Research Notes

You ain’t seen nothing yet VI – Everyone talks about the safety of Chinese equipment

Over the past few years, Huawei and other Chinese vendors have been in media. In 2019, 5G became a mainstream topic and rebooted the discussion of the value that telecommunications to society including innovation, security, and inclusion. Consider the many transformations that the industry has delivered from the invention of the telephone. Today the digital world, including its businesses, the communications of individuals, and government is predicated on the advanced infrastructure that the telecom industry provides.

Policymakers in the US, EU and other countries are concerned about communications network equipment from Chinese vendors. Over the years Strand Consult has published many research notes and reports to help telecom companies navigate a complex world. We describe the problem of Chinese equipment in telecommunications networks. While the media has largely focused on Huawei, the discussion should be broadened to the many companies that are owned or affiliated with the Chinese government including but not limited to TikTok, Lenovo, YMTC, Hikvision, and so on. Although some of our customers disagree with our views, Strand Consult’s job is to publish what is actually happening and how policy decisions may affect their business in the future.

Following are key observations from Strand Consult research about China and security.

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. Read more.

Understanding the Market for 4G RAN in Europe: Share of Chinese and Non-Chinese Vendors in 102 Mobile Networks

The report Understanding the Market for 4G RAN in Europe: Share of Chinese and Non-Chinese Vendors in 102 Mobile Networks, is one of a series of reports about cybersecurity and China. Given the European Union’s 5G security toolbox, there is focus on the use of equipment from Chinese government affiliated firms Huawei and ZTE. Unfortunately, the Body of European Regulators for Electronic Communications and national telecom authorities, which normally gather relevant information for reporting comparisons across countries, have opted not to make an analysis of the equipment used by European mobile operators. However, Strand Consult has conducted the analysis. With its report Understanding the Market for 4G RAN in Europe: Share of Chinese and Non-Chinese Vendors in 102 Mobile Networks, Strand Consult brings much-needed transparency and facts to the discussion on the use of Chinese equipment in European telecom networks. This report, the first of its kind, describes the respective amounts of equipment from Huawei, ZTE, and non-Chinese vendors in European mobile networks and the share of such in equipment in the 4G Radio Access Network (RAN). Read more.

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

Telecom networks are the foundation of the digital society. COVID19 proved that telecom networks are essential, as they have allowed people to work, learn, shop, and get healthcare from home during a period of lockdown and social distancing. Consequently, the importance of security and resilience of these networks is heightened. Policymakers are justifiably concerned about the vulnerabilities of these networks. The want to examine the network elements–their vendors, supply chains, and protocols and adopt measures to secure them.

Many countries have implemented restrictions on Huawei and ZTE. These restrictions have followed extensive investigations which have uncovered many red flags including but not limited to the inability to establish the technical baseline that the systems are not compromised by backdoors, inability to demonstrate that the Chinese government and military are not integrated with the enterprise, lack of operational and financial transparency and disclosure, illegal and unethical business practices, and violation of international law. These investigations also follow the hardening of the Chinese regime under General Secretary Xi Jingping and the demonstrated aggression and repression against the people in Hong Kong, Xinjiang, and Tibet in addition to the widespread implementation of surveillance technologies and practices on the Chinese people. Read more.

Fact Check Huawei: What You Need to Know to Understand its Corporate Communication

Strand Consult’s goal is to help governments, telecom operators, shareholders, financial institutions, the press, and the public by bringing a critical eye to Huawei’s corporate communication.  Strand Consult’s report fact checks Huawei’s claims in the media and on its website.

Since 2005, and especially in recent years, much has been written about the use of equipment made by Chinese state-owned and affiliated entities in communications networks. Huawei, given its coziness with the Chinese government and purported threat of backdoors, has been deemed untrustworthy by countries like United Kingdom, Australia, Japan, USA, among others. Some countries have banned the equipment all together, like Australia, while others, such as UK and France, restrict its use in critical locations and in sensitive parts of the network.

Huawei has spent significant resources to cultivate a narrative that they are a successful company and innocent victim of a trade war. Huawei’s corporate communication includes its financial statements and the microsite “Huawei Facts”.  Huawei repeatedly claims that it shares the ”core values” of European nations, citing its belief in ”openness, innovation and rule of law.” It is interesting to question whether Huawei, China’s national champion, indeed shares Europe’s “core values” for human rights and freedom of expression. Read more.

Does Huawei not believe in Open RAN? Or is just playing poker with the O-RAN Alliance and policymakers?

Security in 5G is an important issue, and Open Radio Access Network (Open RAN) has been marketed as an alternative to Huawei and ZTE. However, as Strand Consult described, at least 44 Chinese government owned or affiliated companies have joined the O-RAN Alliance. In fact, one of the group’s co-founders is China Mobile, the state-owned enterprise which ranks as the world’s single largest mobile operator and buyer of Huawei equipment.  ZTE is also a member. The question remains whether Huawei is purposely avoiding the popular 5G policy trend, or just pretending not to care.

For the record, Strand Consult has nothing against Open RAN. It is an interesting idea to see how Huawei could be excised mobile networks through policy innovation. However, the effort to exclude Huawei could have the effect of opening doors to other Chinese vendors which are not Huawei but still present security concerns. Indeed it appears that those who believed Open RAN the way to innovate around untrusted Chinese vendors in US and European networks were overly optimistic. Read more.

Are your suppliers still doing business in Russia? – Huawei and Lenovo remain but their US and EU competitors have pulled out.

It has been more than 180 days since Russia invaded Ukraine. Following global outrage against Russian aggression and the humanitarian catastrophe, many nations adopted sanctions and restrictions against Russia which obligated certain firms to suspend transactions with Russian entities. However, many US and EU companies have, on their own accord, suspended operations, if not exited all together. Despite the potential loss of millions, if not billions, of dollars in losses, the list of companies leaving Russia continues to grow.

Chinese companies have remained in Russia. The Chinese government supports the invasion. Indeed there were attempts by a handful of Chinese firms to leave, fearing reprisal from their US customers, but they stay on in Russia because of pressure from China. This itself demonstrates how China exerts pressure on its companies, even when many firms have told Western media the opposite. Read more.

Today’s China is not the one we knew just 10 years ago. We are not just talking about a China that uses modern technology to monitor and oppress large populations. We are talking about a China that has a fundamentally divergent view of society. The free world’s democratic values and practices don’t exist in China.

We are also talking about a China that supports Putin and his invasion of Ukraine. Chinese companies have filled the void created by Western companies leaving Russia. When companies like HP and Dell leave Russia, Lenovo will step in. When companies like Cisco, Nokia, and Ericsson leave Russia, network equipment will be supplied by Huawei and ZTE.

Get more information.

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.

Strand Consult’s Next Gen Telecom Policy and Regulation Workshop is for leaders in public affairs, regulation, communications, law, and strategy. Together we examine your company versus its set of regulatory challenges and opportunities, and we deliver a combination of knowledge, inspiration, and a strategy that you can implement immediately.

Strand Consult workshops are highly customized to ensure that customers receive the maximum benefit. We work together with our customers to tailor each workshop so that it delivers the desired business goals. Here are some of the ways we define the framework for the engagement.

If you would like to learn more about our Next gen telecom policy and regulation: Workshop for leaders in the telecommunications industry, contact Strand Consult.

Request more information about the workshop.