PassW0rd – 12th June 2019 (Huawei)

Speaker A: This program is brought to you by Resonance 104.4 FM.

Speaker B: If you like what you hear and want to support our work, please make a donation at fundraiser.resonance.fm. Hello and welcome to Mima. That’s Chinese for password. Today we’re exposing the full story behind China’s mobile phone and telecommunications giant Huawei. Huawei and its role in the global trade war. We’ve got accusations of spying, hacking, and intellectual property theft. It’s a genuinely toxic atmosphere, according to some of the analysts we’ve spoken to, who say nationalist sentiment is now distorting the market. An MP in the House of Commons Technology Select Committee has even accused Huawei of doing the equivalent of manufacturing Zyklon B. That’s the gas that the Nazis used to commit mass murder during the Holocaust. This murky world of claim and counterclaim that has been made even muddier by the US President Donald Trump, who’s put Huawei on the US entity list, effectively blacklisting it. As a result, Google has said it will not supply upgrades to the Android operating system used by Huawei’s phones, a potential body blow to the company. President Trump has gone further and threatened the UK with restrictions on intelligence sharing unless it drops the company. Many commentators are saying it’s the start of a technological Cold War where different power blocs all develop their own technology systems, a process called Balkanization, or the Splinternet. In this program, we examine the background to this battle and using leaked documents prove that its origins go back to at least 2009, with some claiming it started in the last century under the presidency of Bill Clinton. So let’s begin at the beginning. Huawei. Is a world brand, and it means Chinese achievement. The company was founded by Ren Zhenghui, a former engineer in the Chinese army, and documents we’ve seen show that all 14 of his co-founders also have a Chinese military or intelligence background. China expert Isabel Hilton, editor of China Dialogue, believes this shows that the government of the People’s Republic is actually in control of the telecommunications giant.

Speaker C: Well, they’ve done that by excluding others. I mean, Google was the most popular search engine in China, but these days, you know, using any Google product in China drives you insane. You know, the search engine is blocked, you know, mostly your mail is blocked. I mean, almost anything. And they did that in order to foster the growth of Baidu. Which is now going abroad, and so that is now the biggest search engine in China. When you say run by the state, I would just calibrate that slightly because a lot of these begin as nominally private companies, but the fact is that in China you cannot thrive, particularly in the telecom sector, without the approval and without the approval of the party and without collaborating with the party. So you simply wouldn’t get anywhere. So that although companies such as Huawei say, “We are a private company,” the fact is, you know, they would be shut down if they refused to collaborate with the party-state or with the intelligence services. And there is legislation to that effect in China, you know, mandating the cooperation of any Chinese entity with the intelligence services. So it’s a thin fiction. And these companies have been encouraged to get as large as they have grown by a series of state measures which effectively screened them from international competition, which subsidized them, which gave them sweetheart deals in terms of land for their factories or installations, in terms of loans from the state-owned enterprises, and so on. So although they would argue and they do argue that they’re not actually run by the state, it’s part of a range of measures that the party-state uses to exert control over them.

Speaker B: I mean, just to give some sort of detail on that, we were passed some documents which showed that the initial 117 founders of Huawei were all linked to the Chinese intelligence services.

Speaker C: You astonish me. I mean, yeah, and you know, they claim that, you know, we’re just owned by our workers, just like John Lewis, and actually if you try to examine, you know, what does that mean, and how are decisions taken, and you know, what is the actual structure, you hit a bit of a wall quite quickly. So, you know, you’d have to be pretty naive to imagine that Huawei was not, you know, joined at the hip with the party state.

Speaker B: It should not matter that a government backs its own national telecommunications company and gives it favorable trading conditions, like in the case of Huawei, a location in Shenzhen Free Trade Zone. One of the intelligence experts we spoke to wishes the UK government had helped BT. But when the company starts to make secret moves against its rivals in other countries, That’s cheating at best, and at worst, commercial espionage. Whistleblower Brian Shields was a senior advisor in system security at the Canadian telecoms company Nortel when he discovered intruders on their systems. He claims he traced them back to PLA Unit 61398 in Pudong, Shanghai. A report by the US computer security firm Mandiant stated that PLA Unit 61398 is believed to operate under the Second Bureau of the People’s Liberation Army General Staff Department and is responsible for economic espionage.

Speaker D: They were basically going in and logging in and they were taking the whole contents of a folder, whatever that folder was. It was like a vacuum cleaner approach. They weren’t just picking and choosing, they were just taking everything.

Speaker B: Okay, so how much data did they get, do you think?

Speaker D: Do you know what quantities of documents they were?

Speaker B: Whether this was, presumably this is gigabyte plus, isn’t it?

Speaker D: Oh, the size, yeah, I don’t know. I can’t tell you today, I don’t recall. But I will tell you this, that just in the 6 months that when we discovered this in 2004, it was over 1,500 documents.. So, you know, if you translate that, you know, it could be plus or minus hundreds, or, or, you know, 500, or a couple, you know, whatever. And that went all the way back to at least the year 2000. So they basically had whatever they wanted. There was nothing they couldn’t get at, because I’m sure that they had the, the mass— they had the CEO’s password, for goodness sake.

