US compares Huawei to the Mafia

As the US grows ever more desperate to recruit allies for the war on Huawei, its rhetoric is becoming shrill to the point of self-parody.

The latest outburst comes courtesy of some US official or other who didn’t even have the guts to put their name to it. The mystery apparatchik vented at CNBC, accusing Huawei of every crime they could think of short of cattle rustling. “How do we deal with that when the largest player is in essence the Mafia?” he blurted. “What do you do? It means there is some kind of a role for government.”

In keeping with the general suspension of due process by the US when it comes to Huawei, the official seems to be trying to throw sufficient unsubstantiated mud at Huawei to justify a further escalation of the already considerable hostile action against it. The Mafia reference was presumably inspired by the fresh charges of racketeering lodged against Huawei in the US earlier this month.

Huawei had yet to respond to our request for comment at time of writing, but CNBC had better luck. “That’s just crazy,” Glenn Schloss, Huawei VP of corporate comms told them. “We’re one of the largest private enterprise run companies in the world. Our senior management is more akin to the way American executives think and act.

“To liken Huawei to organized crime is disingenuous, and a PR stunt. We’re operating in 170 countries in the world connecting a third of the world’s people. And we operate in a free market structure. We do receive some subsidies [and] R&D funding from the Chinese government, but it’s not significant. We also receive subsidies and R&D funding from governments in Europe.”

How significant that funding from the Chinese is, we don’t know, and it would have been disingenuous of Schloss not to mention it. The racketeering charges largely concern alleged IP theft which, to the best of our knowledge, is one of the few criminal enterprises not associated with the Mafia. But since the US hasn’t let concrete evidence get in the way of a good accusation previously, it’s certainly not about to start now.

Verizon plugs healthcare in the never ending search for 5G ROI

Delivering 5G is the easy bit, figuring out how the telcos are going to make any real financial gains from it is the piece of the puzzle which is missing.

In its pursuit of the much lauded 5G profits, Verizon has announced a partnership with Emory Healthcare, creating what it now claims is the first 5G healthcare innovation lab in the US.

“The potential of Verizon 5G Ultra Wideband combined with mobile edge computing to transform healthcare is limitless,” said Tami Erwin, CEO of Verizon Business Group.

“Which is why Verizon is partnering with Emory to explore the 5G future of patient care. With 5G, doctors should be able to do things like create holographic 3D anatomical renderings that can be studied from every angle and even projected onto the body in the OR to help guide surgery.”

In what now appears to be the greatest PR campaign of the 21st century, the world was told 5G was the only way forward and it would recapture the lost fortunes of yesteryear for the telcos. The reality is somewhat different however as many telcos are still questioning how they are going to generate any ROI from the next generation of mobile technology.

The silver bullet is as real as a sociopathic unicorn, and it does now appear the industry has a new reality to ponder; profit by a thousand usecases.

In its efforts to create value in the healthcare industry, the Emory Healthcare Innovation Hub (EHIH) will aim to transform this vertical through the marriage of super-fast speeds and ultra-low latency networks, with real-time data analytics to add some credibility to the blue-sky thinking ideas of robotic surgery, the connected ambulance and remote patient monitoring.

Realistically, there is a lot to gain in the healthcare industry. This is a vertical which is under financial and operational pressure, and in desperate need of new ideas. Should the clunky bureaucracy of healthcare administrators be able to offer technology a clear path forward, there is an opportunity to create a preventative healthcare mission and significantly realise efficiencies throughout the hospital.

While it might seem like an obvious statement to make, the challenge which the likes of Verizon and Emory Healthcare will face here is going to be cultural. Perfecting the technology is the easy part of the equation, but convincing traditional industry to disrupt themselves will be a monumental task.

DT CEO ups US ambitions to double down on momentum

Deutsche Telekom CEO Tim Hoettges is looking to close the valuation gap between T-Mobile US and its rivals, as the telco revels following a very positive earnings call.

Share price in the German telco has jumped 3.9% in early morning trading following the financial results which saw revenues increase by 6.4% to €80.4 billion for 2019. Net profit was up by almost 80% to €3.9 billion, while free cash grew by 15.9% to €7 billion.

“The market environment in the European telecommunications sector is far from straightforward. Yet, despite the heavy regulation and inconsistent competitive situation, we emerged from the year just ended even stronger,” Hoettges said his letter to the shareholders.

“Not only that, but we are once again the leading European telco, based on both revenue and market value. That was and remains our overarching goal.”

Deutsche Telekom is one of the largest telcos across the world, but in recent years it is questionable as to whether it is one of the more progressive or future proofed. When looking at the penetration of full-fibre broadband or deployment of 5G infrastructure, the numbers are not as favourable, though the tide does seem to be turning.

