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That Global Ban on Huawei? Not So Much Anymore

For years the US government has warned the world that Chinese telecom giant Huawei is not to be trusted. Some governments agree: Australia and Japan have blocked Huawei gear from their next-generation 5G wireless networks.

But others, including US allies, disagree. A UK Parliament committee rejected a proposed ban on British telecom carriers using Huawei gear. "There are no technical grounds for excluding Huawei entirely from the UK's 5G or other telecommunications networks," UK Member of Parliament Norman Lamb, chair of the Science and Technology Committee, wrote in a letter explaining the committee's conclusions. The committee's decision follows the European Union's decision in March not to ban Huawei outright, but instead to ask member countries to assess the risks to their 5G networks.

Even the US appears to be easing up on Huawei. US government agencies are banned from doing business with carriers that use Huawei equipment. Last month, President Trump tweeted that he had agreed to allow US technology companies to sell products that don't threaten national security to Huawei, despite sanctions imposed against the company by the US Commerce Department in May. Last week Commerce Secretary Wilbur Ross clarified that the government will grant licenses to US companies to sell products to Huawei on a case-by-case basis, but won't lift the restrictions on the company altogether.

That could be a major boon to both Huawei and US companies that sell to it, depending on how generous the department is in granting licenses. Both Huawei's telecommunication infrastructure equipment and its smartphones depend on US-made chips and software, such as the Google Play app store. Huawei bought $11 billion worth of products from the US last year, according to founder and CEO Ren Zhengfei. Ren said last month that US restrictions would cost the company $30 billion this year and next. He said the company is working to end its reliance on US companies by making its own chips and smartphone operating system, but that he also wants Huawei to buy from US suppliers if possible.

Still, Huawei reportedly is preparing to lay off hundreds of US employees of its subsidiary due to the US restrictions, according to The Wall Street Journal. Huawei did not respond to our request for comment.

And though the UK committee rejected a ban on Huawei equipment, carriers already exclude the company's gear from "core" parts of wireless networks. The committee recommended making this exclusion mandatory. Lamb's letter did not explain the reasoning for excluding the company from the core parts of networks but not other parts. The committee also said that, though there's no technical reason to ban Huawei gear, there might be ethical reasons to do so. Specifically, Lamb’s letter cites an Australian Strategic Policy Institute report that Huawei supplied equipment to surveil Uyghur Muslims in western China.

Still, the committee's investigation could have been much worse for Huawei. In March, a UK government organization tasked with evaluating the security of Huawei's products released a scathing report warning of serious security risks in the company's software. The group's report didn't accuse Huawei of deliberately creating "backdoors," but blamed the problems on issues with the company's "basic engineering competence and cyber security hygiene."

Lamb's letter acknowledged the security issues highlighted in the previous reports. But it points out that the UK government discovered these issues because Huawei allows the government to audit its proprietary source code. The government doesn't have similar access to code from other vendors, such as Ericsson and Nokia, so it's unable to say whether Huawei's products pose a greater threat than those made by other companies. The letter suggests considering the merits of establishing similar auditing programs for equipment from other companies.

Opening its code to government inspections is part of Huawei's strategy to regain trust around the world. The company opened its Brussels Cyber Security Transparency Centre last March to help assure EU institutions that its products are safe to use.

Read more: https://www.wired.com/story/global-ban-huawei-not-so-much/

telecommunications

No technical reason to exclude Huawei as 5G supplier, says UK committee

A UK parliamentary committee has concluded there are no technical grounds for excluding Chinese network kit vendor Huawei from the country’s 5G networks.

In a letter from the chair of the Science & Technology Committee to the UK’s digital minister Jeremy Wright, the committee says: “We have found no evidence from our work to suggest that the complete exclusion of Huawei from the UK’s telecommunications networks would, from a technical point of view, constitute a proportionate response to the potential security threat posed by foreign suppliers.”

Though the committee does go on to recommend the government mandate the exclusion of Huawei from the core of 5G networks, noting that UK mobile network operators have “mostly” done so already — but on a voluntary basis.

If it places a formal requirement on operators not to use Huawei for core supply the committee urges the government to provide “clear criteria” for the exclusion so that it could be applied to other suppliers in future.

Reached for a response to the recommendations, a government spokesperson told us: “The security and resilience of the UK’s telecoms networks is of paramount importance. We have robust procedures in place to manage risks to national security and are committed to the highest possible security standards.”

The spokesperson for the Department for Digital, Media, Culture and Sport added: “The Telecoms Supply Chain Review will be announced in due course. We have been clear throughout the process that all network operators will need to comply with the Government’s decision.”

In recent years the US administration has been putting pressure on allies around the world to entirely exclude Huawei from 5G networks — claiming the Chinese company poses a national security risk.

