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Do you trust your infrastructure?

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Huawei’s Woes.

One thing I think we can agree on, at least in the West, is that we want to trust our infrastructure providers. The equipment, the software, the apps, and the provider itself. Trust is a huge issue and one that is not as common as you’d think. 

Here in the USA, law enforcement does have access to records but they are supposed to get a warrant first. I know they probably have ways around that, but I would like to think there’s a system in place to protect our privacy.

I lost a lot of that trust when I found out how the FBI was censoring Twitter. How they had people on staff and cut Twitter a check of taxpayer’s money, to make the stories lean towards one party to hurt the other. This is a failure in America. The FBI, in my opinion, brought shame to a respected and trusted organization. I don’t know if Americans can trust them again. 

Let’s get back to infrastructure, I was trying to make a point. We need to trust our providers. It’s a huge deal. We want them to be trusted advisors and provide quality. It has to be a total package. Sure, they may falter, but we need to have faith that they will get better.

That brings me to Huawei’s woes.

Did you know the reason Huawei is being banned in the West? I mean it’s something we talk about. I remember when I was at Alcatel-Lucent, (ALU), and we were worried about Huawei because all their documentation looked amazing. They promised the world and it was way cheaper than ALU or Ericsson. We didn’t know what to do.

Luckily, the US government pressured Tier 1 carriers at the time not to purchase Huawei. We were saved. Remember that this was back in 2018. 

As far back as 2013 Sprint and Softbank told the US and Japanese governments that they would not use Huawei gear. This must have been hard for Sprint, they loved cheap gear!!

Yet, we wondered why. I mean, did they really think that the Chinese government would use that telecom tool to spy? Apparently, they knew something we didn’t. 

Read on tech fans!!

The skinny.

As you know, American communication companies have been pressured not to use Huawei a decade ago before it became an official ban under President Trump, (Rip and Replace Program).  He eventually had Canada hold the Huawei CFO about something. Then they stopped selling Huawei phones about 5 years ago. However, Huawei denied spying allegations but the CFO admitted to wrongdoing in the Iran Trade sanctions case. 

President Biden got elected. You all thought a new president would mean a new policy. Well, not really. 

Surprisingly, Biden stepped things up in the trade war. He went beyond telecom equipment by stopping American semiconductor chips from going to any Chinese company. This includes all American chips which are made in Taiwan and the US among other countries. WOW!

Huawei officially had a bad reputation in the West!! Things kept gaining momentum to ban Huawei in the West. Loss of market share, loss of revenue, and a serious loss of margin!

For those of you that don’t know, margins are much higher in the West than in Asia, especially in China where margins can run negative. In Asia, especially China, making a decent margin is a gift. Many companies that sell there do so at a loss of margin. China still considers itself a developing country which means they don’t have to follow a lot of the same rules other countries do. Labor is cheap which means they can’t afford to buy many iPhones, although Apple will tell you a different story. The good news is that China’s middle class is rising. 

For some reason, everyone wants to sell in China because of the huge population, but most tech companies bleed money and rely on other countries to make up the margins. This is crazy to me, but I am sitting at home writing this and not actively building a tech company. 

Huawei is a protected company in China, which basically means the home team will always win. That doesn’t mean the competition will be kept out. They can get in, operate at a loss, and expect their tech to be copied. You see, rumor has it that the Chinese competition gets reverse-engineered until they can replicate it. Stealing tech was common throughout Chinese history. You have to love history repeating itself. Don’t feel bad, the rest of the world stole gunpowder and green tea from them. It all worked out. 

One thing you learn is that what China does and what they say are usually contradictory. It seems like honesty is not the best policy, and the PRC likes to be the bully, not bullied.

So, here’s the thing. My past experience with Huawei is that they have a great product and great support. When they have problems, they will send a small army of engineers to work with their customers. I’m not sure why they send so many nor why they feel there is a need to have so many. Now I’ve become suspicious, like, is it to have the PRC represented?

Their equipment was cheaper than the other OEMs and somehow their support was very cheap as well. They have many 4G and 5G patents that helped move telecom into the 21st century. They came a long way in a very short time. Pretty amazing right? 

In the US, they sold to many Tier 2 operators and most were happy with Huawei. They liked the support and cheap managed services offered them. FYI – managed services basically gave Huawei access to the customer’s network, direct from China. Think about that for a few minutes.

But then the trust was broken, first in Australia, then in Denmark. Actually, Britain first had suspicious leaks, but that was not as public as these other two stories.

That’s why these stories are crazy! To risk trust by compromising customer privacy is not common in the West.