The team now suggests 5G connectivity is being delivered in eight cities in its domestic German market, with ambitions to increase this to 20 by the end of 2020. Elsewhere, T-Mobile US launched its 5G offering in December and Austria has 31 5G base stations up-and-running.

Deutsche Telekom is heading in the right direction, but it is moving at a much slower pace than other telcos. It might want to proclaim itself as a leader in the telco arena, but realistically it is a fastish-follower at best, BT for example, has already launched 5G in 50 towns and cities across the UK.

One area where the company is proving to be incredibly aggressive is in the US, and this should continue over the coming months.

“We have the chance to become No.1 in the United States, to overtake AT&T and Verizon. That, at least, is our ambition,” Hoettges said during the earnings call.

With T-Mobile US and Sprint now looking at a clear path to the finish line, after a District Judge ruled in favour of the merger in the face of opposition from 13 Attorney Generals, the team can look further into the future. Following the merger, T-Mobile will be roughly the same size from a subscriber base as AT&T and Verizon, allowing more opportunity for the team to compete on a level playing field.

The US business is one which is once again proving to be very profitable for Deutsche Telekom.

T-Mobile US is the single largest business unit in the overarching business, accounting for just over 50% of the total revenues at €40.4 billion, a year-on-year increase of 10.7%. Momentum is clearly with the business also, the team boasted of 1.3 million branded postpaid net additions during its last financial results.

While the US is looking very positive for the telco, it will have to be careful sluggish activity in Europe does not open the door for rivals to steal market share in the various markets.

Texas Judge rules for White House over Huawei

Huawei has faced a setback in its pursuit of legitimacy in the US. as a Texas District Court ruled against its lawsuit directed towards the National Defense Authorization Act (NDAA).

Judge Amos Mazzant of the US District Court in East Texas ruled that section 889 of the NDAA was valid and legal. Huawei had argued the clause, which effectively banned it and ZTE from working with any company receiving federal funding, was unconstitutional on the grounds it presumed guilt without a fair trial.

While a Huawei victory was hardly going to make an impression with the single-minded White House policy makers, this is a victory for the Government, seemingly validating its decision.

“Contracting with the federal government is a privilege, not a constitutionally guaranteed right – at least not as far as this court is aware,” Judge Mazzant said in the ruling, first reported by Reuters.

This is an interesting nuance which has been put forward by Judge Mazzant. Huawei has argued the clause banning service providers from spending federal money on Chinese equipment is unconstitutional, though Judge Mazzant has stated that the Government should have the right to control how its money is allocated and spent. The Act does not prevent Huawei from doing business in the US entirely, which keeps the Government on the right side of the line.

The lawsuit, which was filed in March 2019, stated that Congress was acting in violation of the US Constitution as it was denying the firm the right to bid on both Government and private sector contracts. Huawei suggested the Act was a Bill of Attainder, as it presumed guilt without trial. Under Article I Section 9 in federal law, and in state law under Article I Section 10, US Constitution forbids such actions.

For the US, this could add some momentum to the already existing propaganda campaign against China and seemingly all companies from China. This ruling could add buoyancy to the Simple Resolution which has recently been passed in the House of Representatives.

The resolution, which can be used to influence administrative actions and foreign policy, stated that the House of Representatives believed all Chinese countries were effectively under Government control, state-owned or private. Such a broad-brush approach to condemnation is a very dangerous and small-minded approach to take, though the anti-China rhetoric could be offered a new lease of live…

US reportedly moves to restrict all Huawei access to US chip tech

The US Department of Commerce is said to be weighing new options to further limit Huawei’s access to the semiconductor technologies coming out the American companies.

The Wall Street Journal reported (behind paywall) that the DoC is working on changes to the remit of the “foreign direct product rule” to demand Huawei’s chip suppliers to apply for special licences if they use American technologies and American equipment. The rule currently “restricts foreign companies’ use of U.S. technology for military or national-security products”.

The measures have been mooted for a few weeks but have only just been put forward. President Trump is yet to review it, and not everyone in the administration is in favour of the changes, the newspaper reported. Semiconductor is one of America’s biggest export sectors to China.

The new rules could become a deterrent to all the semiconductor foundries for Huawei, including the Chinese companies, as they could be relying on technologies owned by or using equipment made by American companies. They could be forced to choose between holding on to Huawei as a customer or keeping their legitimate access to American technologies.