Australia announced it was banning Huawei and another Chinese vendor ZTE from providing kit for its 5G networks last year. Though in Europe there has not been a rush to follow the US lead and slam the door on Chinese tech giants.

In April leaked information from a UK Cabinet meeting suggested the government had settled on a policy of granting Huawei access as a supplier for some non-core parts of domestic 5G networks, while requiring they be excluded from supplying components for use in network cores.

On this somewhat fuzzy issue of delineating core vs non-core elements of 5G networks, the committee writes that it “heard unanimously and clearly” from witnesses that there will still be a distinction between the two in the next-gen networks.

It also cites testimony by the technical director of the UK’s National Cyber Security Centre (NCSC), Dr Ian Levy, who told it “geography matters in 5G”, and pointed out Australia and the UK have very different “laydowns” — meaning “we may have exactly the same technical understanding, but come to very different conclusions”.

In a response statement to the committee’s letter, Huawei SVP Victor Zhang welcomed the committee’s “key conclusion” before going on to take a thinly veiled swiped at the US — writing: “We are reassured that the UK, unlike others, is taking an evidence based approach to network security. Huawei complies with the laws and regulations in all the markets where we operate.”

The committee’s assessment is not all comfortable reading for Huawei, though, with the letter also flagging the damning conclusions of the most recent Huawei Oversight Board report which found “serious and systematic defects” in its software engineering and cyber security competence — and urging the government to monitor Huawei’s response to the raised security concerns, and to “be prepared to act to restrict the use of Huawei equipment if progress is unsatisfactory”.

Huawei has previously pledged to spend $2BN addressing security shortcomings related to its UK business — a figure it was forced to qualify as an “initial budget” after that same Oversight Board report.

“It is clear that Huawei must improve the standard of its cybersecurity,” the committee warns.

It also suggests the government consults on whether telecoms regulator Ofcom needs stronger powers to be able to force network suppliers to clean up their security act, writing that: “While it is reassuring to hear that network operators share this point of view and are ready to use commercial pressure to encourage this, there is currently limited regulatory power to enforce this.”

Another committee recommendation is for the NCSC to be consulted on whether similar security evaluation mechanisms should be established for other 5G vendors — such as Ericsson and Nokia: Two European based kit vendors which, unlike Huawei, are expected to be supplying core 5G.

“It is worth noting that an assurance system comparable to the Huawei Cyber Security Evaluation Centre does not exist for other vendors. The shortcomings in Huawei’s cyber security reported by the Centre cannot therefore be directly compared to the cyber security of other vendors,” it notes.

On the issue of 5G security generally the committee dubs this “critical”, adding that “all steps must be taken to ensure that the risks are as low as reasonably possible”.

Where “essential services” that make use of 5G networks are concerned, the committee says witnesses were clear such services must be able to continue to operate safely even if the network connection is disrupted. Government must ensure measures are put in place to safeguard operation in the event of cyber attacks, floods, power cuts and other comparable events, it adds. 

While the committee concludes there is no technical reason to limit Huawei’s access to UK 5G, the letter does make a point of highlighting other considerations, most notably human rights abuses, emphasizing its conclusion does not factor them in at all — and pointing out: “There may well be geopolitical or ethical grounds… to enact a ban on Huawei’s equipment”.

It adds that Huawei’s global cyber security and privacy officer, John Suffolk, confirmed that a third party had supplied Huawei services to Xinjiang’s Public Security Bureau, despite Huawei forbidding its own employees from misusing IT and comms tech to carry out surveillance of users.

The committee suggests Huawei technology may therefore be being used to “permit the appalling treatment of Muslims in Western China”.

Read more: https://techcrunch.com/2019/07/15/no-technical-reason-to-exclude-huawei-as-5g-supplier-says-uk-committee/

telecommunications

Huawei can buy from US suppliers again but things will never be the same

U.S. President Donald Trump has handed Huawei a lifeline after he said that U.S. companies are permitted to sell goods to the embattled Chinese tech firm following more than a month of uncertainty.

It’s been a pretty dismal past month for Huawei since the American government added it and 70 of its affiliates to an “entity list” which forbids U.S. companies from doing business with it. The ramifications of the move were huge across Huawei’s networking and consumer devices businesses. A range of chip companies reportedly forced to sever ties while Google, which provides Android for Huawei devices, also froze its relationship. Speaking this month.

All told, Huawei founder and chief executive Ren Zhengfei said recently that the ban would cost the Chinese tech firm — the world’s third-larger seller of smartphones — some $30 billion in lost revenue of the next two years.

