House Intelligence Committee Probes 'Threat' From Chinese Telecom-Equipment Makers

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The House Permanent Select Committee on Intelligence has launched an investigation into what it called "the threat posed to our nation's security and critical infrastructure" by Chinese-owned telecommunications companies operating in the U.S., including Huawei Technologies and ZTE.

The investigation was announced Thursday by the committee's chairman, Rep. Mike Rogers (R.-Mich.), appointed to the role in January 2011, and ranking member C.A. Dutch Ruppersberger (D.-Md.).

"The fact that our critical infrastructure could be used against us is of serious concern," Rogers said in a statement. "We are looking at the overall infrastructure threat and Huawei happens to be the 800-pound gorilla in the room, but there are other companies that will be included in the investigation as well. As the formal investigation begins, I stand by my caution to the American business community about engaging Huawei technology until we can fully determine their motives."

Privately held Huawei, based in Shenzhen in the Chinese province of Guangdong, had 2010 sales of $19.6 billion and is a leading supplier of data-networking equipment, wireless infrastructure and mobile phones worldwide. The company has 110,000 employees, 51,000 of whom are based outside of China.

In a statement, Huawei Technologies USA vice president of external affairs Bill Plummer said: "Network security concerns are not about Huawei. The integrity of our solutions has been proven worldwide, having been deployed by 45 of the world's top 50 operators across the globe without security incident."

Huawei acknowledged that "network security concerns are very real and we welcome an open and fair investigation, whether by Congressional Committee or otherwise, focused on concerns raised by the interdependent global supply chain used by virtually every telecommunications equipment manufacturer providing solutions in the U.S. and elsewhere," Plummer said.

However, Plummer added, "Citing vague unsubstantiated national security concerns to prevent open competition in the U.S. market is unfair to the tens of thousands of Americans who either directly work for Huawei or whose jobs are supported by Huawei's procurement of U.S. goods and services to support our global business -- such procurements have totaled over $20 billion over the last five years."

Huawei has increasingly been targeting the U.S. cable market, and earlier this week announced it hired two industry veterans, Ron Pitcock and Frank Miller. Pitcock, who is vice president and general manager of the company's MSO business organization, was previously founder and president of High Speed Access Corp., CEO of voice-over-IP vendor IPtimize, and an investor and board member in various startups. Miller, who is now Huawei's chief technology officer - MSO, was previously CTO of Oregon independent operator BendBroadband.

ZTE, for its part, said it is "wholly committed to transparency and will cooperate in addressing any questions regarding our business. Our company is publicly traded with operations in more than 140 countries, and we are confident a fair review will further demonstrate that ZTE is a trustworthy and law-abiding partner for all U.S. carriers and their customers."

ZTE also sells to U.S. cable providers, with products that include DOCSIS-compliant Ethernet passive optical network equipment.

Ruppersberger said the purpose of the investigation is "to determine to what extent Chinese communications companies are exploiting the global supply chain and how we can mitigate this threat to our national and economic security."

The House Permanent Select Committee on Intelligence said its investigation will review the extent to which Chinese-based telecommunications companies provide the Chinese government an opportunity for "greater foreign espionage, threaten our critical infrastructure, and further the opportunity for Chinese economic espionage." The committee also will review whether the U.S. government is appropriately focused on discovering and mitigating threats posed to the security of the country's telecommunications networks.

The committee said it will seek information from relevant telecommunications providers, request information and briefings from private-sector telecommunications security experts, conduct interviews with U.S. government officials and hold a series of hearings and briefings to uncover "what these Chinese companies are capable of doing and how our intelligence community could be better focused on this threat."