Taiwan Semiconductor Manufacturing Company Limited (TSMC), the world’s largest contract chip maker, is said to have generated more than 10% of its $35 billion annual income from fabrication for HiSilicon, Huawei’s fabless chip design subsidiary, according to estimate cited by WSJ.

Over the past year, despite the US restrictions on semiconductor export to Huawei, many businesses have managed to continue their business without a special licence, if they could prove the proportion of American-made value is lower than 25% of the total value. The DoC has proposed to lower the threshold to 10%.

If the new measures should enter into force, they would not only disperse the optimism for the telecoms industry following the “Phase-1” trade deal signed between the US and China, but also represent a new escalation of the Trump Administration’s efforts to further hamstring Huawei. Semiconductor fabrication has been an area that China has struggled to gain on their American competitors.

It would also be seen as part of the concerted government actions towards this purpose. The Defense Department has recently dropped its opposition to the government’s efforts to restrict American chip makers to supply Huawei through their overseas facilities.

The WSJ report comes days after the DoJ announced a set of superseding indictments, also days after the DoC granted 45 days extension to Huawei’s “Temporary General License”. At the time of writing, Huawei has not responded to Telecoms.com’s request for comment.

US outlines the North Korea cybersecurity threat

In a joint statement, US Government agencies have outlined the cybersecurity threats which have been attributed to North Korea.

With the days of James Bond espionage increasingly becoming a thing of the past, cyber criminals are becoming more common and organised. On one side of the coin, this could be private criminals, think of a digital Mafia, but state-sponsored campaigns and attacks are just as, if not more, common.

Russia and China might hit the headlines frequently, but North Korea is a long-time enemy of the US and it appears the Cybersecurity and Infrastructure Security Agency (CISA), the Federal Bureau of Investigation (FBI), and the Department of Defense (DoD) hasn’t forgotten about it.

All state-sponsored cybersecurity activity tied to North Korea is code-named Hidden Cobra, and thus far, seven malware variants have been publicly announced.

  • Hoplight – proxy applications that mask traffic between the malware and the remote operators
  • Bistromath – performs simple XOR network encoding and are capable of many features including conducting system surveys, file upload/download, process and command execution, and monitoring the microphone, clipboard, and the screen.
  • Slickshoes – a Themida-packed dropper that decodes and drops a file “C:\Windows\Web\taskenc.exe” which is a Themida-packed beaconing implant
  • Hotcroissant – custom XOR network encoding and is capable of many features including conducting system surveys, file upload/download, process and command execution, and performing screen captures
  • Artfulpie – performs downloading and in-memory loading and execution of a DLL from a hardcoded url
  • Buffetline – sample uses PolarSSL for session authentication, but then utilizes a FakeTLS scheme for network encoding using a modified RC4 algorithm. It has the capability to download, upload, delete, and execute files; enable Windows CLI access; create and terminate processes; and perform target system enumeration
  • Crowdedflounder – a Themida packed 32-bit Windows executable, which is designed to unpack and execute a Remote Access Trojan (RAT) binary in memory

While the concept of a state-sponsored cyber attack is far from new, the frequency of these incidents are becoming much more common. And worryingly, these are only the incidents which the general public is made aware of.

In November, New Zealand’s National Cyber Security Centre (NCSC) suggested that 38% of the incidents it had to respond to were most likely state-sponsored. These are only a small proportion of the total cyber incidents, though the NCSC is tasked with tackling the most serious. The Five Eyes intelligence alliance, of which New Zealand is a member, has attributed the WannaCry incident to North Korea and NotPetya to Russia in recent years.

Looking at December 2019 alone, the Center for Strategic and International Studies suggests there were attacks from a Chinese state-sponsored group on multiple nations, a Cambodian Government agency was targeted, login credentials from government agencies in 22 nations across North America, Europe, and Asia were stolen by unknown hackers, a suspected Vietnamese state-sponsored hacking group attacked BMW and Hyundai, while Russian government hackers targeted Ukrainian diplomats, officials, military officers, journalists, and non-governmental organizations in a spear phishing campaign.

State-sponsored cyber incidents are most certainly on the rise, but the worrying element of this trend is that no-one genuinely knows. The likelihood of being able to attribute these incidents back to a particular regime with absolute certainly, and free from political bias, is incredibly low.

US Ambassador to Germany starts making intel sharing threats

Richard Grenell, the US Ambassador to Germany, has starting the intimidation game with his host nation over Huawei, hoping the same tactic used against the UK will reap better yields.

In a series of tweets through the weekend, Grenell made his position on Huawei very clear, aligning himself with the anti-China rhetoric lobby which is beginning to verge on xenophobic. The Ambassador has now reiterated the intelligence embargo which was promised to the UK should it offer Huawei opportunity to do business.