Now, however, the Trump administration has provided a reprieve, at least based on the President’s comments following a meeting with Chinese premier Xi Jinping at the G20 summit this weekend.

“US companies can sell their equipment to Huawei. We’re talking about equipment where there’s no great national security problem with it,” the U.S. President said.

Those comments perhaps contradict some in the US administration who saw the Huawei blacklisting as a way to strangle the company and its global ambitions, which are deemed by some analysts to be a threat to America.

Despite the good news, any mutual trust has been broken and things are unlikely to be the same again.

America’s almost casual move to blacklist Huawei — the latest in a series of strategies in its ongoing trade battle with China — exemplifies just how dependent the company has become on the U.S. to simply function.

Huawei has taken steps to hedge its reliance on America, including the development of its own operating system to replace Android and its own backup chips, and you can expect that these projects will go into overdrive to ensure that Huawei doesn’t find itself in a similar position again in the future.

Of course, decoupling its supply chain from US partners is no easy task both in terms of software and components. It remains to be seen if Huawei could maintain its current business level — which included 59 million smartphones in the last quarter and total revenue of $107.4 billion in 2018 — with non-US components and software but this episode is a reminder that it must have a solid contingency policy in case it becomes a political chess piece again in the future.

Beyond aiding Huawei, Trump’s move will boost Google and other Huawei partners who invested significant time and resources into developing a relationship with Huawei to boost their own businesses through its business.

Indeed, speaking to press Trump, Trump admitted that US companies sell “a tremendous amount” of products to Huawei. Some “were not exactly happy that they couldn’t sell” to Huawei and it looks like that may have helped tipped this decision. But, then again, never say never — you’d imagine that the Huawei-Trump saga is far from over despite this latest twist.

Read more: https://techcrunch.com/2019/06/29/huawei-us-supplier-ban-lifted/

telecommunications

Is American Micromobility a Bust?

In recent months, safety concerns and deep operating losses have cast doubt on the long-term prospects of the electric scooter and bike-share industry. American mobility networks like Lime and Bird are devouring so many ebikes and scooters that even Chinese manufacturers worry their pace is unsustainable.

But while individual companies may struggle, such micromobility isn't doomed. For proof, we need only look to China, which already has roughly 200 million electric bicycles and scooters on its streets. If American cities can make space for electric scooters and bicycles, they can incubate technologies that will change the face of urban transportation.

The story of micromobility starts long before electric scooters appeared in Southern California in 2017. Starting in the 1990s, Taiwan sought to promote electric bikes as an environmentally friendly alternative to dirty two-stroke motorcycles. But the ebike industry really achieved scale across the Taiwan Strait, in China. From 1998 to 2005, ebike ownership in China soared from 40,000 to over 10 million.

This boom was unintentionally fueled by government policy. In 1996, city officials began banning gasoline-powered motorcycles from city centers due to air pollution concerns. Ebikes, which eliminate local air pollution and have been shown to reduce carbon dioxide emissions by roughly 98 percent on a per-mile basis compared with cars, filled the void. Micromobility received another boost in 2005, when an outbreak of SARS, the highly contagious and potentially fatal pulmonary virus, drove Chinese commuters away from public transport.

China now has more than 200 million ebikes, about one for every Chinese car. China’s ebikes have helped spawn entirely new classes of vehicles, including the electric scooters proliferating in US cities today.

In America, companies like Bird and Lime have combined micromobility with another Chinese innovation: dockless technology. In 2015, Chinese companies like Ofo and Mobike deployed fleets of bicycles that used wireless networks and apps to track vehicles on city streets, eliminating the need for docking stations. American mobility networks took this one step further by electrifying dockless bike and scooter shares.

Within a few years, micromobility will form the basis for a vast physical network of data, people, and retail. Lime and Bird hope to design, deploy, and harvest data from this project. They will also develop new vehicles that will have as much in common with today’s crude scooters as the iPhone did with its clamshell predecessors.

In fact, the iPhone is a good analogy in more ways than one. While iPhones are built in China, much of the profit comes back to US designers and mobile carriers. In 2016, the iPhone 7 debuted at a price of $649. IHS-Markit estimated that only about $8.46 of that went to China; the lion’s share of the value went to the US and Japan. iPhones also support monthly subscription fees, an $11 billion app ecosystem, and a massive accessories market.

Micromobility holds similar potential. The industry will spawn new business models, software platforms, subscription fees, and product ecosystems. All this will enable increased productivity, a reduction in emissions and air pollution, and massive savings in time and fuel.

Just as we have come to rely on telecommunications, we all rely on mobility. In many cases, micro will be the best way to supply this demand. This is as true in car-crazy America, where roughly 60 percent of car trips are under 6 miles long, as it is in Beijing or Manilla. McKinsey estimates that in the US, EU, and China micromobility could be a $300 billion to $500 billion market by 2030. Barclays predicts the market will be worth nearly $900 billion.

