Washington Asks Allies
to Drop Huawei
By Stu Woo in London and Kate O’Keeffe in Washington (Wall Street
Journal)
Updated Nov. 23, 2018 4:56 a.m. ET
U.S. worried about potential Chinese meddling in 5G networks, but
foreign carriers may balk
The U.S. government has initiated an extraordinary outreach
campaign to foreign allies, trying to persuade wireless and internet providers
in these countries to avoid telecommunications equipment from China’s Huawei
Technologies Co., according to people familiar with the situation.
American officials have briefed their government
counterparts and telecom executives in friendly countries where Huawei
equipment is already in wide use, including Germany, Italy and Japan, about
what they see as cybersecurity risks, these people said. The U.S. is also
considering increasing financial aid for telecommunications development in
countries that shun Chinese-made equipment, some of these people say.
One U.S. concern centers on the use of Chinese telecom
equipment in countries that host American military bases, according to people
familiar with the matter, such as Germany, Italy and Japan. The Defense
Department has its own satellites and telecom network for especially sensitive
communications, but most traffic at many military installations
travels through commercial networks.
The international effort extends the battle lines of a U.S.
campaign to keep Huawei electronics out of the U.S. Some officials see the
initiative as part of a broader technological Cold War between U.S.-led allies
and China for control of a world that is increasingly digitally connected—and
thus increasingly vulnerable to surveillance and malfeasance. They fear the
rise of technological giants that could benefit authoritarian governments,
including irritants or outright foes of the U.S.
The initiative also coincides with rising tensions between
Washington and Beijing on other fronts this year as the Trump administration
moves to counter what some U.S. officials say they see as years of unbridled
Chinese aggression. Washington has placed tariffs on some imports from China,
drawing retaliation from Beijing. The U.S. has also tightened up
foreign-investment rules targeting Chinese deal making.
Officials familiar with the current effort say concerns
about telecom-network vulnerabilities predate the Trump era and reflect
longstanding national-security worries.
The overseas push comes as wireless and internet providers
around the world prepare to buy new hardware for 5G, the coming generation of
mobile technology. 5G promises superfast connections that enable self-driving
cars and the “Internet of Things,” in which factories and such everyday objects
as heart monitors and sneakers are internet-connected.
U.S. officials say they worry about the prospect of Chinese
telecom-equipment makers spying on or disabling connections to a fast-n
exponentially growing universe of things, including components of manufacturing
plants.
“We engage with countries around the world about our
concerns regarding cyberthreats in telecommunications infrastructure,” a U.S.
official said. “As they’re looking to move to 5G, we remind them of those
concerns. There are additional complexities to 5G networks that make them more
vulnerable to cyberattacks.”
The briefings are aimed at dissuading governments and
telecom executives from using Huawei network components in both government and
commercially operated networks. A core focus of the briefings is Beijing’s
ability to force Chinese corporations to comply with government requests from
government authorities, a U.S. official said.
Some major carriers
say Huawei’s broad offering of components, lower costs and high quality make it
a difficult provider to do without.
The talking points also emphasize how wireless and internet
networks in a few years could be more susceptible to cyberattacks or espionage,
people familiar with the briefings said. Today’s cellular-tower equipment, for
instance, is largely isolated from the “core” systems that transfer much of a
network’s voice and data traffic. But in the 5G networks telecom carriers are
preparing to install, cellular-tower hardware will take over some tasks from
the core—and that hardware could potentially be used to disrupt the core via
cyberattacks. For that reason, U.S. officials worry that Huawei or ZTE
cellular-tower equipment could compromise swaths of a telecom network.
Huawei is the world’s No. 2 smartphone maker behind Samsung
Electronics Co. It is the global leader for telecom equipment, such as the
hardware that goes into cellular towers, internet networks and other
infrastructure that enables modern communication.
The company has been all but shut out of that market in the
U.S. after a 2012 congressional report labeled it a national-security threat.
American officials say the company could be compelled by Beijing to use its
knowledge of its components to snoop on or disrupt telecommunications networks.
