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Red Flag Raised on Chinese Telecom Deal Eli LakeBy Eli LakeDecember 3rd 20133:20 PM FOLLOWMore Stories by Eli

Lake As Beijing bids to lay a wireless network in South Koreaa country that stations t housands of U.S. troopstwo senators have voiced concerns that the the system coul d be used to spy. Only days before Vice President Joe Biden's tour of east Asia this week, two influ ential Democratic senators quietly asked the Obama administration to evaluate th e intelligence risks posed to the United States by a proposed telecom deal in So uth Korea. The deal would allow Chinese telecom giant Huawei to help build a broadband netw ork for South Korea. While U.S. senators usually pay attention to business deali ngs closer to home, the prospect of Huawei equipment embedded inside South Korea's new telecom network was enough to raise the concerns of Senate Foreign Relation s Committee chairman Robert Menendez and Senate Select Committee on Intelligence chairwoman Dianne Feinstein. We are very interested to receive your assessment of potential threats and securi ty concerns that Huawei's involvement in this plan represents, the two senators wro te in a November 27 letter obtained by The Daily Beast and addressed to James Cl apper, the director of national intelligence; Chuck Hagel, the secretary of defe nse; and John Kerry, the Secretary of State. For much of the 20th century, the United States was able to collect vast amounts of signal intelligence because American telecom companies helped create the tel ecom networks of foreign countries. In recent yearsas more countries create the b roadband wireless networks needed for tablets, cell phones, and other computersin telligence officials have begun to worry that China is trying to do the same thi ng. With more than 28,000 U.S. troops in South Korea, the U.S. military needs to kno w its communications channels are secure on the peninsula. The fear for the U.S. intelligence community and several lawmakers is that Huawe i components give China the equivalent of a digital listening post inside a coun try's wireless network. The Obama administration has quietly agreed. In 2011, the Commerce Department blocked Huawei's bid to help build a wireless network for U.S. first responders. In 2010, political pressure stopped Sprint from signing a dea l to allow Huawei to build cell towers for a proposed nationwide 4G network. Huawei is a privately owned company, but it has access to a $30 billion line of credit from China's Development Bank. Its CEO and founder is also a former officer in the Chinese military. A spokeswoman for the National Security Staff, the body that advises the preside nt on national security and foreign policy matters, declined to comment on the l etter from Menendez and Feinstein. A senior administration official said: I'm not g oing to discuss the details of our diplomatic discussions. But we do have concer ns about Huawei, evidenced by the fact that Huawei was excluded in October of 20 11 from taking part in the building of America's wireless emergency network for fi rst responders due to U.S. Government national security concerns. Vice President Joe Biden is traveling to China Tuesday as part of a tour of East Asia. He is scheduled to visit South Korea later this week. They can pump out a software update and you have no idea what is in the software. While in recent years U.S. concerns have centered on Huawei's efforts to penetrate the American market, some experts also worry about Huawei equipment inside fore ign telecom networks. There has been enough concern over Huawei's equipment that it

could provide an intelligence advantage to the People's Liberation Army [the mili tary arm of the China's Communist Party] that a number of countries have declined to purchase Huawei equipment, said Jim Lewis, a senior fellow and expert in signa ls intelligence at the Center for Strategic and International Studies. Lewis pointed out that some countries, including the United Kingdom, have allowe d Huawei equipment into their wireless networks, but in these cases special prec autions were taken to mitigate the concern that Huawei's equipment would provide a back door for Chinese intelligence. Huawei spokespeople have denied that their equipment has been used by China's mili tary for espionage purposes. William Plummer, a vice president of Huawei and a s pokesman for the company in the United States, said his company has provided equ ipment for many cell phone carriers all over the world. Our gear is world-proven and trusted, connecting almost one third of the world's population. The motivation s of those that might groundlessly purport otherwise are puzzling. Lewis said that Huawei's routers and switches may be clean at first. But the poten tial for back doors, or exploits within the software and hardware of the equipme nt, could be slipped into the gear through routine maintenance such as software updates. The computers and devices owned by the company all connect back to and are manage d by the supplier, Lewis said. Huawei has a degree of control and access to the Ko rean telecom network. They can pump out a software update and you have no idea w hat is in the software. Lewis added that because the United States has to use the Korean telecom system for its own military communications, there is a risk that China could penetrate those communications. The bad business environment in the United States appears to have led Huawei's CEO to give up on his efforts to penetrate the U.S. market. Ren Zhengfei, the CEO o f Huawei recently told French journalists we have decided to exit the U.S. market , and not stay in the middle. Plummer, however, said Huawei was still interested in U.S. markets. Huawei remain s committed to our customers, employees, investments and operations and more tha n $1 billion in sales in the U.S., and we stand ready to deliver additional comp etition and innovative solutions as desired by customers and allowed by authorit ies.