Perhaps most important, micromobility can be scaled with eye-popping speed. But for the US to get a piece of this pie, we need to start rethinking some fundamentals of our car-obsessed society.

American cities will need to dedicate public roads to micromobilty as they have in China, where massive protected bike lanes flank boulevards. Cyclists on 40-pound vehicles should not be forced to ride shoulder to shoulder with cars weighing 4,000 pounds. Asking them to do so is dangerous and impractical.

Policy and infrastructure are critical. Unlike transit, micromobility can thrive without subsidies. Indeed, the movement can save cities money by improving the utilization of existing roads and addressing the “last mile” challenges of urban transit systems.

If American cities follow China’s lead and make space for electric scooters and bikes, we can improve air quality and traffic congestion while slashing carbon emissions. The US can and should lead the way. If we don’t, we’ll miss out on one of the key growth opportunities of the 21st century economy.

WIRED Opinion publishes articles written by outside contributors, representing a wide range of viewpoints. Read more opinions here. Submit an op-ed at opinion@wired.com

Read more: https://www.wired.com/story/is-micromobility-a-bust/

telecommunications

Huawei says US ban will cost it $30B in lost revenue

Following a string of trade restrictions from the U.S., China’s telecoms equipment and smartphone maker Huawei expects its revenues to drop $30 billion below forecast over the next two years, founder and chief executive Ren Zhengfei said Monday during a panel discussion at the company’s Shenzhen headquarters.

Huawei’s production will slow down in the next two years while revenues will hover around $100 billion this and next year, according to the executive. The firm’s overseas smartphone shipment is tipped to drop 40%, he said, confirming an earlier report from Bloomberg.

That said, Ren assured that Huawei’s output will be “rejuvenated” by the year 2021 after a period of adjustment.

Huawei’s challenges are multifaceted as the U.S. “entity list” bars it from procuring from American chip makers and using certain Android services, among a list of other restrictions. In response, the Chinese behemoth recently announced it has been preparing for years its own backup chips and an alternative smartphone operating system.

“We didn’t expect the U.S. to attack Huawei with such intense and determined effort. We are not only banned from providing targeted components but also from joining a lot of international organizations, collaborating with many universities, using anything with American components or even connecting to networks that use American parts,” said Ren at the panel.

The founder said these adverse circumstances, though greater than what he expected, would not prevent the company from making strides. “We are like a damaged plane that protected only its heart and fuel tank but not its appendages. Huawei will get tested by the adjustment period and through time. We will grow stronger as we make this step.”

huawei

“Heroes in any times go through great challenges,” reads a placard left on a table at a Huawei campus cafe, featuring the image of a damaged World War II aircraft (Photo: TechCrunch)

That image of the beaten aircraft holding out during hard times is sticking to employees’ minds through little motivational placards distributed across the Huawei campus. TechCrunch was among a small group of journalists who spoke to Huawei staff about the current U.S.-China situation, and many of them shared Ren’s upbeat, resilient attitude.

“I’m very confident about the current situation,” said an employee who has been working at Huawei for five years and who couldn’t reveal his name as he wasn’t authorized to speak to the press. “And my confidence stems from the way our boss understands and anticipates the future.”

More collaboration

Although 74-year-old Ren had kept a quiet profile ever since founding Huawei, he has recently appeared more in front of media as his company is thrown under growing scrutiny from the west. That includes efforts like the Monday panel, which was dubbed “A Coffee With Ren” and known to be Ren’s first such fireside chat.

Speaking alongside George Gilder, an American writer and speaker on technology, and Nicholas Negroponte, co-founder of the MIT Media Lab, Ren said he believed in a more collaborative and open economy, which can result in greater mutual gains between countries.

“The west was the first to bring up the concept of economic globalization. It’s the right move. But there will be big waves rising from the process, and we must handle them with correct rather than radical measures,” said Ren.

“It’s the U.S. that will suffer from any effort to decouple,” argued Gilder. “I believe that we have a wonderful entrepreneurial energy, wonderful creativity and wonderful technology, but it’s always thrived with collaboration with other countries.”

“The U.S. is making a terrible mistake, first of all, picking on a company,” snapped Negroponte. “I come from a world where the interest isn’t so much about the trade, commerce or stock. We value knowledge and we want to build on the people before us. The only way this works is that people are open at the beginning… It’s not a competitive world in the early stages of science. [The world] benefits from collaboration.”

