China's new broadband cable guy

China's newest operator, the under-sized state-owned cable player, has a hard road to travel.

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China commits to private broadband, with limits

China gets serious about introduce private investment into broadband, with trials planned for 16 cities. But the game is stacked in favour of the incumbents, and it's not even clear who can play.

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Spooks, spies and backup tape

Gen. Michael Hayden’s lengthy encounter with the Australian Financial Review last week was unusual in itself.

Despite the appetite for spook-related stories these days, the most widely-reported part of the interview is the claim by the ex-CIA and NSA chief about Huawei's role in Chinese espionage.

What's telling is not the assertion, or the inevitable lack of accompanying hard fact; it's that the assertion itself is adequate.

Hayden tells the interviewer that Huawei “would have” shared its knowledge of foreign telecom systems with Chinese authorities.  Asked if evidence exists that Huawei has engaged in espionage on behalf of China, he replies (emphasis added):

Yes, I have no reason to question the belief that’s the case. That’s my professional judgement. But as the former director of the NSA, I cannot comment on specific instances of espionage or any operational matters.

Thus Huawei’s role as a security threat is reduced to a mere “belief”. Even within 'operational' constraints, if you have a case against someone, you will find a way to express it. And you would certainly put it with more conviction than the phrase above.

But Hayden does us an unintentional favour here by making it clear that Huawei is proscribed not because of what it's done but what it has the potential to do.

Hayden reveals that after retiring from the CIA he even received a pitch from Huawei in its search for Beltway advocates. According to Hayden, Huawei said all the right things: 

But God did not make enough briefing slides on Huawei to convince me that having them involved in our critical communications infrastructure was going to be okay. This is not blind prejudice on my part. This was my considered view based on a four-decade career as an intelligence officer.

He adds:

But frankly, given the overarching national security risks a foreign company helping build your national telecommunications networks creates, the burden of proof is not on us. It is on Huawei.

Leaving aside the ontological challenge of demonstrating that one is not a spy, this is the logic of the national security mindset. It takes a brave politician to challenge it and through the Cold War, the 'war on terror' and now the contest with China, it’s been the prevalent one in Washington.

The rest of world, including the telecom industry, has to live with it.  Telstra and PCCW are surely not the only operators to have signed pledges allowing the FBI access to their cables or to store data for its convenience.

But as this blog has suggested before, this logic makes suspects of all vendors.

In this part of the world, that puts the spotlight on Cisco. According to Ni Guangnan, a professor at the Chinese Academy of Engineers, Cisco provides 70%-80% of the backbone routers, international gateway nodes and super-nodes in the two biggest backbone networks, China Telecom and China Unicom.

In a widely-reported incident last October, Unicom swapped out Cisco routers for Huawei kit in what is said to be the world’s largest cluster node. Because of Cisco’s large installed base and the thousands of Cisco-qualified engineers, we won't see a rush to dump Cisco gear.

The Snowden saga has given China the ability to laugh off US complaints about its online data theft. Now the US national security case, as put by Hayden, is a script that China will faithfully adapt for its own purposes.

So stand by for the continued blocking of foreign telcos, more technology protectionism and the dextrous application of 'national security' to ensure China's networks are increasingly the preserve of the home team. 

Disclosure will force China to end its heist of corporate secrets

This is no surprise: in the wake of damaging revelations about its online attacks on the west, China has disclosed attacks on its networks.

Not only was last week's Mandiant report a gamechanger, I’m predicting that within a year or two China will drop its large-scale corporate espionage programme.

In part, that's because China's disclosures in fact highlight the criminal nature of the PLA hacks. Whereas China has only suffered attacks on military sites, the real damage in the reports by Mandiant and Business Week were the details of China’s theft of business secrets.

Sooner rather than later China will come to see the corporate attacks as a low-percentage play.

The underlying narrative in western reporting has been of a clever China Inc. stealing into foreign networks, downloading terabytes of data and seamlessly transferring it to its own corporate sector for easy profit.

In truth, China’s giant, secretive bureaucracies don’t play well. They are severely constrained by their size, dysfunction, deep-rooted corruption and suspicion of each other (proof point: it took Beijing a typically tardy ten days to respond to Mandiant).

Mandiant estimates PLA hacking teams have stolen data from hundreds if not thousands of foreign organizations. The task of sifting through those petabytes of material, identifying valuable corporate information and somehow directing it to the ‘right’ agency or state enterprise would tax the most efficient system.

To take one prominent example, the attempts to steal Google’s search engine secrets don’t seem to have helped Jike, the Chinese state-backed search engine with a market share of close to zero.

More likely, I suspect, is that the corporate attacks have taken place with the tolerance of rather than the active direction by the top leadership. Few officials would wish to get into a scrap with the PLA, and certainly not on behalf of foreign corporations.

Plus, this being China, it’s not beyond the bounds that some PLA officers are running these hacks commercial agendas in mind.

This is not to say that politically-motivated attacks, such as those on activists’ Gmail accounts, or on the New York Times and Bloomberg, aren’t directed from the highest level, or that none of the corporate spying has yielded results.

But these industrial-strength raids on corporate networks surely yield little, except increasing embarrassment. China may despise the democratic west but it can ignore world opinion only up to a point.

Just as diplomatic and trade pressure forced China to stop transferring weapons technology to the Middle East in the 1990s, transparency will help it abandon its heist of foreign commercial secrets.

China's ave broadband speed is 2.6Mbps

Shanghai residents enjoy China’s fastest broadband, with bandwidth two-thirds higher than the national average, says the latest quarterly survey by CDN player China Cache. 

China Cache’s CC Index puts Shanghai at 4.34Mbps – the only one above 4Mpbs - followed by Fujian and Zhejiang provinces at 3.17 and 3.07Mbps respectively.  Beijing ranks eighth with an average 2.79Mbps.

The national average of 2.59Mbps compares with 2.31Mbps in the third quarter.

Reports the China Daily:

China's western regions fell behind the national average with a connection speed of 2.34 Mb/s, while the Xinjiang Uygur autonomous region was the last on the list with 1.74Mb/s.

Comparing China's three major carriers, China Unicom had the slowest average connection speed of 2.3 Mb/s, slightly behind China Mobile's 2.36 Mb/s and China Telecom's 2.63 Mb/s.

Just as interesting as China Cache’s quarterly broadband rankings is its real-time CC Index which scores operators and major cities and provinces over the past week. 

In the current rankings Shanghai Telecom is still top, but six of other nine at China Mobile provincial affiliates, underscoring the dominance of mobile in the China market.

Meanwhile, Beijing’s Jing Hua newspaper (via Sina Tech) says the capital now has 4.74m fixed-line broadband users, with 52.7% enjoying bandwidth of 4Mbps or above and 20.1% on at least 10Mbps. Last year China’s capital rolled out fibre to 1.14m more homes, taking the total of fibre-capable residences to 4.82m.