News Risk Management04 Apr 2018

China:Tech firms risk security clampdown in the US

04 Apr 2018

The US has indicated that it intends to keep some technology made in China out of American markets, amid concerns about "back doors" that could compromise sensitive information, reported the Nikkei Asian Review.

According to the Federal Communications Commission (FCC), the US federal agency responsible for implementing and enforcing America’s communications law and regulations, it is considering regulations that would prevent use of money from its $8.5 billion-a-year Universal Service Fund to purchase equipment from companies that pose a security risk to communications networks in the US.

The fund seeks to provide universal access to telecoms services by subsidising phone services to educational institutions and underserved communities.

Should this FCC proposal be implemented, it may shut out devices made by certain Chinese and Russian companies from getting US government subsidies in purchasing equipment for the fund’s programmes.

For China, Huawei Technologies and ZTE may be at the top of the list as they have been said to have ties to the Chinese military. Washington suspects that Huawei may include back doors in its products at Beijing's behest, an allegation the company denies, reported the Nikkei.

“Hidden ‘back doors’ to our networks in routers, switches—and virtually any other type of telecommunications equipment—can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more,” said FCC chairman Ajit Pai in a note to Congress.

Back doors are mechanisms built into hardware or software that allow access to systems by people other than the intended user and thus have the potential to allow data to be accessed or stolen by these parties remotely.

‘Kill switch’ functions that can shut down a system are another potential threat, noted the Nikkei. The US is wary that such security holes could be used by foreign entities to intercept valuable information or create chaos.

The Universal Service fund has already attracted its fair share of controversy given Mr Pai's plan to bar the smaller companies that provide the bulk of the service and concentrate funding on big telecom companies like his former employer Verizon.

The US has its own track record with back doors, which may have made them more sensitive than most to the risks. An early example is the Clipper chip, an encryption chipset for telephones and computers developed by the National Security Agency with a built-in back door that would let law enforcement agencies access encrypted communications. The initiative stalled amid public outcry.

There are still rumours lingering about US government back doors. From documents leaked by whistleblower Edward Snowden, it was discovered in 2014 that the National Security Agency (NSA) intercepted Cisco Systems routers in transit installed surveillance tools before sending them along to their destination, and that senior US officials pushed companies such as Apple to design back doors for their products, said the Nikkei.

Though these demands were rebuffed, suspicions still linger. Back doors installed at the request of foreign governments may also exist in equipment used in countries such as Japan—such as North Korean hackers possibly concealing their identities to develop software for Japanese manufacturers.

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