“This is an age for win-win games,” said one of the anonymous employees TechCrunch spoke to. He drew the example of network operator China Mobile, which recently announced to buy not just from Huawei but also from non-Chinese suppliers Nokia and Ericsson after it secured one of the first commercial licenses to deploy 5G networks in the country.

“I think the most important thing is that we focus on our work,” said Ocean Sun, who is tasked with integrating network services for Huawei clients. He argued that as employees, their job is to “be professional and provide the best solutions” to customers.

“I think the commercial war between China and the U.S. damages both,” suggested Zheng Xining, an engineer working on Huawei’s network services for Switzerland. “Donald Trump should think twice [about his decisions].”

Read more: https://techcrunch.com/2019/06/17/trade-war-costs-huawei-30-billion/

telecommunications

Chinas largest chipmaker is delisting from the Nasdaq

The U.S-China trade war is increasingly influencing tech. Huawei has suffered a turbulent past week with key suppliers pausing work with the company, and now China’s largest chipmaker is planning to delist from the New York Stock Exchange.

Semiconductor Manufacturing International Corp (SMIC) announced in a filing published Friday that it plans to delist next month ending a 15-year spell as a public company in the U.S. The firm will file a Form 25 to delist on June 3, which is likely to see it leave the NYSE around ten days later. SMIC, which is backed by the Chinese government and state-owned shareholders, will focus on its existing Hong Kong listing going forward but there will be trading options for those holding U.S-based ADRs.

In its announcement, SMIC said it plans to delist for reasons that include limited trading volumes and “significant administrative burden and costs” around the listing and compliance with reporting.

What it doesn’t say is that this is linked to the frosty relationship between the U.S. and China, and already the company has played that rationale.

“SMIC has been considering this migration for a long time and it has nothing to do with the trade war and Huawei incident. The migration requires a long preparation and timing has coincided with the current trade rhetoric, which may lead to misconceptions,” a spokesperson told CNBC.

Still, it is impossible to ignore the current context. Huawei’s entry to a U.S. blacklist has paused its relationship with key suppliers including ARM, Qualcomm, Intel and Google, which supplies the Android OS for its phones, so SMIC’s decision to remove its financial links to the U.S. fees into fears of a bifurcation of U.S. and Chinese tech, deliberate or not.

SMIC’s shares dropped 4 percent in Hong Kong on Friday. Trading of its U.S-based ADRs crossed one million on Friday, that’s well above an above 90-day volume of nearly 150,000 per day.

The company is China’s largest chip firm, specializing in integrated circuit manufacturing with clients such as Qualcomm, Broadcom and Texas Instruments. SMIC made a profit of $746.7 million in 2018 on revenues of $3.36 billion. Its most recent Q1 results released earlier this month saw revenue fall 19 percent year-on-year.

There has always been tension around Chinese companies using U.S. public markets to go public, and not just from an American standpoint. Chinese companies are increasingly exploring other options, including Hong Kong — where Xiaomi went public last year — while a-soon-to-launch ‘science and tech’ board in Shanghai is hotly touted as an alternative destination.

The board launches in pilot mode next month, but already Chinese bankers and tech companies have found it challenging to deliver on expectations, as a Reuters report earlier this year concluded.

Read more: https://techcrunch.com/2019/05/24/smic-nasdaq-delisting/

telecommunications

How Huawei Might Handle the Latest US Sanctions

Things were looking up for Huawei last month. Officials in the UK, Germany, and the European Union signaled they would defy US pleas to ban the Chinese telecommunications giant from building 5G wireless networks within their borders. Huawei also reported a 39 percent increase in first-quarter revenue. Then, on Thursday, the US Department of Commerce added Huawei to a list of companies considered a threat to US national security, meaning it would need permission to acquire US technology. Soon chipmakers like Intel and Broadcom reportedly stopped selling to Huawei, and Google pulled the company's licenses for key mobile applications like Gmail and the Google Play app store.

When the Trump administration barred US companies from selling to Chinese telecom company ZTE last year, ZTE said it would halt operations. The Trump administration later backed down, but ZTE's near-death experience demonstrates how reliant telecom companies are on US technologies. Huawei isn't as vulnerable as ZTE was, analysts say. Huawei makes some of its own chips, has bigger stockpiles of components, and isn’t as reliant on its handset business as ZTE.

Huawei has been downplaying the consequences of the US export restrictions. "The current practice of US politicians underestimates our strength,” Huawei founder Ren Zhengfei told Chinese media on Tuesday, according to The Guardian. "Huawei’s 5G will absolutely not be affected."