Fun fact, Huawei means “Chinese achievement”. It was founded by Ren Zhengfei, a former People’s Liberation Army engineer. We all love when an engineer starts a hugely successful company. However, the fact the government played such a huge role in his success raised a lot of suspicions.  

Also, recently under China’s President Xi Jinping, the internet is being locked down even harder, making VPN usage illegal without the government’s permission. It must be approved by the Chinese government so they have access to all the data. If it’s not government approved, then expect fines and/or jail time. (VPN means Virtual Private Network and gets you access to the destination place where your virtual network terminates.)

By the way, remember that President Xi Jinping has a very wealthy family. So he is making a lot of decisions based on wealth. Not so different from the American leaders. 

Allegations in the UK.

It was the UK that was one of the first to ban Huawei. They had suspicions but only the potential for problems. At least that’s the way I read it.

Huawei said it would address the security concerns and make everything better. Unfortunately, that didn’t make anyone sleep better.  

To be honest, when I researched this, all I could find was a lot of accusations and very little solid evidence. I trust British Intelligence to tell us what’s going on but give me something to work with. They had a huge report that was very difficult to get through. OK, it’s 45 pages, but I just could not read all of it.

It appeared to be allegations and not much more. 

Then, I read about what happened in Australia.

What happened in Australia?

Australian intelligence discovered that Huawei had people spying on Australians, apparently government officials. They had found a security breach 10 years ago that sparked this controversy. 

The US Government had suspicions about Huawei being a spy branch for the People’s Republic of China, (PRC), something that doesn’t surprise anyone anymore, but at the time it was huge! Today we realize that the PRC owns part of almost every Chinese company. 

The Australian government found that their local wireless telecoms had been infiltrated by cyber spies. Apparently, they allege it was a network of cyberspies from China. While this seems crazy, remember that China locks down the internet to their residents, so any hacker in China that has access to the outside world does so with their government’s blessing. 

When I say lock down the internet, you can’t use many things that are open in the USA, like Google. 

Those brilliant Australians found malicious code in a Huawei update on a major Australian telecom company back in 2012. While the Chinese government denies this, it was confirmed by over 2 dozen national security officials.

What happened was the system did an update, pushed to the network by Huawei technicians, which is common in telecom. That’s when someone noticed it was stealing data and targeting specific users. They saw the code and knew what it was doing, but then, a few days later, the code deleted itself. Just like that it was gone. Not completely, there were bits and pieces of the code still there, but the bulk of it disappeared as quickly as it came.

The code acted like a digital wiretap that could target specific people if required. Then, mysteriously, the code deleted itself a few days later. Go figure! 

The code was pushed in and had a self-destruct mechanism to automatically remove itself a few days later. Give a lot of credit to that hacker, that is awesome. Too bad it was noticed right away. 

I wonder whose phone information was targeted before it deleted itself. Do you think it was someone in the intelligence community or in government to be noticed so quickly? Maybe a ranking US official in Australia at the time. I mean, to notice something like that in time to see it before it auto-deleted itself must have been because it triggered something. Do you think?

Luckily Australia’s intelligence agency caught it and documented what they saw. They immediately alerted US Intelligence. Apparently, US Intelligence confirmed that they saw the same thing a year earlier, also from Huawei gear, and pushed the same way, AND with the self-destruct mechanism. 

Both noticed a high degree of Chinese spy activity each time. 

Both agencies said there were more incidents where they kept quiet. They said it was becoming more and more common that patches were actually spyware. These “patches” seemed to come from Beijing. 

According to the Bloomberg article “Chinese Spies Accused of Using Huawei in Secret Australia Telecom Hack” released 12/16/2021, written by Jordan Robertson and Jamie Tarabay, Michèle Flournoy said she was aware of this from public forums. She was under-secretary of defense for policy at the Department of Defense under President Barack Obama and co-founder and managing partner of WestExec Advisors LLC. She has some clout!

So, here’s the thing, according to the article, Huawei and ZTE may not be aware that their employees are doing this since they could be working directly for the PRC. There could be factions at these companies that have software and network engineers working together to do this. In the article, they state that ZTE’s message was, (quoting the article) “employs many rumors and speculations to prove nonexistent accusations, the committee rests its conclusions on a finding that ZTE may not be ‘free of state influence’. That standard “would apply to any company operating in China.”

They also refer to a Wall Street Journal article where Huawei technicians helped African leaders spy. That article can be found here. How crazy is that? Why would they do that? Or, why not?

Back to Australia. Huawei’s response was “no evidence had been provided to demonstrate that Huawei had undertaken anything untoward in Australia.” Does anyone know what they meant by “untoward”? 