Speaker B: Now, this data went to China. You don’t know that it went to Huawei. Presumably it went to Chinese intelligence, if it did go to China.

Speaker D: Yeah, I absolutely— I have never come right out and said that, you know, Huawei was doing the stealing. I don’t believe that. Actually, I do believe 99.99%, you know, 100% essentially, the Chinese government that was behind this. This was an advanced attack. They were well hidden. We didn’t find them. They knew how to do all these advanced things to be able to get access to whatever they wanted and not be detected. And this went on for at least 10 years. So, you know, considering that most companies, they eventually figure this stuff out. We didn’t figure it out. It happened to be because of a guy looking at a log file. Only reason we figured this out. Otherwise, I don’t think we ever would have noticed. This doesn’t happen because somebody’s an amateur. This is because somebody’s very advanced. And the fact that it was going— here’s the other thing. Half of the downloads were going over to Shanghai. All right, there was a company, the ISP was listed as a Faccian Corporation, their base. This was listed as Shanghai. And I’m like, well, geez, that’s where, you know, Unit 61398, the APT-1 that the Mandiant at the time, now FireEye, you know, their report came out and talked about, you know, as an advanced attack team that’s based over there in China, in Shanghai coincidentally. So is this a coincidence that most of our data was going over to Shanghai. And one of the things that I saw, and people aren’t aware of this, is that network that was being used, I am absolutely certain that entire address space, it was one whole net. I don’t want to get too technical here, but basically address 1 all the way up to 255 are all allocated. Instead of being ISP that, you know, like your users at home could log in and use this, I saw things that consistently looked organized, structured, and like they— it was beyond random, which it should have been, like if I was logging in from home. So one of the things that gave me a clue to find these guys in our network and try and stay on their trail was that they stopped for 6 months, and yet this is an ISP over in China. Well, why would this stop? It shouldn’t have stopped. Employees are still working from home. And that’s why I knew they were still on our network, and I couldn’t get any help. This is the thing, my frustration that I just mentioned to you earlier on. You know, you go to management, and I actually go to the telecom team and say, hey, look, I need you guys to sniff this traffic because I want to see what it is. I want to look at it. I want to see if I can read it, or is it encoded? And it took me almost 3 years to get them to finally set up where I can get packet captures. I mean, this is ridiculous. Here you got an advanced compromise and I’m getting no help. I can’t even get, you know, you know, it’s like I’m all on my own.

Speaker B: Brian Shields’ time at Nortel came to an end because the company went bust. And Nortel is not the only company calling foul. Employees at Lucent have also claimed that its DSLAM technology A network device that allows high-speed digital switching has also made its way to China. But did the Chinese really steal secrets that enabled them to get ahead in the technology race? Here’s Henning Schultzrinne, former chief technology officer for the United States Federal Communications Commission, who was responsible for much of the VoIP phone technology.

Speaker E: There’s probably a development stage issue involved here, namely that many countries and companies go through a model where they largely copy existing ideas, then maybe implement them cheaper or better or in some other ways superior, and then hopefully they’ll progress based on their own research. So I think Huawei is, as best as I can tell, in the realm that they are still largely relying on doing pretty run-of-the-mill standard implementations that don’t require an inordinate amount of scientific or deep research— I meant deep engineering research. And one has to also then distinguish again by area of development. So for example, my general sense is that communication networks, 4G, 5G networks in particular, are at the stage of their development, unlike say in the first 10, 20 years of the internet or mobile networks, where it was a fairly large number of fundamental breakthrough contributions that were made at various layers and levels. New ideas that then got implemented and refined over time. Communication networks today, at least as they’re implemented in 4G, 5G, and just backbone internet networks or residential access networks, have become somewhat more incremental engineering developments. It’s still hard engineering. It is still difficult to build reliable, cost-effective systems that are maintainable. It is still some of the math that you need to do for the radio part, it’s still very challenging. I don’t want to downplay that you don’t need any creativity or advanced engineering or research to do that, but it’s a different lifecycle stage of that particular industry compared to what it was. And that I think is actually a reason why Huawei has been successful is they were able to capitalize on a transition of an industry that had traditionally been extremely research-heavy, with, I mean, Bell Labs level of investment in research and Bell Labs level sophistication and PhD depth, if you like, to what you might call more a master’s of science level development, namely a large fraction of the development these days in these type of systems, and this is true in Nokia and in Ericsson and in other network, is done by very competent, highly skilled engineers that typically do not have PhDs. The number of PhDs in these organizations has, as a relative fraction of employees, decreased significantly, and their impact on products to the extent that I can observe it, say, at Bell Labs, has diminished greatly.

