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China’s No. 2 telecoms equipment maker ZTE Corp says it is being “unfairly criticized” after a letter signed by US lawmakers was sent to the Federal Communications Commission stating the Chinese telecoms equipment vendor could pose a security threat if it were to win deals with US operators.

The letter— dated 19 October and signed by four US senators – Sens. John Kyl (R-Ariz.), Susan Collins (R-Maine), Joseph Lieberman (I-Conn.) and Rep. Sue Myrick (R-N.C.) – signed the letter. It was sent to the FCC just weeks before operator Sprint Nextel is expected to choose suppliers for a multibillion-dollar network upgrade, reports the Wall Street Journal.

ZTE is the third-largest vendor of GSM telecom equipment, worldwide, after Ericsson and Nokia Siemens Networks. ZTE sales accounted for about twenty percent of all GSM gear sold throughout the world in 2009, according to Wikipedia.

Sprint wants to have basestations and other infrastructure gear provide both WiMAX and LTE. Six vendors are bidding for the contract. Korean-based Samsung and Chinese-based Huawei also offer dual mode (WiMAX/LTE) basestations and infrastructure, as does US-based Motorola.

Motorola provides a dual mode LTE/WiMAX basestation, but has since sold their cellular infrastructure unit to Nokia Siemens Networks. NSN bought Motorola’s carrier business this summer for $1.2 billion.

ZTE hit back at suggestions that restrictions should be imposed on its US operations, arguing that it is making a number of concessions aimed at easing security fears: ZTE executives say they plan to set up a US manufacturing facility within the next year or two, let third parties audit the company’s hardware and software, and are willing to share the company’s software code with US officials.

“We feel that we are unfairly criticised,” said Lixin Cheng, president of ZTE’s North American business. “My biggest challenge in this marketplace is to make sure people understand who we are.” ZTE also objected to the US senators assertion that the vendor is potentially subject to “significant influence by the Chinese military,” claiming it has no current ties to the Chinese government or military.

ZTE said in a statement released late on Monday in the United States that it plans to buy $3 billion worth of gear from U.S. vendors such as Texas Instruments and Qualcomm, as it tries to boost its presence in the world’s biggest economy. The money will be spent over the next three years and will be used to show ZTE’s commitment to the U.S. market.

Besides the United States, the European Commission has also opened an investigation into Chinese subsidies for wireless modems made by the two companies, which critics say give ZTE and Huawei an unfair competitive advantage. Huawei, the largest networking and telecommunications equipment supplier in China, is also facing a political battle in the US.

In other news, ZTE announced it has received FIPS 140-2 security validation from the National Institute of Standards and Technology (NIST) for FIPS 140-2 Cryptographic standard. ZTE is the first Chinese telecom provider ever to receive the NIST and Federal Information Processing Standards (FIPS) 140-2 Cryptographic Algorithm Validation in wireless infrastructure equipment.

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