That response may be true, to be honest, I don’t know. I am still trying to figure out what untoward means. Apparently, I am not the sharpest tool in the shed. I mean, I googled it and it says “unexpected and inappropriate or inconvenient”, but that really doesn’t explain crap. The fact there was a spyware virus put there in lieu of a patch was unexpected and inappropriate coming from a telecom infrastructure OEM. Not to mention the inconvenience. Am I right? 

I do know that China put heavy tariffs on Australia and it appears they’re no longer friendly trading partners. To be clear, this is the Chinese government punishing China for the allegations and for banning them.

I think Australia will be happier, in the long run, to lessen trade with China, but that’s only my opinion.

Watch out China, here comes India, a new friendly trading partner. Sorry, I digress. 

FYI – if you’ve ever read the book “Unrestricted Warfare” by Qiao Lang and Wang Xiangsui, this is a step in the updated war strategy for the People’s Liberation Army. I am putting together something on that for the future.

More hack details came out in 2021. Bloomberg did an extensive report on this, https://archive.is/smY8T.

Something is very wrong in Denmark!

OK, now this is like something out of a spy novel!! Strap in and get ready to read. While this is more on manipulation of winning a contract, I think it shows to what length Huawei and their backers will go just to get a major win. 

I got this information from another Bloomberg article found here, called “When a Huawei Bid Turned into a Hunt for a Corporate Mole” written by Jordan Robertson and Drake Bennett on June 15, 2023. I highly recommend reading it!! They have the option to listen to it, also awesome! Listen to the Bloomberg Podcast and they talked about spying on bids in Denmark with TDC Telecom. They also did a YouTube report found here. Kudos to Bloomberg Businessweek for pulling together a great report. 

FYI – the Danes didn’t care what the US thought of Huawei, they were going to do what they thought was best for them. They went with Huawei for 2G and 3G because Ericsson’s service was not living up to their expectations at that time. 

The big story happened in Denmark with the telecom company TDC. It was the Bloomberg report that initially blew open the investigation.

For those of you that don’t know, TDC Group is a Danish Telecom company. They’ve had Huawei in their network since 2013. Huawei was a trusted partner that already got $700M back then. A trusted partner, up until 2019. 

The basis of the story is that in 2019 TDC was looking for bids to upgrade to 5G. In the end, the 2 final players were Huawei and Ericsson who were bidding against each other. Unfortunately, Nokia was not mentioned. 

When reading this, keep in mind this is a $200M contract, it ain’t chump change, it’s a game changer.

So, the bids were in and they were competitively close, but Ericsson had the edge in price. They were considerably lower, but that isn’t always the deciding factor, is it?  These were the final bids in the final round. Again, Ericsson appeared to have the winning bid. Amazingly, Huawei put in another final bid, literally right before the deadline, just lower than Ericsson’s. When I said last minute, it was at 2:52 AM. Similar offer at a much lower price.

It was almost as if they knew what Ericsson’s bid was. But that should not have been possible, or was it?

Red flag time! This late change raised red flags. (In this case, literal red flags since they’re Chinese.) You gotta love the Danes for being cautious and observant! Respect. 

How could Huawei know? It was like Huawei knew what Ericsson’s bid was, privileged TDC information. 

Then, in meetings with vendor teams following submission, there was a noticeable difference in the teams. Ericsson’s team was nervous whereas Huawei’s key guy, Yang Jason Lan, appeared calm and almost overconfident. So overconfident that it set off the TDC executive’s suspicions. This was strange to the TDC team, (again, the Danes are super observant). So strange in fact, they launched an internal investigation.

Call in security!!

Why? Only senior executives had access to the offers and the bid responses. 

So TDC security investigated everyone and everything. Who had access to the bid, the pricing, and the details? Was it only TDC executives and the respective vendors?

They started looking at laptops and phones, the obvious devices. Hacks were suspected. To us it seems obvious, right? Wouldn’t that be the easiest way in and the best way to shut down the leak? 

No dice. They didn’t find any hacks. That would have been easy to explain and quick to shut down, just remove the hacked devices. So now it’s getting scary, no hacks mean it could be an inside job. 

Let’s start by saying that security also suspected someone could have been listening to their conversations using surveillance techniques. So, they swept the boardrooms and found microphones hidden in the boardroom. Who does that? Sounds like some serious James Bond stuff, am I right?

Can you imagine an employee, cleaning person, or an outsider coming into the conference rooms and installing microphones? Think about the balls it took to do something like that?!?

That’s not all, but what if someone intentionally shared company confidential information with Huawei, specifically the lead, Lan? Who could share those files?

Who would have access to Ericsson’s offer and then share it?

Well, according to GDC security, it was someone named Dov Goldstein, head of special projects, who became a prime suspect. This guy was a 13-year-plus employee, formerly a mechanical engineer that moved up to the head of special projects inside of TDC. Apparently, he got access to all the files and was a close buddy of Lan. Security found all the files on Dov’s laptop. However, they could not figure out how the files got to Lan.