Speaker B: Whatever the rights and wrongs, Huawei was somehow able to produce quality switches for telecom systems more cheaply than its European rivals Nokia and Ericsson, helped, it’s claimed, by Chinese government funding. And it is now a $107 billion business. When Tony Blair’s government pledged to deliver a 21st century network to 93% of the UK and to put internet-enabled computers in every school, Huawei offered a lower price than alternatives from Marconi, Ericsson, and Alcatel, a fact that proved fatal to the British technology company Marconi, which had staked its future on winning the bid. Documents we’ve seen show that the concerns about Huawei surfaced a long time ago. I spoke to password producer Jane Wyatt, about the material we’ve uncovered.

Speaker F: So Pete, what do these leaked documents tell you?

Speaker B: One of the most significant leaks was a document from the National Security Agency, the US National Security Agency, which shows that on the 30th of March 2009, they suddenly got very, very worried about the contents of a speech that David Blunkett made at InfoSec, In that speech, David Blunkett said— and remember, this is when he wasn’t Home Secretary— David Blunkett said that there was the potential for the UK telecoms network to be turned off. That worried the Americans enormously, principally because the Huawei technology had been installed already in one part of the US telecoms infrastructure, and there was talk about it being installed in another part of the US telecoms infrastructure in Washington, DC. This gave the Americans profound anxiety. They sent a communication to the UK asking for clarification of this. This came from the man who was in charge of critical national infrastructure for the National Security Agency in the US. The other document tells us that it was essentially, uh, BT wanting to do some research into the company that they were going to give this role in, in the UK network. And that research indicated that a lot of the people who were the founders of Huawei had actually got backgrounds in the People’s Liberation Army. More importantly, that they’ve got backgrounds in intelligence in the People’s Liberation Army.

Speaker D: So what was the role of the UK government in all this?

Speaker B: The role of the UK government is, I suppose you’d have to say, not very creditable. Essentially what the UK government wanted to do was to put the entire onus onto BT to look after the UK’s security and to look after the security of its infrastructure. They wanted to do this at the same time as they were trying to force the— or put a lot of pressure on BT to develop a new infrastructure, a new internet infrastructure that would allow us to be at the cusp of the technological revolution. But they weren’t offering any extra money. And there was a very interesting statement that Sir Christopher Bland, who was the then chairman of BT, made to the government. He said that over the headquarters of the BT building, it doesn’t say Regnum Defendam. It doesn’t say that BT has a commitment to actually look after the security of the telecoms infrastructure. That it’s a commercial company. Now, another issue in all of this was there seems to have been a contradictory role for Ofcom. Ofcom wanted to push through a new telecoms industry. It wanted to encourage telecoms industries, and it wanted them not to actually pay very much money for actually entering the market. So it lowered the criteria for security. Now, all of this had acutely disturbed MI5, who started briefing against the decision and also this idea of actually reducing security in our telecoms networks. And they were told that the reason that this had to happen was because of European competition rules, that they couldn’t have some criteria that were national criteria put into our telecoms network that prevented other companies from competing. This then led to a tremendous row because MI5 said that national security trumps European regulations and that they had the right and the legal right to actually say to Ofcom that they could go away in no uncertain terms. Unfortunately, it would appear that Ofcom had a very stalwart backer and a very powerful backer in the shape of Gordon Brown.

Speaker D: What do you think are the threats that could emerge from having Huawei in the UK’s network?

Speaker B: Well, there’s two threats that people are pointing out. One, exfiltration of data. Two, the second one is that the network could be turned off. Now, the exfiltration of data, according to a lot of the sources that we’ve spoken to— and our sources are quite literally at the highest level, I would say that they’re actually on the coalface of all of this— unfortunately they can’t go on the record, but The threats are exfiltration of data, turning the network off. Can they exfiltrate the data? No. According to the people that we’ve spoken to, Huawei is just in the network layer. It is not in the management layer, so it doesn’t have the capacity to be able to exfiltrate data, to take data out. Although there are some very big concerns about Huawei and intellectual property, and those have been mentioned by a lot of people. In terms of being able to turn off the network, well, according to the intelligence subcommittee, which is run by Dominic Grieve, they say that there are lots and lots of different versions of the software that control the BT network that are running around, or that seem to be around in the various different centers. That is a massive concern. The reason it’s a massive concern is version control is an issue. You can use that to kickstart or restart the network, and if you do that, you could very quickly put a weakness in. And according to the people that we’ve spoken to, and these are top experts experts. They’ve said that you could turn the network off. It has to be borne in mind too that we turned off Saddam Hussein’s network during the first Gulf War, and we also turned off the Libyan telecommunications network under Gaddafi. And the reason that we could do that is because there was Marconi equipment in both of those telecommunications networks. So it’s a very real threat. It depends upon how much You want that threat in your network? What is even more significant is that sources involved in the BT decision to accept the Huawei bid told us that if it had been proved Huawei had stolen intellectual property, it would have been rejected. You’re listening to Password on Resonance FM with me, Peter Warren. After this, you can hear A World in London with DJ Ritu. So, the accusation is that Huawei is dealing unfairly in the international market. That’s one of the reasons why US President Donald Trump has banned Huawei from the United States. Huawei see this as the US engaging in a trade war looming since the presidency of Bill Clinton in the late 1990s. Owen Keary of the cybersecurity company EdgeScan fears the result of this political and economic tussle might be that the internet as we know it gets broken up.