On Monday, the US government agreed to a 90-day exception to the export restrictions that allow Huawei to deal with US companies to support existing products. Google will still be able to provide updates, including security patches, to existing Android-based Huawei smartphones. Perhaps more important, Huawei will be able to buy chips and components necessary to maintain and support existing telecommunication infrastructure. That cushions the blow dealt by the Trump administration. It’s possible that the Commerce Department will renew the exceptions after 90 days to prevent problems for carriers that rely on Huawei’s equipment. But Huawei’s ability to build and support new products will be hampered.

The US government has long worried that Huawei could help China spy on US citizens by planting "back doors" in its telecommunications infrastructure gear or by reporting security vulnerabilities to Beijing before the rest of the world. Huawei denies that it has spied on behalf of China and argued that it would actually be illegal for it to do so, though legal experts don't agree with the company's reasoning. The concerns have largely kept Huawei out of the US telecommunications infrastructure, but the company continued to do business with US companies.

Even without the 90-day exemption, Huawei will still be able to use Google's open source Android operating system for its phones. But Huawei won't be able to bundle Google's app store with those phones. That might not be a big deal in China, where smartphone users rely mostly on domestic apps like WeChat. But losing its license to use Google's mobile apps will hurt Huawei's smartphone sales in Europe, says mobile industry analyst Chetan Sharma. Huawei has been encouraging developers to submit apps to its own Huawei App Gallery, much as Amazon runs its own app store for its Fire tablets. But that requires convincing app developers to participate in yet another app market. Plus, many Android applications rely on proprietary Google software to run. That means Huawei would also need to convince many developers to rewrite parts of their applications. Huawei might be able to offer replacements for Google's proprietary tools, but US developers might not be allowed to contribute to Huawei's app store because of the Entity List restrictions. Huawei has also been developing its own operating system, but will face similar issues in attracting developers.

Hardware might be a bigger concern for Huawei than apps. The company told Reuters that it will use substitutes for chips sold by US companies. In addition to making some of its own chips, Huawei might be able to buy chips for both its phones and network infrastructure gear from companies in countries like South Korea or Taiwan. But the longer the restrictions last, the harder it will be for Huawei to make do without sources for US chips.

No Resolution

In March, Huawei filed suit against the US government over legislation passed last year that banned government agencies from doing business with companies that use technology from Huawei and ZTE, arguing that the two companies were unfairly singled out. The suit challenges the US to provide evidence of nefarious action or intent by Huawei.

Even if Huawei wins that suit, it won't help with the current ban, says Julian Ku, a professor of law at Hofstra University. He explains that the Commerce Department has broad authority to limit exports, and judges are reluctant to second-guess the agency. “The chances of success are much lower than its lawsuit against the law passed by Congress,” Ku says. “That earlier lawsuit is a longshot, but a lawsuit trying to challenge the entity list inclusion would be a super-duper long shot."

That means that for Huawei, escaping US sanctions will rest on the US and China coming to a broader agreement to ease the distrust between the two nations. But an end to the trade war between the two countries isn't yet in sight.

Read more: https://www.wired.com/story/how-huawei-might-handle-latest-us-sanctions/

telecommunications

Huawei Still Has Friends in Europe, Despite US Warnings

US Secretary of state Mike Pompeo warned US allies in February against using technology built by Chinese telecom giant Huawei, going so far as to suggest the US might stop sharing intelligence with countries whose communications infrastructures rely on Huawei’s equipment.

Pompeo's remarks during a European speaking tour echoed years of concerns from the US government over the possibility that Huawei might use its products to help China spy on US citizens. Huawei has repeatedly denied that it has spied or would spy on US citizens on behalf of China, and it sued the US government over a law banning government agencies from doing business with companies that buy gear from Huawei and its fellow Chinese telecom giant ZTE.

But some big European countries aren’t toeing Uncle Sam’s line. On Wednesday, The Telegraph reported that the UK government will allow Huawei to build "non-core" parts of its 5G network.

“The UK initial decision is a mixed bag for both Huawei and the US,” says Paul Triolo, who focuses on technology for the political risk consulting firm Eurasia Group. Huawei didn’t get banned entirely, Triolo points out, but “for the US it shows that its security concerns are being listened to.”

The UK is intimately familiar with Huawei's equipment, because the company allows British officials to inspect its code. Last month, a UK governmental agency released a scathing report criticizing Huawei's basic security practices. However, it concluded that these issues were related to "basic engineering competence and cyber security hygiene," not deliberate attempts to build backdoors into its products.

Germany isn't ready to kick Huawei out of its networks yet either. Earlier this month Jochen Homann, the president of Germany's federal network agency, told the Financial Times that his agency "has not received any concrete indications against Huawei." Last month the agency announced a set of security requirements for telecommunications networks that apply to all companies, not just Huawei. "If Huawei meets all the requirements, it can take part in the 5G network roll-out," Homann told the Financial Times.