While security was investigating Dov, he went to executives and complained, like he knew what security was doing. It’s like he knew all their moves!! 

So, they had to move the team to a remote location. This was a legal office downtown, away from the main campus, and where the Huawei employees did not have access. Nor did Dov. Secure access. However, they felt they were still being watched. They were!

One night a night watchman looked up and saw a drone above the building. The security guard saw a drone outside the conference room window with a bright light. Inside the room was a whiteboard with the investigation laid out. Whoops!

They were on a high floor and the drone had found the room where they had all the details laid out on a whiteboard. The bright light of the drone enabled it to see inside at that time of night.

It gets crazier! Employees felt they were being followed. Someone started following GDC employees whenever they went out to eat or in a public place.

Guess what, Ericsson got the contract. 

Huawei’s Lan went back to China.

Goldstein left GDC before the investigation was complete. He moved on to his next job. His supervisor stepped down as well.

Huawei’s employees were banned from GDC and all its networks.

Several GDC employees left GDC after the investigation, we’re not sure why. Even many of the investigators left. Even the GDC lead for the investigation left. He would not comment or say why he left. He was the one that oversaw the investigation, yet, he left and would not talk. Why is that? It could be as simple as an NDA, maybe Huawei threatened to sue. Who knows?

Did Huawei have a response? Of course. They said, and I am quoting from the article, “Huawei complies with applicable laws and regulations, and strives for the highest standards of business conduct. We deny any wrongdoing.” No kidding.

Lan had a lawyer respond for him on this investigation, and I’ll quote the article again, “believes that he has acted in compliance with all applicable laws and regulations at all times.” Lan’s relationship to Goldstein was of a professional nature, and one that was appropriate in the circumstances.”

Oh, China’s foreign ministry weighed in, because that’s what they do, and they said, “It is no secret that Huawei has been unreasonably suppressed and treated unfairly in the United States and Europe”.

Also, in 2021 Denmark enacted legislation that gives intelligence officials the ability to block domestic telecom deals involving suppliers that don’t have security agreements in place. Imagine that!

Reputations.

Let me ask you, after all of this, do you trust Huawei as an infrastructure company? In this industry trust is a huge issue. Ericsson lost some of it with allegations of payouts in the Middle East. Alcatel Lucent and Ericsson were getting in trouble decades ago when they would entertain customers. 

However, today it’s all about the privacy of each person, not some corporation making shaky business decisions.

Each person has a choice about their privacy in the West. We rely on the government to support us in many ways, but not to make decisions that could destroy our daily life as we know it just because they disagree with something we say. 

Of course, I guess it depends on what we say and how hurtful it is. Is it defamation? That’s another conversation.

There are reports that Huawei employees are incentivized when they get information about the competition. I don’t mean on the internet, I mean by looking at the competitors’ equipment at a site, logging in, and obtaining privileged data.

I think that if nothing else, Huawei has lost so much trust, especially in the West, that they were actually banned in several countries. How crazy is that?

Ask yourself this:

  • Who do you trust? 
  • Do you trust your smartphone’s privacy settings?
  • Do you use your device for banking?
  • What about Investments?
  • What about retirement?
  • What about private messages to friends, family, or lovers?
  • What about business deals?
  • How much do you trust the device, the company that made your device, the carrier you pay for every month, and the infrastructure that it rides on?
  • Whom can you trust?

Now what?

OK, obviously Huawei is being punished. We really don’t know if it’s the fault of Huawei or if the PRC has infiltrated Huawei and ZTE. I mean, we may never be sure, but this looks quite suspicious now that we know what’s going on. We do know that the PRC has partial ownership of both companies. 

I am pretty sure we, the common public, will never know it all. We’re citizens and I think only ranking government officials really know. We only know what little we’re being told. That’s why the reporters at Bloomberg and Wall Street Journal have my greatest respect. They are taking their chances reporting the truth. 

The PRC is already attacking Bloomberg for the reports. I feel bad for the reporters as China pressures their employers to punish them. We’ll have to wait and see what happens going forward.

All the same, Huawei and ZTE have been replaced in the USA along with Australia and the UK. When I say replaced, I mean banned by the government. Don’t feel bad for Huawei, most of the world is allowing them to be used. They just don’t care about what happened in the US and Australia. I mean even Denmark is on the fence, and they had proof of an RFP being tampered with. 

Some carriers across the world are banning Huawei. Making it their choice, not the government’s. 

So believe that you will. In the West, it’s still up to you to decide. I think China has already made up its mind. 

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