Global telecoms tussle taken into a dark web

Sometimes you get a whiff of optimism in the air with the trade wars saga – then something else looms large and all your hopes are seemingly sadly dashed. This is the perception at least. The reality may be quite different, as the great games of the superpowers get played out in ways beyond any normal rationale.

In this case, the US administration has muddied the waters of the trade wars with China – not by raising the issues of technology transfer and investment which are legitimate concerns for all business partners, but by its all-out assault on the Chinese technology giant Huawei. This is all about the massive tussle for global telecoms supremacy, but it also looks set to derail any immediate momentum towards normality in the US-China trade wars.

This is not only bad news for both sides, it is also bad news for many others as this fight spills over, or rather is being pushed on, to allies of the US. There may well be issues that need to be addressed with Huawei, but it needs to be in a completely separate arena. Several countries simultaneously plan to introduce ultra-fast 5G (fifth-generation) networks, so the stakes are high for companies that win contracts. But now, with so much at stake – in particular the rollout of 5G telecoms networks, an area that Huawei was expected to be a leader in – inevitably the Chinese company is fighting back.

Last week Huawei filed a lawsuit against the US government over a ban that restricts federal agencies from using Huawei products. The US has restricted the use of Huawei products over concerns it says are related to national security. The US has also said that Huawei equipment could be used by the Chinese government to spy on other countries and disrupt critical communications.

Huawei is challenging the constitutionality of Section 889 of the National Defense Authorisation Act. The lawsuit has been filed in a US federal court in Texas. Huawei says that the US has failed to provide evidence to support the ban. It has also said that the US is involved in a ‘smear’ campaign against it. The company also rejected claims it had any links to the Chinese state, saying in a statement the company was ‘not owned, controlled, or influenced’ by the Chinese government.

And in an extension of all this, the US administration has been urging some other OECD governments to boycott Huawei. US Secretary of State Mike Pompeo has said that European countries that use the company's equipment ‘makes it more difficult for us [the US] to partner alongside them’. Some countries have already taken action – with Australia and New Zealand both blocking local firms from using Huawei to provide the technology for their 5G networks.

In the UK, where Huawei has been providing technology to UK firms for more than a decade, the National Cyber Security Centre (NCSC) – part of GCHQ – has asked Huawei to fix problems that pose ‘new risks’ to the network. And the NCSC recently concluded that any risk posed by involving the Chinese company in the development of new networks can be managed. Undoubtedly, increased US pressure will be put on poor old Brexit Britain. It is understood the UK's major mobile phone operators are waiting for a decision from the government expected in April.

But in another rather underhand development, it has also been reported that the US has told Germany it would curb intelligence sharing with Berlin if it allows Huawei to participate in its 5G mobile network. According to the Wall Street Journal, the warning came in a letter last week from the US ambassador Richard Grenell to the German economics minister. By all accounts, the ambassador said the US would not be able to keep the same level of cooperation with German security agencies if Germany allowed Huawei or other Chinese firms to participate in its next-generation 5G mobile network. WSJ reported that the letter said secure communications systems are essential for defence and intelligence cooperation, and that firms like Huawei could compromise this.

Most impartial observers would agree that the US’s goal to try to get the world to shun Huawei is unrealistic, if not ridiculous. After all, Huawei is a massive company which also imports many components for its products from outside China, including the US. Huawei now has around 16% of the global market, making it the world's third-largest supplier after Samsung and Apple. Based in Shenzhen, Guangdong, Huawei is owned by 80,000 of its 180,000 employees.

The firm's founder Ren Zhengfei, a former People's Liberation Army officer, started Huawei in 1987. The US points out that his background directly links him to the Chinese government and the company could not have risen to such heights without the support of Beijing. That may well be true, but it does not necessarily mean that it is a spy vehicle for China. 

However, the US also points to China's national intelligence law passed in 2017 which says organisations must ‘support, cooperate with and collaborate in national intelligence work’. But let’s face it, it’s a strange world, and there is no doubt that most high-tech companies around the world will have quite close contact with their security services when required to do so.

Huawei is a leader in the field of 5G, the next and long-awaited advancement in mobile technology. So what is all the fuss about? I’m no techy, but 5G mobile broadband which is coming over the next year or so, is supposed to promise superfast mobile connectivity with download and browsing speeds 10 to 20 times faster than those today's 4G networks can offer. Importantly, it will also power and link with machines and AI.

At a press conference in Shenzhen the Huawei chairman Guo Ping stated:  "The US Congress has repeatedly failed to produce any evidence to support its restrictions on Huawei products. We are compelled to take this legal action as a proper and last resort." He added: "This ban not only is unlawful, but also restricts Huawei from engaging in fair competition, ultimately harming US consumers."

To counter some of the accusations from the US, Huawei has also been opening up with a full-on PR campaign. Recently it has invited foreign journalists to visit its production facilities and campuses. The company has also taken out ads in the foreign press. 

