Monday, August 23, 2010

The Huawei and Sprint Nextel Deal Seems Innocent Enough

On first impression, the eight Republican Senator's opposition to Huawei's bid to supply Sprint Nextel with telecommunications equipment in the US seemed like a typical political exploitation of xenophobia, particularly in a competitive mid-term election season. But Huawei has had some accusations against them over the years that make them seem more suspect than other Chinese companies. However, I think the nature of this particular business deal does not make it a serious security risk.

Huawei was accused of stealing technology from Cisco, Motorola, and some vendors at a Supercomm show. Cisco's suit against Huawei was dismissed because it was determined that rogue developers were at fault, the 'spy' at the Supercomm show was never prosecuted, and we have yet to see whether the Motorola case has legs. So Huawei's history with corporate espionage is so far undetermined.

Transactions with Huawei have previously run into problems in two other countries. In the US, Huawei was attempting a merger of 3Com and the CFIUS committee found that the merger would pose a threat to national security, but the deal was not blocked. Instead, Huawei voluntarily withdrew their offer. The Indian government has also previously canceled two deals between Huawei and Indian telecom companies because of national security concerns, including BSNL and Sistema Shyam Teleservices Ltd., the Indian unit of Russia's AFK Sistema.

The allegations of corporate espionage have not yet proven true, and while corporate espionage is a criminal issue, the government should not block a deal because it is possible that Huawei might steal technology from Sprint. Sprint should be able to make those determinations on their own as part of their willingness to be supplied by Huawei.

Even if there have been security concerns in the US over a merger with Huawei, those same concerns should not be a problem in the supply of equipment in the US market. The great and only fear, of course, is a hardware hack. The successful application of hardware hacks in espionage is limited, and largely just to the US against very specific targets that were already our enemies.

A hardware hack is an unreasonable fear, the risk of technology theft can be dealt with effectively by Sprint's choice to deal or not deal with Huawei, and it's time to realize that the second largest mobile equipment in the world, Huawei, might, might just be after a profit. And if they're the best provider of equipment, then it's a net good if Sprint buys their equipment from Huawei.

1 comment:

Anonymous said...

Some U.S politicians have become so China-phobic that they will see anything coming from China as a security threat, be it barbie dolls or pandas. Wouldn't companies like Boeing, GM, or HP can just as easily plant special chips in their China-bound products? Would it be fair to these companies if Chinese government rejects their products for the same reason that U.S official reject theirs? After all, these same companies are also big defense contractors for the U.S government. Wouldn't it be beneficial for these companies to help their own domestic U.S government to defeat its foreign enemies by embedding special chips in their products? In the future, watch the Chinese government to return the favor by rejecting Boeing airplane on the same stupid logic.