Perhaps one of the most ironic elements of this story is the phone call itself. President Donald Trump has reportedly refused to use encrypted phones, due to the inconvenience, so any conversation he has is completely unprotected.

Irrelevant of whether the concepts of irony gain traction in the US, Grenell is effectively declaring that he has been given permission to take a firm stance against Germany. Although there has been no official confirmation, Germany will most likely be offered an ultimatum; access US intelligence data or have Huawei equipment in the communications network.

Although most of the transatlantic-lobby has been directed towards the UK in recent months, thanks to the now-concluded Supply Chain Review, Germany is another influential voice in Europe which is yet to formalise its position on Huawei. The US might have lost the political battle in the UK, but it still has until the EU Summit in March to convince the Germans China is the enemy.

There might have been some noises that Germany would head the same direction as the UK, but Chancellor Angela Merkel has previously said Germany would not make a decision until the EU Summit in March. Like the UK, Germany has a valuable trading relationship with the US, but it also has one with China. There is also the ambitions of the wider European Union to consider, where Germany is one of the leading voices.

Looking at the relationship with China, Germany’s highly influential automotive sector will not want to lose out because of issues with the telecoms industry. In 2018, almost one-quarter of all cars sold in China were German. In the first nine months of 2019, BMW delivered more than 500,000 vehicles to China, its largest single market.

As it stands, the automotive industry in China is not in the greatest of positions, sales have slumped over the last 18 months, while the US/China trade war has impacted the ability for these automotive giants to source some parts. The conflict between the US and China is not good for the German automotive trade, and this is a very powerful organisation in the German economy.

Germany may not want to say no to Huawei and anger the Chinese, but then again it might not have to.

The US, and Secretary of State Mike Pompeo, had been very aggressive towards the UK in the weeks leading up to the conclusion of the Supply Chain Review. When the carrot didn’t work, promising a favourable trade agreement, the stick was favoured. The threat of an intelligence data embargo for security agencies was pushed towards the UK, like Grenell is doing today.

The issue that Grenell might face here is that the US didn’t follow through on that threat to the UK.

The conclusion of the Supply Chain Review saw a 35% limitation placed on the telcos for Huawei equipment in the different segments of the network. This has proven to be awkward for some, having to reconfigure deployment strategies, though it is far from the apocalypse scenario of an all-out ban which was being demanding by the US.

The UK defied the US, but the US is yet to cut off the UK from valuable intelligence data for security and enforcement agencies. Considering this outcome, some in Germany might not take the US threat as seriously as before.

Huawei dismisses fresh US racketeering charges

Huawei has publicly rebutted the new superseding charges of racketeering and trade secret theft filed by the US Department of Justice.

Officials from the DoJ and the FBI announced the charges against Huawei as well as two of its official subsidiaries, Huawei Device Co. Ltd. (Huawei Device), Huawei Device USA Inc. (Huawei USA), and two of its unofficial subsidiaries, Futurewei Technologies Inc. (Futurewei) and Skycom Tech Co. Ltd. (Skycom). Also on the defendants list is Huawei’s CFO, Meng Wanzhou (Meng), already in detention in Canada fighting her extradition case. The new charges being a superseding indictment means it contains and expands on the earlier charges officially announced in January 2019. As a result, most of cases listed out in detail in the full document are familiar to those following the Huawei vs. USA saga closely.

Huawei denies all the charges. “This new indictment is part of the Justice Department’s attempt to irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement,” the company said in a statement. “These new charges are without merit and are based largely on recycled civil disputes from last 20 years that have been previously settled, litigated and in some cases, rejected by federal judges and juries. The government will not prevail on its charges, which we will prove to be both unfounded and unfair.”

The charges broadly fall into two categories: racketeering and breaking US international sanctions.

Most of them fall into the first category. The DoJ alleges that Huawei and the associated parties have violated the 1970 “Racketeer Influenced and Corruptions Act (RICO)”. The law, targeted at organised crimes, lists 35 types of offenses that may qualify as “racketeering”, from bribery and kidnapping to obstruction of criminal investigation by law enforcement agencies and everything in between. In the present case, the DoJ accused Huawei of “misappropriated intellectual property included trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology”, then, after winning unfair competitive advantages, Huawei and its subsidiaries reinvesting the gains from this “alleged racketeering activity in Huawei’s worldwide business, including in the United States.”

