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China's telecom giant Huawei's relation with BT faces

posted 13 Oct 2012, 05:37 by Sam Mbale   [ updated 13 Oct 2012, 05:38 ]

UK-Huawei - China's telecom giant Huawei's relation with BT faces investigation in UK

 China Central Television (CCTV) - The commercial relationship between Chinese telecoms giant Huawei and British Telecom (BT) is being investigated by the British parliament's Intelligence and Security committee, reported The Guardian this week.

Sir Malcolm Rifkind, chairman of the committee, claimed that the investigation will involve the relationship between Huawei and BT and check the infrastructure of Huaweiin the UK to determine whether the country should worry about the Chinese company.

Huawei stressed that the report from the British parliament's Intelligence and Security Committee is just an evaluation of the relationship between the company and BT, but not an investigation.

Huawei issued a statement that the firm has been operating in the UK since 2001 under the country's scrutiny and procedures, that the company maintains regular contact with the British government and that it "welcomes all discussions and questions".

Two years ago, Huawei established a center in Banbury. The company asked several of its British employees with backgrounds in security to check its software and hardware in order to ensure the company could fend off potential risks. British officials approved of the center's security capabilities, believing that it could guarantee that the safety standards of Huawei's equipment had reached those of the UK.

"The center, a cyber-security center, which is under jurisdiction of the UK authority, which presents the transparency that western industries need to see. I think there is a question about the transparency here," said Annabelle Gawer, an assistant professor at the Imperial College Business School.

Huawei has been BT's supplier since 2005 and is the main contractor of BT's national fiber-optic broadband service. Other telecoms operators in the UK have worked well with the Shenzhen-based company, whose equipment has been used in the building of UK's 4G network.

Tommaso Valletti, adviser to the United Kingdom's Office of Communications, said that the investigation by the British parliament has added a new layer of tension following previous investigations of Huawei by the U.S. House of Representatives and theCanadian government.

"There is an American election, presidential election, ongoing, as we all know. There is some big lobbying, some big money which some companies are giving to politicians to run their own campaigns," said Valletti in regard to a new U.S. direction for Huawai.

"So the biggest losers, should Huawei go into the US, would be Alcatel-Lucent -- yes, it's a French company but also with some American and Canadian base -- and then Cisco, which is based in San DiegoCalifornia. This would be probably a loser of market share. So, I see these companies putting pressure on their own representatives, their own politicians in order for lobbying for a legislation," he added.

More time is needed for Huawei to gain the trust of the British parliament, although the company has already obtained the British government's confidence. The evaluation results will be sent to Prime Minister David Cameron before Christmas, according to reports.

BT has responded that their relationship with Huawei conforms to British laws and regulations, and that the UK will not need to change its position regarding the U.S. House of Representatives' report. TalkTalk, another important partner of Huawei, said it is willing to continue working with the Chinese telecoms company.

Tommaso Valletti said that Huawei is particularly popular in Britain for investment reasons.

"In particular, they have created many jobs," Valletti said. "They have created more than 1,000 jobs. They have committed to new investment plans. They have announced a few weeks ago that they are going to invest 1.2 billion pounds in next few years in the UK. And obviously, this is good business for the country."

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