Last month the European Union asked member states to complete security risk assessments of their 5G network infrastructures by the end of June, but it did not propose a ban on Huawei or other Chinese vendors.

Triolo says an EU meeting next week in Prague on 5G security will provide a better indication of the bloc’s view of Huawei. He says European government and telecom carriers are in a tough spot because their networks include a lot of Chinese gear.

"European governments are just reacting to the reality on the ground," says mobile industry analyst Chetan Sharma. He says Huawei is “well entrenched” in existing 4G wireless networks on the continent, and would be expensive to replace. “If you are going to have 4G gear from Huawei, it just makes sense to have their 5G gear as well, as there are financial incentives that can’t be overlooked. Neither the operators or the governments have the funding to replace Huawei in the networks." Sharma also points out that relationships between the US and the EU have deteriorated, and the US' warnings might not carry the same weight they once did.

Losing Germany and the UK would have been a major blow to Huawei, which is facing more scrutiny around the world. Last year Australia and Japan effectively banned Chinese vendors from building 5G networks, and Taiwan reinforced an existing ban on the companies' networking gear.

Despite these bans, Huawei has continued making deals. Huawei had signed 40 contracts to supply 5G gear by the end of March, the company's rotating chairman, Ken Hu, said at the company's global analyst summit earlier this month, according to Reuters. Of these contracts, 23 were in Europe, 10 were in the Middle East, six were in Asia-Pacific, and one was in Africa. In a sign of health, Huawei reported a 39 percent increase in first-quarter revenue on Monday.

Huawei has more to worry about than government bans. Earlier this year the US indicted Huawei and its executives, including CFO Meng Wanzhou, of crimes including bank fraud, wire fraud, money laundering, and obstruction of justice related to alleged violations of sanctions forbidding the sale of US-made equipment to Iran. Meng was arrested in Canada last year and is awaiting extradition to the US. If convicted, Huawei could face sanctions banning US companies from selling it software and components. Similar sanctions nearly forced ZTE out of business last year, but the company was saved when the Trump administration dropped the sanctions. Huawei might be better able to survive sanctions than ZTE was, but it would seriously curb the company's ambitions.

Read more: https://www.wired.com/story/huawei-friends-europe-despite-us-warnings/

telecommunications

China is reportedly using US satellite technologies to bolster its surveillance capabilities

The Chinese government has been using a private company jointly owned by a U.S. investment firm and its Chinese counterpart to expand its surveillance and telecommunications capabilities using American technology, The Wall Street Journal reports.

At the center of the Journal’s reporting is a company called Asia Satellite Telecommunications (AsiaSat). It’s a satellite operating company acquired back in 2015 by U.S. private equity firm The Carlyle Group and Chinese private equity firm CITIC Group. Both Carlyle and CITIC are known for their ties to government in their respective home nations.

While the U.S. government basically bans American companies from exporting satellite technology to foreign governments like China, there have been no controls put in place on how bandwidth from launched satellites is used once those satellites are in orbit.

Based in Hong Kong, AsiaSat isn’t subject to the same sort of export controls and regulations that the U.S. places on companies headquartered in mainland China, which has allowed the company to acquire U.S. satellites.

The Chinese government, through its connections with CITIC, has leveraged that loophole to bolster its surveillance and telecommunications capabilities for security activities, the Journal reports.

At issue are satellites bought by AsiaSat from Boeing and Maxar Technologies subsidiary SSL, of Palo Alto, Calif. We’ve reached out to Maxar and AsiaSat for comment.

“Boeing follows the lead of the U.S. Government with respect to the use of export controlled items,” the company said in a statement to TechCrunch.

The U.S. and China are in a highly public contest over who will control the future of networking technologies — with the U.S. accusing China’s leading commercial telecommunications vendors of collaborating with the Chinese government to spy on partners.

Huawei is suing the US government over ‘unconstitutional’ equipment ban

U.S. officials also accuse their counterparts in Beijing of using physical and cyber espionage to acquire American technology. However, in this case, China was able to use corporate interests and profit-seeking to gain access to core U.S. satellite technologies, the Journal reports.

Since at least 2011, CITIC has touted Chinese intelligence branches and armed services as customers of its satellite company’s services, according to the Journal’s reporting.

In other marketing materials, CITIC’s satellite company has touted its link to government agencies — as a tool to link national broadcasters to far-flung towns and cities across the sprawling nation. Meanwhile, China’s Ministry of Public Security has documented how it used AsiaSat 5 — a satellite made by SSL — to develop rapid-response forces with audio and video capabilities provided in real time, the Journal is reporting.

CITIC’s ownership stake in AsiaSat predates the Carlyle Group’s acquisition. The company previously was a joint venture between the Chinese private equity firm and General Electric, and its surveillance activities extend back to that period, as well.