Speaker G: My view is that there’s a sprinkle of market protectionism with Huawei. I think the likes of Apple, you know, because Huawei are coming out with a lot of stuff and it’s, you know, at a price point that’s cheaper. I think there’s a little bit of that there, a little bit of market, because, you know, there was the idea that Trump said he may be able to ease used the Huawei restrictions as part of the tariff trade talks, which doesn’t make sense if it was a security issue. But the point is, yeah, like operating systems are really hard to maintain. I’ve known of companies that tried to come out with their own browser and they failed miserably because it wasn’t building the browser that was the hard part, it was maintaining it, right? If you’re going to build a major road network, the cost of the road network is one thing, but what you have to factor in is the next 20 years of maintenance. On that road network. And so building an operating system is difficult. Maintaining it is going to be even harder. And I think if Huawei— they say they’re going to go off and build their own version of Android. That’s pretty hard to do. And I don’t think— it’s not going to be compatible with the Google universe. It has the idea of breaking the internet in two. Like you could have, you know, and it is somewhat broken anyway, but in terms of like China and so on, you know, would have a different ecosystem than all the countries where Google is prevalent, right? People have bought Huawei devices and have returned them once they heard this news because they knew that it’s pretty much bricking the phone. All of a sudden you won’t be able to use your Google Docs, your Google, you know, your Gmail, whatever it may be. But it got even worse. A few days later then there was a company called Arm which make chipsets, I think for Huawei as well. And Arm then decided that they had to pull out of the Huawei deal. It’s like Huawei have a phone with no microchips and no operating system, or definitely a restricted cutdown in terms of buying it in from Western organizations or firms. So if you have an operating system and you are not going to get the patches and not going to get the software updates as a user, obviously over time, your window of exposure gets dramatically bigger and all of a sudden you’ll be infected to hell. Because I can guarantee you if this thing carries on, there will be a lot of people who will have Huawei phones. They won’t change them. They probably can’t afford to change them. They only bought the phone a few weeks ago. It’s a great phone. But all of a sudden in 6 months’ time there’s no updates. There’s lots of vulnerabilities out there. You could have a couple of million people with that issue and all of those people could be victim of, you know, information theft or fraud. And it’s due to the fact that, well, it’s a political thing, um, primarily, but, but it’s also the fact that it comes down to being able to maintain and update software. And if you can’t do that, you’re dead in the water very quickly.

Speaker B: Interestingly, with Huawei, yeah, as you say, they’re in big trouble. Move will see the purchasing of Android-based Huawei devices plummet. Huawei said We’ve been expecting this. We’re stockpiling chips, presumably in— and let’s face it, this does appear to be a trade war. Huawei has the option of developing its own operating system, own phone operating system, and trying to wean consumers onto that or suffering annihilation. So it’s got to develop its own operating system, surely.

Speaker G: Huawei do a lot more than mobile phones, right? First of all, it would be a huge hit for them. I think they will try and weather the storm, but they also, you know, develop, you know, 5G infrastructure and so on and so forth, right?

Speaker B: They’re under pressure on both of them. The 5G infrastructure that Huawei is developing, they’re being forced out, out of the core on that. Yes, forced to the towers on the edge, although there are issues there.

Speaker G: Yeah, I need to answer your question, Peter. If I was buying a phone today as somebody that lives in the western part of the world, I certainly wouldn’t buy Huawei, even if they said we’re stockpiling chips and they, they’re going to build their own OS. Why? Because everybody I know is either using iOS or Android, right? Just two. It’s like, you know, you have the Republicans and the Democrats, right? And here we have iOS and Android. Everybody I want to share data with, socially network with, do all those things that particularly younger people can do with their phones these days, they do not want to have all of a sudden wind up with a third operating system which possibly the minority of the population of the planet will use. Okay, they’re building their own fork of the open source Android piece and they’re forking off that. And that’s great. But again, it comes down to roadmap and it comes down to, well, if I buy technology, let’s say a mobile phone, it depends on the individual, but maybe 3 years, 5 years for what you might keep a mobile phone for. My view would be, hey, will I buy a Samsung, for example, who do Android as well, they’re very big in the Android space, which is part of the Google infrastructure. Google ecosystem hasn’t got these concerns. Would I do that, or would I buy a Huawei which is going to have a forked version of Android, or would I buy an Apple? And the fact is, is that I think the majority of people anyway in the Western world won’t, even if they have their stockpile and even if they have their forked OS. I don’t think a lot of people will just buy it.