Specifically this category of actions allegedly include “entering into confidentiality agreements with the owners of the intellectual property and then violating the terms of the agreements by misappropriating the intellectual property for the defendants’ own commercial use” and poaching competitor employees the “directing them to misappropriate their former employers’ intellectual property”, as well as “using proxies such as professors working at research institutions to obtain and provide the technology to the defendants.” Huawei is also alleged to have incentivised its employees for obtaining the most valuable competitor information.

When it comes to breaking sanctions, the indictment, updated with more details, is against Huawei and its subsidiaries’ alleged “business and technology projects in countries subject to U.S., E.U. and/or U.N. sanctions, such as Iran and North Korea – as well as the company’s efforts to conceal the full scope of that involvement.”

Meanwhile, the Department of Commerce decided to renew the Temporary General License for Huawei for 45 more days, which means American companies can have another one and half months to do business with Huawei legally while moving “to alternative sources of equipment, software and technology”, the DoC said.

In response to the DoC decision, Huawei reiterated its position that it should be removed the government’s Entity List completely instead of being granted one at a time. Not doing so “has done significant economic harm to the American companies with which Huawei does business, and has already disrupted collaboration and undermined the mutual trust on which the global supply chain depends,” the company said in an emailed statement.

Incidentally, while the DoJ alleged Huawei of using scholars to gain access to advanced technologies otherwise unavailable to it, the Department of Education has launched an investigation into gifts from foreign governments to America’s top universities, with Harvard and Yale being singled out. These two schools as well as other Ivy League and leading schools including Georgetown, Texas A&M, Cornell, Rutgers, MIT, and Maryland, have failed to declare fundings from Qatar, China, Saudi Arabia, and the United Arab Emirates. The DoE said since its enforcement efforts started in July last year, $6.5 billion previously undisclosed foreign money has been reported.

The crackdown on the US academics’ links to the Chinese government went up a notch when late last month, Charles Lieber, the chair of Harvard University’s department of chemistry and chemical biology and one of the world’s leading nanoscientists, was arrested for lying about his link with Chinese government-sponsored lab in China as well as the hefty payments ($50,000 per month) he received.

Huawei attacks US Government and Wall Street Journal credibility

Huawei has issued its retort to US accusations that it has access to telco networks, suggesting the US Government should be more mature than resorting to PR and propaganda campaigns.

“US allegations of Huawei using lawful interception are nothing but a smokescreen – they don’t adhere to any form of accepted logic in the cyber security domain,” the statement reads. “Huawei has never and will never covertly access telecom networks, nor do we have the capability to do so.”

Earlier this week, US officials briefed journalists at the Wall Street Journal regarding a technical loophole which granted Huawei access to telco networks around the work. Intended for law enforcement agencies, these backdoors offered opportunity for ‘Lawful Intercept’ activities when validated by the courts, though Huawei allegedly had access to these backdoors.

While it is a claim which certainly would have shocked a few people around the world, the story itself was a little bit suspect…

Firstly, if this is evidence of a smoking gun to prove espionage, why weren’t US officials showing this to the Governments of allied nations. Secondly, the US officials didn’t actually state that Huawei had done anything wrong. Third, it seemed unusual that only Huawei has access to these backdoors. And finally, if this is a situation which has been present since 2009, why are we only finding out about it now?

It would be foolish to completely disregard claims of espionage from the Chinese Government, but these statements from the US Government to the WSJ look more like a propaganda campaign, an offensive move to turn the tide of public opinion. If there was evidence, as the US officials suggest, surely it would be presented to other regulators and governments rather than a news outlet.

In its response to the allegations, Huawei has hit back suggesting the claims are nothing more than a rouse, the WSJ should have more credibility than to blindly follow such statements, its products are built to standards which make provisions for lawful intercept, and that it is an equipment manufacturer to the telcos.

The last point is an interesting one. Huawei manufacturers equipment which it sells to telcos, who then operate it behind security firewalls and systems. There would have to be some very sophisticated and nefarious software skills to embed such treacherous backdoors, and considering the damning reports the National Cyber Security Centre (NCSC) gave it in recent months, it seems like a long shot. Not impossible, but perhaps improbable.

At some point the telcos are going to have to put their hands up and say they aren’t that incompetent. Security is one of the most important roles in a telco nowadays, and to suggest Huawei has managed to dupe the telcos for all these years without a single sniff of suspicion, or at least someone accidentally bumping into a backdoor, is also quite unlikely.

If a network is breached or has played a role in international espionage, the telco which owns it has as much to lose as Huawei; how many subscribers or enterprise customers would it have left if this was the case? How many lawsuits would they open themselves up to if all these allegations could be proven true? Eventually, the telcos are going to have to say they aren’t idiots and know what they are doing to mitigate risk and uphold the security principles they preach.