In 2008 and 2009, AsiaSat assets were used to help authorities communicate and coordinate efforts to put down antigovernment protests over religious and ethnic persecution in Tibet and Xinjiang — a mineral-rich region in Northwestern China populated mainly by an ethnic minority called Uighurs, a group comprised predominantly of practicing Muslims.

In a statement provided to the Journal, AsiaSat disputed the company’s reporting, saying that the Chinese military wasn’t a direct customer, but used in a capacity for disaster relief. Several cities in the Chinese province of Sichuan were decimated by an earthquake that hit in 2008.

AsiaSat also declined to comment on whether its bandwidth was being used in Xinjiang currently or whether it had been used in the Tibet and Xinjiang uprisings that occurred roughly 10 years ago. In the past few years, Chinese authorities have built a pervasive surveillance network in Xinjiang and sent as many as one million ethnic Uighurs to internment camps, according to multiple reports.

In statements to The Wall Street Journal, Carlyle said that AsiaSat’s equipment supports internet and phone communications for Chinese telecommunications carriers.

“It is effectively a pipe,” Carlyle said in a statement to the Journal, “and AsiaSat, because of privacy issues, doesn’t monitor or regulate the content that flows through it.”

Read more: https://techcrunch.com/2019/04/23/china-is-reportedly-using-us-satellite-technologies-to-bolster-its-surveillance-capabilities/

Credit Cards

Partnering with Visa, emerging market lender Branch International raises $170 million

The San Francisco-based startup Branch International, which makes small personal loans in emerging markets, has raised $170 million and announced a partnership with Visa to offer virtual, pre-paid debit cards to Branch client networks in Africa, South-Asia and Latin America. 

Branch — which has 150 employees in San Francisco, Lagos, Nairobi, Mexico City and Mumbai — makes loans starting at $2 to individuals in emerging and frontier markets. The company also uses an algorithmic model to determine credit worthiness, build credit profiles and offer liquidity via mobile phones.

“We’ll use [the money] to deepen existing business in Africa. Later this year we’ll announce high-yield savings accounts…in Africa,” says Branch co-founder and chief executive Matt Flannery.

The $170 million round from Foundation Capital and its new debit card partner, Visa, will support Branch’s international expansion, which could include Brazil and Indonesia, according to Flannery. Branch launched in Mexico and India within the last year. In Africa, it offers its services in Kenya, Nigeria and Tanzania.

A potential Branch customer

The Branch-Visa partnership will allow individuals to obtain virtual Visa accounts with which to create accounts on Branch’s app. This gives Branch larger reach in countries such as Nigeria — Africa’s most populous country with 190 million people — where cards have factored more prominently than mobile money in connecting unbanked and underbanked populations to finance.

Founded in 2015, Branch started operating in Kenya, where mobile money payment products such as Safaricom’s M-Pesa (which does not require a card or bank account to use) have scaled significantly. M-Pesa now has 25 million users, according to sector stats released by the Communications Authority of Kenya. Branch has more than 3 million customers and has processed 13 million loans and disbursed more than $350 million, according to company stats.

Branch has one of the most downloaded fintech apps in Africa, per Google Play app numbers combined for Nigeria and Kenya, according to Flannery.

Already profitable, Branch International expects to reach $100 million in revenues this year, with roughly 70 percent of that generated in Africa, according to Flannery.

In addition to Visa and Foundation Capital, the $170 Series C round included participation from Branch’s existing investors Andreessen Horowitz, Trinity Ventures, Formation 8, the IFC, CreditEase and Victory Park, while adding new investors Greenspring, Foxhaven and B Capital.

Branch last raised $70 million in 2018. The company’s overall VC haul and $100 million revenue peg register as pretty big numbers for a startup focused primarily on Africa. Pan-African e-commerce startup Jumia, which also announced its NYSE IPO last month, generated $140 million in revenue (without profitability) in 2018.

Startups building financial technologies for Africa’s 1.2 billion population have gained the attention of investors. As a sector, fintech (or financial inclusion) attracted 50 percent of the estimated $1.1 billion funding to African startups in 2018, according to Partech.

Branch’s recent round and plans to add countries internationally also tracks a trend of fintech-related products growing in Africa, then expanding outward. This includes M-Pesa, which generated big numbers in Kenya before operating in 10 countries around the world. Nigerian payments startup Paga announced its pending expansion in Asia and Mexico late last year. And payment services such as Kenya’s SimbaPay have also connected to global networks like China’s WeChat.

Read more: https://techcrunch.com/2019/04/08/partnering-with-visa-emerging-market-lender-branch-international-raises-170-million/