Speaker B: And the impact can already be seen in Huawei sales figures for mobile phones. Vanessa Katsappa is UK and Ireland country manager of the comparison website PriceSpy.

Speaker F: They’ve been greatly affected, Pete. So during that period, we see an increase in traffic to mobile phones in general, but we see traffic to Huawei plummet. So they saw a decrease of 35% just after the ban was announced, and their sister company Honor as well. And during the same time, Samsung saw an increase of 17% in their traffic.

Speaker B: What does that mean? Can they recover from that? Is that a fatal blow?

Speaker F: We actually do see a slight recovery the days just after this, but it doesn’t last for very long. So I don’t think we’ll see recovery in the near future.

Speaker B: I mean, it’s got to be hurting them, hasn’t it? The mobile phone business is 50% of Huawei’s revenue.

Speaker F: Definitely, it must be hurting them a lot, and I’m not sure how they’ll recover from it.

Speaker B: What is it that you think that consumers are reacting against? Is it that they just don’t like to be seen with a mobile phone, if you’re in the UK, because these figures are for the UK? So is it that there’s a degree of embarrassment, do you think?

Speaker F: I think it could be that, but I think it’s mostly uncertainty. What does it mean for them in the future, even if they, if they’re okay now? Would these handsets that they’ve paid for be of any value?

Speaker B: And so that uncertainty is because of the operating system, because there’s a worry that Huawei won’t carry on working with Android.

Speaker F: Exactly. So they could be developing something themselves, but even, you know, I think by the time that happens, The damage will be done.

Speaker B: Yeah, I mean, if you wanted to develop an operating system from scratch, one, it’s going to take you a long time, and two, I suppose people won’t be particularly happy with something that they’re unfamiliar with.

Speaker F: Exactly. I think we, um, consumers are so used to the, you know, the operating systems that are on the market now for with Android and iOS, it’ll be a big step to move to something else.

Speaker B: And I suppose another thing would be that the apps in the Play Store, if you’re developing your own operating system, the apps aren’t there at the moment, or would not be there.

Speaker F: No, and you would never have, um, well, I don’t think you would have the variety that you have, um, now with Android.

Speaker B: So it’s that decision by Google, makers of Android, that has really hit Huawei more then?

Speaker F: I think so. As a consumer, that would be my biggest worry.

Speaker B: I mean, I suppose too that people are becoming a bit more aware of the significance of a mobile phone and maybe of a mobile phone operating system, do you think? I mean, are people suddenly looking for more information about mobile phones?

Speaker F: I think so. I think, you know, this is something they’ve generally taken for granted, and they can’t do that anymore. And I think that’s why people are looking at mobile phones generally during this time. And, you know, like I said, Samsung is definitely the biggest winner, but then there’s also Apple slightly and Motorola.

Speaker B: Right. So in a sense, if Donald Trump is— if President Donald Trump is trying to accomplish a trade war, he’s not doing very well if a South Korean company is doing better, much better than any American competitor. Exactly. Yeah, this is more than the trade war. There are security concerns too. That’s what lay behind the House of Commons Security Committee’s decision to put intelligence officers into Huawei’s cybersecurity evaluation center in Banbury. That was 6 years ago, but still those doubts remain. Can we trust this Chinese company to play a crucial role in the core of our national infrastructure? If their switches control the direction of flow of our voice messages and data, wouldn’t it be possible for them to monitor that data? That would give them a mass surveillance capability, just like the one the US National Security Agency had with its PRISM system, as revealed by the NSA whistleblower Edward Snowden. Tim Roehlig is an expert in telecoms for the Swedish Institute of International Affairs, and he’s worried.

Speaker H: Yes, I think the security concerns as such are real. The question for me more is more, are we really mitigating those risks by banning Huawei? And again, I’m not an engineer, but from all I understand is that even though it’s true that China accounts for a large share for political and particularly economic espionage, it does so and it will continue to do so even if we don’t allow it into our 5G infrastructure. So the question really is for me, what are we really gaining if we ban Huawei? And I think here is an interesting sort of trick. I think the most effective in terms of preventing espionage would probably be an effective end-to-end encryption. And here I think what we see is that the ones who don’t have an interest in that is not just the Chinese, it’s also law enforcement authorities in the US as well as in Europe, they got used to having preferential access to voice communication, mobile voice communication, and then also data communication. And I think what we see here is that the same political actors that are arguing in favor of securing the networks are actually avoiding to talk about encryption while encryption would probably, as far as I understand it, end-to-end encryption would probably be the most effective. So I’m not sure we gain that much, while espionage as such is probably indeed a real security risk.

Speaker B: In the first Gulf War, the UK killed Saddam Hussein’s communications infrastructure. It was Saddam’s communications infrastructure ran on British kit, on Marconi kit. So we turned him off. We also did the same in Libya. People have said, well, what would be the advantage of that? Well, the advantage in a war would be that turning off the telecommunications structure infrastructure creates mass panic. Two things create mass panic: access to water and telecommunications. Obviously, you can determine access to water by cutting off the switches and the infrastructure that develop or make the network work. Turning off the telecommunications only adds to that sense of panic. It’s difficult for an army to fight when it knows that all of its people are in a bad way.

