A new report from the Center for Cyber ​​Security in Denmark declares cybersecurity threats in telecom networks have reached unprecedented levels.  While the US, Australia and Japan have pursued explicit restrictions on known malicious vendors, many European nations prefer a different path that requires minimum security standards.

For example Germany’s telecom regulator, Bundesnetzagentur (BNetzA), recently published a proposal on network security with request for comment by November 13, 2019. The document offers a short, non-specific catalog of security requirements for networks and data processing systems. No specific company or country is mentioned. The German car industry, which has big business in China, has pressured the German government to avoid restrictions on Huawei. Therefore, it is unlikely that the German government will lead on security measures that could be interpreted as discriminatory to China. Notably Germany’s Chancellor Merkel recently met with France’s President Macron and two dozen of Europe’s top industry leaders for a dinner, and network security was high on the agenda. Read more.

Yesterday the White House, UK government and European Union simultaneous published statements calling for China to stop cyberattacks. What is the impact for the telecom industry?

For Strand Consult, it is increasingly clear that governments around the world will “outsource” significant cybersecurity responsibility to telecom operators.

It is well known that the Chinese government has the country on lockdown: people are monitored 24/7 with millions of CCTV cameras; the “Great Firewall of China” blocks access to unapproved content and tracks attempts to circumvent it; municipal party leaders keep tabs on citizens. All networks and equipment are operated by companies either owned by the government or are beholden to them. All surveillance data is aggregated into a unified system of social credits intended to standardize the assessment of the social and financial reputations of individuals and firms. People who don’t live up to the Chinese government standards are sent to “transformation-through-education” or reeducation camps and generally are denied due process to defend their activities, according to Amnesty International. In practice, no information moves outside of the government’s purview.

It’s curious then why so many cyberattacks originate from China than any other nation. If the Chinese government was so concerned about law and order, they could end these attacks immediately, but they don’t. In China, the government and President Xi controls everything except the people hired and encouraged to hack the free world every day. Read more.

Customer choice: All countries should have at least one mobile network free from Chinese tech like Huawei and ZTE

The debate about the security of telecom network equipment has grown in recent years with focus on suppliers like Huawei and ZTE. Strand Consult has produced many reports and analyses to provide the needed facts and transparency to understand the issue. The report Understanding the Market for 4G RAN in Europe: Share of Chinese and Non-Chinese Vendors in 102 Mobile Networks provides a fact-based accounting of the amount of Huawei and ZTE equipment in European mobile networks. This is important information for consumers to make informed decisions about which mobile operator they choose. Read more.

French satellite provider Eutelsat ignores the moral compass and continues to operate in Russia

The Russian invasion of Ukraine forced a paradigm shift in global business. While US and EU sanctions have dented operations in Russia, many businesses took a further step to exit the country in protest of Vladimir Putin’s aggression. The moral compass of business leaders, shareholders and customers points to the door. The objective is to starve Russia of the benefits of business and to hasten the end of the war. More largely, the corporate response is part of larger strategy to stop Putin’s further advance.  The Yale School of Management describes 750 public companies and their completeness of withdrawal graded A-F.

Companies that stay in Russia communicate a tacit disregard for the oppression of Ukrainians and callous desire to profit from the warmongering Russian regime despite the costs. Many that stay are from China, whose government supports the invasion. Indeed Chinese companies like Huawei provide the Russian military with hacker soldiers. Eutelsat is in the same boat; it delivers Putin’s required censorship so the Russian people can’t get different perspectives on Ukraine. The situation reveals the gulf between what is legal and what is right and how companies use the moral compass to navigate. Information and telecommunications providers are critical players. Read more.

Some of them may seem harsh the other way around, so we have always had the belief that sometimes you have to deal with the harsh realities. Those who stick their heads in the ground when the man with the scythe comes and cuts grass risk facing a brutal reality that will affect their business for many years to come.

The good news in the midst of a time of geopolitical tensions, a war in Ukraine and conflicts elsewhere around the world is that the world we live in today is markedly better than the world we lived in in 1989 when the Berlin Wall fell and a number of Eastern European countries gained their freedom. When I was in Bucharest last week, it was in a Romania that is markedly different from the Romania I first visited back in 1979 when Nicolae Ceaușescu ruled the country with a heavy hand.

I think that in the midst of a difficult time, we should not forget the many good things that have happened in the world in the last 30 years where over a billion people have been pulled out of poverty and many hairs have had their standard of living significantly raised. We should also not forget that the telecommunications industry and the many private investments in infrastructure have played a key role in the creation of modern society.

Telecommunications companies have done a lot of good things and they will in the future have a significant role when it comes to national security and building societies where digital development will lift the quality of life for many people.

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