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ZTE calls foul over senators' 'xenophobic' letter

Protectionism by any other name...

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ZTE, the Chinese telecoms equipment maker, has cried foul over a letter sent to the FCC by four US senators which suggests that Chinese companies should not be trusted with US contracts.

The letter, which comes from the Senate Committee on Homeland Security & Governmental Affairs, names Huawei and ZTE as Chinese companies from whom cellular carriers have, or may yet, source infrastructure, and asks the FCC what steps it has taken to mitigate the perceived risks.

"The unsubstantiated allegations made in the letter are disappointedly[sic] anti-competitive, protectionist and somewhat xenophobic", ZTE told Bloomberg, saying that the letter "unfairly characterises ZTE", despite the company claiming to have no connection with the Chinese government or the military.

But the tone of the letter indicates the four signatories feel otherwise, referencing reports that accuse Huawei of having "significant ties to the Chinese military", and indicating that both companies have received loans from the Chinese government - the implication clearly being that anyone who accepts a loan will be in thrall of their creditor.

It reads:

We are very concerned that these companies are being financed by the Chinese government and are potentially subject to significant influence by the Chinese military which may create an opportunity for manipulation of switches, routers, or software embedded in American telecommunications network so that communications can be disrupted, intercepted, tampered with, or purposely misrouted.

To bear out this accusation, the letter accuses both companies of "aggressively seeking to supply sensitive equipment for US telecommunications infrastructure ... and increase their role in the US telecommunications sector through acquisition and merger". Not only that, but according to the letter Huawei has been offering "low prices with attractive financing"... those inscrutable Chinese, what could they be planning?

Daily Wireless breaks down the contracts for which both Huawei and ZTE are competing, mainly with Motorola to supply dual-mode LTE/WiMAX base stations to Sprint Nextel. Daily Wireless also points out that ZTE has promised to open a US manufacturing plant and spend $3bn with US companies over the next three years.

But the senators' letter asks the FCC for a list of all the US networks already using kit from ZTE and Huawei, complete with "a detailed analysis of the geographic regions covered by those networks" and an explanation of how the FCC intends to determine if such deployments represent a risk. It goes on to ask how the FCC intends to mitigate those risks, neatly switching to an assumption that such risks exist.

Should the FCC bend before such transparent politicking, US operators will be faced with a huge pile of paperwork. This will in turn ensure that buying Chinese will always be more expensive, and if Americans can be convinced that Europe represents a similar risk, then Motorola (the only US supplier of any scale) can't lose. ®

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