State and local governments continued to buy Chinese telecom gear despite warnings

Details: Institute for Defense and Emerging Technologies; Note: Technology operations refer to technology and information and communications services from foreign companies that US agencies and government agencies are prohibited from purchasing; Chart: Simran Parwani / Axios Visuals

Despite government efforts to keep Chinese mobile devices out of US supply chains, state and local governments across the country continued to buy products posed a threat to national security, a new report finds.

Why it’s important: US officials are warning China’s telecom infrastructure could make the US vulnerable to economic espionage or digital sabotage.

  • National and local governments should better align with government policies in order to maintain school facilities, hospitals and others critical infrastructure across the country, according to a report published today by Georgetown University’s Center for Security and Emerging Technology (CSET).

Rear end: Government agencies have been banned since 2018 from buying products from Chinese technology companies Huawei, ZTE, Hikvision, Dahua and Hytera.

  • However, federal-level restrictions do not apply to state agencies.
  • Only five states – Florida, Georgia, Louisiana, Texas and Vermont – have taken some measures to reduce the cost of such devices for national security reasons, although the report warns that gaps still exist in some of those countries.
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In numbers: Between 2015 and 2021, at least 1,681 state and local organizations purchased equipment and services related to five Chinese companies, according to the report.

  • Total value of technology and services purchased during that time were about $45 million.
  • Public school districts, colleges and universities account for a third of the purchase, but prisons, public hospitals and public transportation systems have also purchased equipment.
  • The number of transactions has decreased since 2018, according to the report. But there were still more than 600 deals in 2021 and there’s no sign the deals have stopped, said report co-author Jack Corrigan, a research analyst at CSET.

Details: The purchases covered a wide variety of products, including smartphones, surveillance cameras and internet devices, according to the report, which is based on purchase records made in public documents.

  • The largest customer, a public university in central Michigan, has invested more than $15 million in Huawei network equipment and services over a seven-year period.
  • Two public school districts in Arkansas each spent more 1 million dollars in Hikvision surveillance system.
  • The report does not name these organizations.
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Between the lines: Chinese mobile devices are often cheaper than devices from non-Chinese companies, making them a good purchasing option for cash-strapped local US organizations.

  • Local organizations also often lack the internal expertise and means to understand and deal with the threats posed by foreign technology.

What they say: “When the technology is used in a government network, it can act as an entry point for any network connected to it,” said Michael Kratsios, co-author of the report and former CTO of United States, he told Axios.

  • He added: “If opponents or critics want to destroy public services, they can use these assets as entry points to pursue these activities.”
  • “State and local governments can take steps to remove these technologies from their supply chains, by taking steps related to federal guidelines,” Corrigan said.
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What’s next: The Federal Communications Commission (FCC) plans to ban all sales of new Huawei and ZTE mobile devices in the US for national security reasons, Axios reported earlier this month.

  • The ban would cover both state and local organizations.
  • The FCC will also determine the scope of the ban on the sale of video surveillance equipment used for public safety, which will affect three other Chinese companies, Hikvision, Dahua and Hytera.

What to watch: The report made several policy recommendations to reduce the risks of these technologies at the national and local levels, including:

  • Creating a list of “unscrupulous” foreign companies covered by purchase restrictions, so state and local procurement officials can easily identify dangerous technologies.
  • Increasing funding for “rip and replace” programs to exchange assets.

Go deeper: The FCC is about to ban all US sales of new Huawei and ZTE devices


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