5G mobile communications will be faster, deeper and wider than 4G, enabling new applications and is being tested in many countries planning to deploy in the next few years. Huawei is the world’s biggest supplier of Service Provider networks and leading developer and supplier of 5G base stations used by mobile telco operators – ahead of European suppliers Ericsson and Nokia. In 2018 it signed 30 contracts and shipped 40k base stations in this new market.
Huawei is also a significant player in the mobile device (basic, smart phones, tablets, etc.) – third behind Apple and Samsung in both shipments (206m) and revenue ($21b). In addition it’s a growing supplier of servers, storage systems and enterprise networks. It is an international player specialising in building business in emerging country markets, although its revenues from the US market are small and declining.
Huawei is innovating and investing; in 2018 it held 87,805 patents, of which 11,152 core patents were granted in the US. It also spent 14,1% of its sales revenue in 2018 on R&D.
Governments v Huawei
Huawei’s business strategy is typical of large ITC suppliers; it sources components for from the same vendors, partners with the same software companies and sells through the same distributors and resellers. However it threatens the increasing dominance of American IT suppliers on the world stage at a time when Japanese ones are in decline and European ones have all but disappeared.
There has been a continuous stream of news demonstrating that many governments around the world are fearful of the implications of Huawei’s growth – most importantly in its supposed close relationship with the Chinese government and its leading role in 5G. Many of these stories are just ‘xxx government is considering banning Huawei as a supplier of 5G equipment’; however there have been a number of more serious actions. In particular:
- The US president declared that Huawei is ‘pervasively unsafe’; added it to the ‘Entity list’ banning it from buying parts and components from American firms without government approval.
- In the Netherlands the newspaper Volkskrant claimed the Dutch intelligence agency has discovered a ‘backdoor’ in a Huawei provided customer network.
- The Canadian government arrested Huawei’s CFO Meng Wanzhou on allegations of Iran sanctions violations and awaits an extradition petition by the US.
- Australia and New Zealand banned telecoms companies from using Huawei as a supplier of 5G networks.
- Denmark – four Huawei employees charged with contravening immigration laws.
- In January 2019 Polish police allegedly arrested an unnamed Huawei employee on espionage charges.
- Cyber security forces in the Czech Republic declared Huawei’s equipment as a potential security risk (December 2018).
But it has not all been bad news for Huawei. More positive stories include:
- The UK National Security Council (NSC) decided to allow Huawei to supply ‘non-core’ 5G telecoms equipment, despite significant political opposition.
- In India Huawei conducted 5G testing at Bahti Airtel/Reliance Jio.
- French president Macron said it will not ban Huawei, but will be very careful about which supplier will install 5G networks.
- Vodafone discovered and fixed security flaws in Telnet dating back to 2011, which had a backdoor potentially giving access to fixed line phone information in Italy.
- Belgian cyber security forces investigated and found no vulnerabilities in Huawei equipment used by Proximus, Orange and Telenet telcos.
Even in Canada the government has not banned Huawei as a 5G equipment supplier. If Huawei is passing on information secretly gleaned from the equipment it sells to its customers it clearly has no place in supplying 5G equipment, or anything else – but the case is far from proven yet. As a Chinese supplier the company’s governance is different from suppliers based in other countries of course, but there are many others (Lenovo, Inspur, ZTE, BBK for instance) who are making headway in the global market. Accusations of collusion have not been restricted to Chinese-owned companies either; Supermicro was accused of selling server motherboards with secret chips to collect and report secrets to the Chinese government, despite being headquartered in San Jose, California. Huawei isn’t responsible for the potential leakiness of mobile communications networks either; governments insist that they can be monitored for security reasons – it’s just that they don’t want someone else’s government to be running their own analyses.
Governments as cyber security threat agents
Governments rightly seek to protect their citizens from security risks. In a world on the foothills of the digital age they use software to monitor phone conversations, picking up trigger words that may indicate terrorist activities for instance. The UK TV series Hunted demonstrates some of the techniques used to track down suspects through monitoring mobile phones and CCTV cameras, but not the full extent of modern surveillance activities. While some government agencies share sensitive information across some country borders (the UK and the US for instance, or many police forces who are part of Europol), they fear in the worst cases that unfriendly countries will terrorise, or otherwise cause disruption through secretly gathering private information on individuals and organisations and exploiting it through illegal and questionably legal techniques. In particular:
- The use of Russian government money appears to have played a significant part in influencing both the election of Donald Trump as US president and the ‘leave’ vote in the UK referendum for instance.
- In 2018 the Dutch security forces caught and expelled two Russian spies attempting to hack into the network of the Spiez laboratory, involved in analysing the Novochok used in the poisoning of Sergei and Yulia Skripal and the murder of Dawn Sturgess.
Spying is nothing new and we know more about Russian activities in the UK perhaps due to the incompetence of those operatives. However other governments have been caught out as well. For instance:
- Facebook’s WhatsApp security breach said to have been enabled by software, which its supplier NOS claims it only to be sold to government agencies.
- The Snowden revelations show that US intelligence agency had been intercepting German president Angela Merkel’s (among many other) phone calls.
- The US and Israeli security forces were involved with the development of Stuxnet – a zero day virus disrupting Iranian nuclear operations in 2010.
Security forces around the world are using the growth in computing and comms to create disruption and interfere in other nations’ social, political and economic life. However there’s a big difference between happening to be a supplier whose equipment and software has been subverted and deliberately working with a government to collate information or target attacks.
For me the case against Huawei is currently unproven, although the constant barrage of bad news is highly damaging to its commercial interests (at least in those countries not closely tied to China). If 5G technology is inherently insecure, then it should be made more robust and in deployment telcos should consider new security techniques – dare I say it, building a ‘Chinese wall’ around their national communications networks.
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