Speaker H: Again, as you just pointed out, I think the security concern as such is absolutely in place. The kill switch is a horror scenario, and everyone arguing that, that that would only be a worst-case scenario and we don’t see any armed conflict between the West and China, I think misunderstands that it might not be likely, but given the severity of this scenario, I think we have to consider it, and I think we have to take it serious. I absolutely agree with that. But again, the question is, will China not be able to hack into Ericsson, Nokia, or other 5G mobile infrastructure? Are we really safe if we shut out Huawei? And the engineers that I talked to tell me they will probably be able to hack into those, those vendors’ infrastructure as well and shut it down as well. So Is it really worth shutting out Huawei altogether, or are there other strategies that are more effective but not as sort of good selling point to public audiences?

Speaker I: Okay.

Speaker B: I mean, there’s another point here as well, though, which is almost a sort of de facto acceptance, isn’t it? And that is, and the point that is a de facto acceptance is that Nokia and Ericsson will not turn off the network, that Nokia and Ericsson are neutral and will always be friendly.

Speaker H: Yes, well, I mean, I would probably rely on that assumption as well, that Ericsson will not shut down European mobile infrastructure. If you look into the Chinese debate, then you see indeed that both Ericsson and Nokia are expected to suffer from a huge blow in the rollout of 5G for precisely the same line of argument. The Chinese saying it’s not safe to have Ericsson and Nokia in our critical infrastructure. So the Chinese running exactly the same line of argument here, and it’s hard to counter, I think.

Speaker B: Now the next generation of telecommunications is about to be rolled out. It’s called 5G. And in the UK, it’s already arrived in central London, where perhaps by coincidence, the intelligence agency MI5 has its headquarters not far from MI6. Tracking the progress of 5G across the world is the main preoccupation of the think tank Signals Research Group, where managing director Mike Thierlander has some concerns.

Speaker I: You know, the US administration is not doing anything to limit where operators deploy 5G. So the challenges of different countries deploying 5G in different bands existed, you know, well before, you know, the current administration was in place. So that problem exists regardless, you know, but it will be resolved over time as countries allocate more spectrum to 5G. And secondly, when operators start kind of repurposing their spectrum that they’re using for 4G today and start deploying 5G in it, that will also address a number of those problems that exist today.

Speaker B: Obviously, the reason that Donald Trump has given for this sanctioning of Huawei He says it’s security reasons. He says that they don’t want Huawei in US networks because there are worries about exfiltration of data. And also, the— one of the intelligence monitoring committees here in the UK said there are potentially worries that the network could be turned off if you have Huawei in your network. What do you think to that?

Speaker I: Yeah, I tell you, if it was my— if I had the authority to make the decision for what the US should do, I’d punt. I don’t know what the solution is. I mean, what I would tell you is that, you know, 5G, although 5G is great and wonderful and it’s better than sliced bread, fundamentally it’s not that different from 4G. So if there are concerns about you know, Huawei and security or Huawei turning off a network, that problem exists with 4G as well, you know. And so, you know, if you take that argument to its next extent, then the administration should be upset about Huawei having 4G in the UK, you know, but they’re not saying anything there. And so that’s kind of interesting. You know, I think there are some valid concerns. I mean, I definitely wouldn’t want Huawei providing telecommunications to Air Force One with the president on board. But I don’t think Huawei was created, you know, back in the 1990s to be a spy for the Chinese army, as is almost alluded to or suggested. I mean, I think Huawei is trying to compete on a global basis and be successful. You know, it’s the pride, if you will. So, you know, China wants the US to need Huawei, or they want the UK to need Huawei. Nobody else can do it but the Chinese. That’s where I think they win. So the moment Huawei is caught, you know, pilfering data, you know, and siphoning it back to China, or the second they turn off infrastructure for some reason, I mean, that’s the kiss of death, you know. So I, I don’t see them doing that. Conversely, the possibility exists, you know. And so how you, how you control that, you know, recognizing that Huawei is definitely a leading company when it comes to 5G, but also recognizing that, you know, Huawei presents some unique challenges that we need to figure out how to deal with, you know, and I don’t know what the solution is, you know, that, that’s why I’m a wireless telecom analyst and consultant and not a politician.

Speaker B: Now we know China has created its own internet infrastructure. Instead of Google, it has Baidu. Alibaba is its Amazon, WeChat its Facebook, and Huawei underpins it all. In development According to the official news agency China Daily, is Hongmeng, a new operating system for smartphones. So, soon it won’t matter that Google no longer supports Android on Huawei phones. Hongmeng is now registered in Canada, Australia, Mexico, and Europe and will be shipping by autumn of this year. The name Hongmeng means a newly created universe. Can Huawei really claim that it is just a commercial company making products and selling them all over the world with no national interest and no conscience about how they could be used? I put these points to Huawei Communications Director Edward Brewster.

