China has never had an easy relationship with the US where the Internet is concerned, and it does not look like it is getting any better.
Described as a safety measure, but more likely as a political response to the recent findings of the US Committee on Huawei, China Unicom has decided not to use Cisco equipment for the foreseeable future and has instead adopted other equipment for a recently completed project in Jiangsu province.
The report by China’s “Daily Economic News” claims that China Telecom and China Unicom represent the backbone of China’s Internet and approximately 80% of Internet traffic. Cisco’s equipment is used in 70% of China Telecom’s 163 network and 80% of China Unicom’s 169 network.
Using the same language that many in the US have used to describe Huawei and ZTE equipment, industry insiders in China are now saying that there significant “loopholes” and “backdoor” security concerns in Cisco’s equipment, and they recommend legislation and full-out replacement by the telecom industry.
Citing a 2005 presentation by Michael Lynn, an ISS analyst, on the vulnerabilities of Cisco’s IOS (Internet Operating System) router software, the report goes on to quote a security expert, Fang Binxing, who says that this “backdoor” represents a risk that may “automatically allow access to network equipment information.”
They continue by explaining that Cisco’s business in China represents only 4% of its revenues but 30% of its overall profits, and that their equipment is used in the telecom network backbone of crucial sectors in finance, government, railway, civil aviation, medicine and even the military police.
As a warning, they quote extensively Chinese Internet blogger Fang Xingdong, who predicts war in the industry and suggests that the government produce legislation on the issue:
“The future of the war will hinge on the nature of Internet security, therefore China’s existing use of foreign products represents an underlying threat and problem that the government must urgently take into account. The government and the industry must consider: Internet security laws, replacement of current equipment and an examination of the current Internet security situation. These would be practical methods. In this instance, China Unicom’s replacement of Cisco equipment illustrates that domestic carriers are starting to place importance on safety issues. Although this is only one node, it is just the beginning.”
What is clear from this development is that China’s Internet industry is upset by the US Congressional ruling earlier this month, wherein Congress essentially destroyed any of Huawei and ZTE’s further chances of a successful bid in American infrastructure projects. It will not be long before Cisco gets the boot on a number of projects in China’s rapidly growing mobile and Internet sectors.
This is not a good sign for Cisco, especially as Huawei has come to the forefront in recent years. The only reason why Cisco was able to gain significant traction in the beginning was due to the lack of technological know-how when the Internet first came to China. This has changed dramatically, and Huawei may stand to gain from this political skirmish.
Source: Sina Tech