Huawei, ZTE may benefit from US security report

Congressional watchdog finds no evidence of cyber incidents affecting country's networks

PUBLISHED : Saturday, 20 April, 2013, 12:00am
UPDATED : Saturday, 20 April, 2013, 5:45am

A new United States government report on network security could have positive implications for Huawei Technologies and ZTE's business in the country, the world's largest telecommunications market.

The US Government Accountability Office released this month a report that found no recent evidence of cyber-security incidents affecting the country's telecommunications networks.

Often called the "congressional watchdog", the GAO is the audit, evaluation and investigative arm of the US Congress.

Its latest report followed the publication in October last year of a separate congressional study, which claimed that the telecommunications infrastructure equipment from Huawei and ZTE could threaten national security.

Based on an 11-month probe conducted by the House Intelligence Committee, the October study urged US companies to stop doing business with both Huawei and ZTE for fear of possible spying and cyberattacks by China.

The two companies rejected the findings, which have stymied their efforts to crack the US telecommunications network equipment market.

The GAO report, however, found that "no cyber-based incidents involving the core and access communications networks had been reported using [established] mechanisms to the federal government from January 2010 to October 2012".

Its report forms the first section of an extensive audit on the risks in the information and communications technology industry's supply chain, which was requested by the House Energy and Commerce Committee in October 2011.

Both the Federal Communications Commission and the Department of Homeland Security have reporting mechanisms for private telecommunications network operators, such as AT&T and Verizon, and the federal government to share information on network outages and cyber incidents.

The GAO report said: "Specifically, of the over 35,000 outages reported to the FCC over this time period, none were related to traditional cyber threats."

Such cyber threats included computer viruses, self-propagating worms, spyware and co-ordinated attacks by bot-net operators, which use compromised, remotely controlled networks of computers.

"Officials within the FCC and the private sector attributed the lack of incidents to the fact that the communications networks provide the medium for direct attacks on consumer, business and government systems - and thus, these networks are less likely to be targeted by a cyberattack," the report said.

That finding directly refutes the stand taken by the US congressmen behind the October study, which singled out Huawei and ZTE as security risks because their products are made in China and that the Chinese government has influence on their operations.

A Huawei spokesman said: "Every major telecommunications infrastructure provider has a substantial manufacturing supply chain network in China."

Shenzhen-based Huawei is the world's second-largest telecommunications equipment supplier after Sweden's Ericsson, while ZTE is ranked fifth.

Improved dialogue between China and the US may also augur well for Huawei and ZTE's business in the US.

Secretary of State John Kerry and President Xi Jinping recently reached an agreement to set up a working group to improve cyber-security.