Speaker A: We make telecommunications network equipment. We then sell that network equipment to companies that own and operate telecoms networks. So to give you that context in Europe, European terms, we work with every, every major telecoms network in Europe, providing them whether they’re a fixed network, a broadband network, or a mobile, or mobile broadband network, the equipment that powers their networks. You know, we are one of the suppliers into their networks. So, you know, I don’t want to sort of get too into the technical sort of jargon of our sector, which is very full of technical jargon, but in very simple terms, we are one of the 3 leading leading companies in the world that providing the kits, the equipment, whether that’s the antenna in, on the, on the roofs of buildings in, in the cities, or whether that’s the broadband fiber connectivity on the high streets of the, you know, the countries in Europe. We’re one of the world leaders at providing that kit. That’s what we do. We don’t own and operate telecoms networks. We sell kit to people and equipment to people who own and operate telecoms networks.

Speaker B: Okay, but there, and This charge of potentially being able to exfiltrate data. There have been a couple of incidents where people have said that Huawei has exfiltrated data. Africa particularly. There was a university in Africa. The African Union said that it had replaced a lot of its technology infrastructure. Those charges won’t go away, will they?

Speaker A: Those charges are often repeated and we strenuously deny them. The company, as I said, was founded in 1987, so nearly 32 years of operation. And I am not aware, and I have not ever seen any evidence that this business, uh, that has been the source of any major data leaks or breaches on any networks anywhere in the world. So what, you know, it’s easy to put allegations forward, but I would say to you, they’re not backed up by evidence. And I would encourage anybody who’s interested in this subject and wants to learn more about it is to spend some time looking at, well, what is the evidence? And, you know, there is no evidence for these allegations, but obviously, you know, this technology is increasingly complex and this is a, and, you know, cybersecurity is a really important issue. It’s an important issue for Huawei. It’s an important issue for our customers, the sector as a whole. So the telecoms sector, telco operators as well as, you know, consumers. And it’s an important issue for governments. You know, singling out one company on the basis of its country of origin is not just not appropriate, but it’s also deeply misleading. And unfortunately, that’s the debate that’s happening at the moment. Personally, I think that’s regrettable.

Speaker B: During the First Gulf War, the British did turn off Saddam Hussein’s telecommunications system. It was run by Marconi. It was the reason why Saddam Hussein replaced the telecommunications system, apparently with Huawei equipment, so it couldn’t get turned off again. So, but the potential does exist, evidently, to turn telecommunications networks off. It also happened in Libya, again with British equipment.

Speaker A: Every day around the world, Huawei equipment supports the communications of about a third of the world’s population. We’ve never turned off any of our equipment, and nor would we ever turn off any of our equipment. We’ve sold the equipment. It’s not our— well, mainly because it’s no longer our equipment. We’ve sold the equipment to the operators. They own and operate the equipment. I think it’s a really important distinction, and I think unfortunately in the debate, it’s a distinction that’s constantly sort of ignored. You know, as I said, cybersecurity is a really important issue. It should be taken very seriously. It, you know, it should be taken seriously at a global, potentially intergovernmental level. We’ve been arguing that and putting that case for some time because, you know, as we, we all live in this digital age and this information age and, you know, it’s important people and customers and, you know, industries and companies have confidence in, you know, networks and technology products.

Speaker D: Works.

Speaker A: But we’re not going to have that confidence with, frankly, you know, false, uh, false and unfounded allegations.

Speaker B: Okay, and see, and, and you don’t have any access to data. I mean, that, that was another point, wasn’t it? Because it was one of the things where it was suggested that the Chinese government, if it demands data from any Chinese company, they have to be provided with it according to new Chinese telecommunications regulations. You’re saying we don’t— Huawei doesn’t have any access today, so it can’t get hold of the data. That’s what John Suffolk said yesterday.

Speaker A: That’s right. So, you know, those laws in China have no extraterritorial reach, i.e., they don’t operate outside of China no matter what they say. But even the Chinese government has made it clear that those laws do not allow the Chinese government to do that. So, you know, we sell a piece of equipment to a UK telecoms operator. They then own and operate that piece of equipment. It would be in breach of our terms and conditions and the legal contracts, as well as the law in the UK, for us to access that equipment in any way without— in any way, you know, without the permission of the operator.

Speaker H: Clearly.

Speaker A: So this is where I’m afraid that, you know, the debate has been characterized by oversimplification, sort of prejudice, and I’m afraid has led to some very misleading conceptions, not just about Huawei, but about the market as a whole and how the market as a whole operates. I would encourage people to, you know, look at the evidence, talk to people, and read about the sector understand how the sector really works and understand how technology, you know, the benefits of technology are based upon globalization, interconnectivity, us as Huawei, drawing from the best in the world, working with the best in the world, you know, best-in-class partners wherever they’re from in the world, whether it’s Korea, Japan, the US, the UK, Germany, wherever, to deliver world-leading technology. But that’s how all the leading technology companies work.