Last week, journalists were invited to tour Huawei’s facilities in southern Guangdong – which included the company’s Cyber Security Laboratory. There, the director of the Lab, Wang Jin, told reporters: “Our most basic red line is that our products cannot have any back doors”. The media also toured a huge factory with 35 highly automated assembly lines in the city of Dongguan, where robotic arms assemble Huawei P20 smartphones every 28.5 seconds.

But the US is also pursuing legal action against Huawei’s chief financial officer Meng Wanzhou, the daughter of Ren Zhengfei. She was arrested in Canada in December, at the request of the US. Washington alleges that she committed fraud by lying to US banks about her firm's ties to a telecoms company that did business in Iran – and that business was a breach of sanctions on Iran. She faces extradition to the US. 

Currently Meng is on bail and has filed a civil claim against Canada's government, border agency and police for ‘serious breaches’ of her civil rights. Back in December, and rather strangely, US President Donald Trump said he could intervene in Meng's case if it helped to avoid a further decline in US relations with China. If this whole side-episode isn’t politically-motivated then my uncle’s a monkey!

At a recent press conference, China's foreign minister Wang Yi stated that Beijing will take "all necessary measures" to defend Huawei and Meng Wanzhou against US accusations. He added: "It's quite obvious to any fair and unbiased person that this matter involving a particular company is by no means a normal case. This is a deliberate political move".

During the tour of Huawei’s facilities last week, journalists were given coffee in cups with the print of a lighthouse on them and the words: ‘Lighting a beacon for Wanzhou’s early return’. Novel!

In a highly commercial world, of course, not every country is going to be following the US line to shun Huawei. Two weeks ago at the world’s top mobile industry fair in Spain, Huawei secured 5G commercial contracts or partnership agreements with 10 international operators – including Turkcell in Turkey, STC in Saudi Arabia, Sunrise in Switzerland and Nova in Iceland.

Flying back to the UK from Singapore last Thursday I was lucky enough to find an international copy of the New York Times to help me pass some of the time. One article entitled ‘America the cowardly bully’, written by Paul Krugman, really hit the note in relation to the way the US is conducting the trade wars with China, and also with Mexico and Canada. Specifically, on China he stated: “Even if most of the tariffs go away, Trump’s trade belligerence has done lasting damage to America’s reputation, and hence to a global economy that depends on American leadership.”

He concluded by stating: “Not having a trade war is better than the alternative. But the path the Trump administration has taken to its trade deals has made us [the US] less trusted, less respected and weaker than we were before.”

The world’s first cyber attack?

Today, we hear about cyber attacks –  in all manner of forms – and with increasing frequency. Arguably the first telecoms/cyber attack or hack goes way back to the early 19^th century before we even had proper telecommunications. In this case, it goes back to a Parisian stock market fraud and something called steganography.

But first a little background on the French steganography system. This consisted of chains of towers, placed about 8-10 km apart across several routes throughout the country to carry messages. Each of these towers had two rotating arms which could be positioned in various ways to make a code of symbols.

An operator at a receiving tower could look through a telescope to see the symbols shown by the transmitting tower. They would then repeat those symbols in their own tower, and so on across the chain. Amazingly, the network stretched a total distance of 4,800 km, through 556 stations. It was known as the Chappe Network (after the inventor Claude Chappe) and was for government use only. The system was used until the 1850s, and messages travelled along it at around 500 km per hour. Much quicker than using the mail coach or a carrier pigeon!

So, in 1834 two bankers/bond traders – Joseph and Francois Blanc – working on the Bordeaux stock exchange, decided to use this system to get news of early market movements from Paris, and by thus doing make a killing on certain trades. They paid a colleague in Paris to keep watch on the stock exchange and pass information on the most significant trends to a telegraph operator in Tours on the Chappe Network who could then transmit messages to Bordeaux.

 As the telegraph network was for government use only, the Blanc brothers found a way to nest their messages inside those authorised using the symbols used to indicate transmission errors. The telegraph’s encoding system included a backspace symbol that instructed the transcriber to ignore the previous character. The Blancs worked with the corrupt telegraph operator in Tours, giving him instructions to make very specific errors in the transmissions, letting them propagate along the line, and then correcting them thereafter.

The addition of a spurious character indicating the direction of the previous day’s market movement, followed by a backspace, meant the text of the message being sent was unaffected when it was written out for delivery at the end of the line. But this extra character could be seen by another accomplice: a former telegraph operator who observed the telegraph tower outside Bordeaux with a telescope, who then passed on the news to the Blancs.

The Blancs managed to avoid getting caught for two years, but when they were caught in 1836 and put on trial the authorities realised that there were no laws that specifically prohibited the injection of private messages into the Chappe network and the misuse of data networks. Thus the two remained free. However, the Blancs’ pioneering misuse of the French network probably qualifies as the world’s first cyber-attack.

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