Huawei has long said it is an employee-owned company and
isn’t beholden to any government, and has never used
its equipment to spy on or sabotage other countries. It said its equipment is
as safe as that of Western competitors, such as Finland’s Nokia Corp. and
Sweden’s Ericsson, because all manufacturers share common supply lines. In a
statement Friday, Huawei said it has its customers’ trust and was “surprised by
the behaviors of the U.S. government” detailed in this article. “If a
government’s behavior extends beyond its jurisdiction, such activity should not
be encouraged,” it said.
The Trump administration and Congress this year initiated a
multipronged push to tighten up restrictions on Huawei and other Chinese
telecom-equipment manufacturers, including ZTE Corp. The Federal Communications
Commission, for instance, moved to restrict federal subsidies to some carriers
if they buy Chinese gear.
Even without U.S. business, Huawei dominates the world’s
telecom-equipment market. Last year, the company held a 22% share globally,
according to research firm IHS Markit Ltd. Nokia had 13%, Ericsson had 11% and
ZTE was in fourth at 10%.
Some other members of the “Five Eyes,” a five-member
intelligence pact among English-speaking countries that includes the U.S., have
also publicly challenged Huawei. The Australian government in August banned
Huawei and ZTE from its 5G networks. In October, U.K. authorities said they
were reviewing the makeup of its telecom-equipment market, a move
industry leaders said was clearly aimed at Huawei.
Still, there is a big hitch to U.S. efforts to curb Huawei
overseas: The company is already popular among carriers in allied countries,
including some of America’s closest military partners. Some major carriers in
these places say Huawei offers the most products and often customizes them to
fit a carrier’s needs. They also cite lower costs and high quality.
“There is only one true 5G supplier right now, and that is
Huawei,” said Neil McRae, chief network architect for large British carrier BT
Group PLC, at a Huawei event in London earlier this week. “The others need to
catch up.”
In an effort to narrow that
advantage in some countries, Washington is considering ways to increase funding
from various U.S. government sources to subsidize the purchase and use of
non-Chinese equipment, according to people familiar with the matter. Countries
buying Chinese telecommunications equipment would be ineligible for such
subsidies.
In the past year, U.S. officials, including representatives from
the National Security Council and Commerce, Defense and State departments,
worked together to produce briefing notes about why they believe Chinese
telecom equipment poses national-security risks, people familiar with the
matter said. One U.S. government official said they focused on Huawei but also
included ZTE, a Chinese rival with a much smaller business outside China.
A ZTE representative declined to comment on the U.S. effort.
Washington has circulated the notes to national-security
officials as well as to embassies, with the idea that they can deliver the
message to foreign officials and telecom executives, some of the people said.
A spokesman for the Commerce Department said it would
“remain vigilant against any threat to U.S. national security.” Spokesmen for
the National Security Council and the State Department declined to comment. The
Defense Department didn’t return a request for comment.
U.S. officials have briefed counterparts in Germany, which
has signaled a new wariness toward Huawei, according to people familiar with
the matter. Huawei this month opened a lab in Germany similar
to one it already operates in Britain, where Huawei products are
inspected for security flaws. The U.K. government said in July it found
shortcomings in the process.
Germany’s Federal Office for Information Security declined
to comment.
American officials have also briefed Japanese officials
about Huawei, people familiar with the matter said. A Japanese government
official said “we share various information with the
U.S.,” but declined to comment on specifics. Japanese officials in August said
they were studying restrictions on Huawei.
In Italy, U.S. officials met with executives of one of
Italy’s the country’s major telecom carriers to explain the risk of using
Huawei and ZTE equipment, according to a company board member. He said his
carrier was aware of the risks but planned to keep using Huawei.
“We cannot ignore Huawei because they are a leading
telecom-equipment provider world-wide, and that’s a very tough call,” he said.
—Giovanni Legorano in Rome, Mayumi Negishi
in Tokyo, Dan Strumpf in Hong Kong and Sara Germano in Berlin contributed to this article.
Write to Stu Woo at
Stu.Woo@wsj.com and Kate O’Keeffe at kathryn.okeeffe@wsj.com
Appeared in the
November 23, 2018, print edition as 'U.S. Asks Its Allies To
Shun Chinese Supplier.'
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