Speaker B: It has got a bit toxic, this debate, though, hasn’t it? I mean, yesterday at the House of Commons Select Committee on Technology, you were compared to the manufacturers of Zyklon B.

Speaker A: Yeah, I, uh, I think that is wholly inappropriate, inaccurate, and as I said just now, highly misleading. We produce communications network equipment and communications, you know, and smartphones and ICT, which, you know, internet, you know, communications technology in simple terms. IT communications technology. That’s what we do as a business. And that comparison, I’m afraid, is— I felt that was highly inappropriate and entirely unjustified and uncalled for.

Speaker B: That’s Huawei’s justification. We also asked Prime Minister Tony Blair and his Home Secretary, David, now Lord Blanket, to comment. Tony Blair’s role was to push for a high-speed internet so the UK could compete technologically. So according to our sources, he put pressure on BT. BT’s response was to turn to Huawei, who promised to be able to deliver the new technology for £500 million less than Marconi, a situation that alarmed MI5. It started to voice its concerns, but to no avail, though we have been told that their worries did reach David Blunkett. Both Tony Blair and David Blunkett declined to take part in the program despite being invited. Commodore Patrick Tyrrell a former intelligence agent, says that the decision to cut costs and allow Huawei into the UK Telecoms network was short-sighted and that ultimately did not save the UK any money because it rendered the UK Telecoms core unreliable due to potential security concerns, which led to increased costs to protect government communications.

Speaker J: Huawei came in with a deal that the bean counters in the British government couldn’t afford to ignore, which was, you know, here we are, we’re coming in, we can do all the things that Marconi or General Electric or any of the large companies, uh, say quoting a billion pounds, we can do it for half a billion pounds. And then when people accuse Huawei of saying, well, ‘Well, you know, it might be that you’re working on behalf of the Chinese military.’ ‘Oh, of course not, old chap. We wouldn’t do things like that. That’s just not fair.’ And so, you know, they’re quite happy to— some people are quite happy to say, ‘Oh, well, that’s jolly good. These people are— they obviously play cricket. They’re obviously to be trusted. We’ll go ahead with it.’ It tends to be the bean counters and they don’t look at the long-term costs.

Speaker B: So would the long-term costs of presumably we have to now send information that’s encrypted, government information over the BT and Huawei-run network, those costs, would they be anywhere near 500 million or did we get a good deal?

Speaker J: I mean, I picked 500 million out of out of the air as an example that, you know, I think Huawei have come in at about half the cost of the other quotes that have been made. You know as well as I do that quoted costs and actual costs are often hugely different, particularly in IT projects done by the British, but Actually, to be fair, by any country, they’re always more expensive. And they think in terms— we think in terms of months, and at the most years. We think in terms of 5 years. Politicians don’t have an event horizon more than the next election. Are they going to keep their seat, or are they going to lose it? The Chinese have an event horizon that’s probably measured in hundreds of years. You know, we intend to do this sort of thing, and we are going— we are so confident of the government of China still being in power. It won’t be us, but it might be our grandchildren will be able to achieve this in 70 years’ time. Yeah, they’re in it for the long haul.

Speaker B: Pat, we’ve been told by very, very good sources that the Huawei bid did come in at £500 million cheaper, and so obviously a substantial cost saving for BT, which is a commercial company. Should the government have paid more money to have got information security?

Speaker J: Well, my view is undoubtedly The problem is that, as I mentioned, the bean counters who are involved in this sort of thing will say, well, good heavens, no, you know, here we are, we can save money, we’ve got other things to want to spend it on. There’s the pressure of, you know, whether we’re building new train lines or new roads, or we want to invest in the National Health Service, or whatever it might be. We can let this run for a bit. And the problem is, as I’ve said before, you know, it’s, it’s a short-term palliative by the government that saves money on its long-term security.

Speaker B: So have these concerns gone away now? The next generation is about to be rolled out. 5G. Huawei is technologically well placed to deliver it all over the world, but because of security concerns, the Chinese company has been banished to the edge of Britain’s telecommunications system. It can supply equipment to the masts, but not to the backbone. But guess what? Those masts will host the backup data that all the emergency services will use during a crisis. A new system called the Emergency Services Network, which is currently being rolled out by AEE. So if the telecommunications system was disrupted, it could be catastrophic. Huawei could be in a position to control those backup systems with potentially disastrous consequences. No wonder the Technology Committee of the House of Commons is getting nervous. That’s all from this edition of Password with me, Peter Warren. The producer was Blue Buffery, and Jane Wyatt wrote the script. We’ll be back next month with the next episode, and you can watch the Huawei story unfold in a full article on our website, Future Intelligence. Thanks for listening. Goodbye.

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