National Security

China Bid Blocked Over Spy Worry

Citing national-security concerns, the Commerce Department rebuffed Chinese telecom giant Huawei’s application to build a wireless network for America's first responders, Eli Lake reports exclusively.

10.11.11 5:30 AM ET

Worried about potential spying, the U.S. government has blocked a bid from China’s telecommunications giant Huawei to help build a new national wireless network for first responders such as police, firefighters, and ambulances.

Huawei “will not be taking part in the building of America’s interoperable wireless emergency network for first responders due to U.S. government national-security concerns,” Commerce Department spokesman Kevin Griffis told The Daily Beast.

Griffis declined to elaborate on those concerns. But current and retired U.S. intelligence officials tell The Daily Beast the longstanding concern about Huawei is that the company’s chips, routers, and other technical equipment will be bugged in a way that gives China’s government a cyber back door into sensitive information networks.

The technique of bugging equipment or writing software in such a way as to allow undetected access has also been used by U.S. intelligence agencies in the past to gain a window into the communications of other foreign governments.

Huawei in recent years has attempted to compete inside the U.S. wireless market and for contracts with sensitive military labs, only to be checked quietly by the Pentagon and the intelligence community.

In 2008, the Treasury Department’s Committee on Foreign Investment in the United States blocked a proposed sale of the U.S. software company 3com to Huawei on national-security grounds. More recently, the National Security Agency and the White House discouraged Sprint Telecom from using Huawei components in the company’s proposed bid to expand the 4G network.

The latest Pentagon report on the Chinese military singles out Huawei as a company that maintains “close ties” to the People’s Liberation Army.

William Plummer, Huawei’s vice president for external relations, tells The Daily Beast that the Commerce Department’s decision was without merit.

“Given that to the best of Huawei’s knowledge neither the Commerce Department nor any other agency of the U.S. government has conducted any audits of our equipment, such a determination seems utterly capricious,” he said. “Due to our heritage in China—where all of our competitors also conduct R&D and code software and build solutions—Huawei’s business activities in the U.S. have been repeatedly and unfairly challenged due to vague supposed security concerns that have never been substantiated.”

Huawei was invited to test its equipment for the new wireless network for first responders in April, according to an April 5 email from the National Institute for Standards and Technology.

The new network is meant to bring the wireless devices of firefighters, police officers, ambulance drivers, and other emergency personnel onto the same frequency so they can communicate during a disaster. The inability of the police and firefighters to communicate on Sept. 11, 2001, was roundly criticized by the 9/11 commission.

Plummer also said the decision “could have a chilling effect on our greater U.S. business activities and accountability needs to be defined appropriately.” He added that “Huawei is committed to the U.S. market.” On Oct. 1, 2010, Huawei opened a new headquarters in Plano, Texas. Gov. Rick Perry appeared at the ribbon-cutting ceremony and praised the company’s “strong, worldwide reputation as an innovator of quality telecommunications technology, with facilities spread across the globe.”

Plummer said Huawei’s U.S. sales for 2011 will exceed $1 billion and that the company employs more than 1,500 in the United States. “Last year, our investment in U.S. R&D and innovation exceeded $100 million, and our procurements from U.S. supplier partners exceeded $6 billion,” he said. “Notably, our solutions have been deployed by U.S. operators to deliver affordable broadband to underserved areas.”