created by cable in 1979 and brought to you today by your television provider. announcer: -- >> andy purdy is chief security officer for huawei. he is based in washington dc and he is our guest on "the communicators." mr. purdy, what do you do for huawei as chief security officer? andy: my primary role is internal, although i have been doing external things for the past few months, i chair the committee of key parts of the company in the united states that tries to assess and manage and control risk, help support our overall ethics and compliance program so that we make sure we protect huawei, we protect our customers, and we can continue to do business and manage the privacy and cyber security risk. peter: what is huawei's legal and business status in the u.s. right now? andy purdy it is a moving target. we have the national authorization act, we have a pending rule to an executive order. right now, we can't sell to the u.s. government, can't sell to u.s. contractors, and there is pressure for our small-carrier customers, wireless and wireline customers, to rip out huawei gear. so there is legislation pending that would provide funds, not adequate or providing sufficient time, that would give them money to rip out huawei equipment. so it is a difficult situation and although not official, the u.s. government has blocked american carriers at&t and verizon from selling our mobile devices. peter: why do you think that is? andy: it is a complicated matter. we have the geopolitical context of the u.s.- china trade talks having exasperated things. we also have a situation i think affects many of us in our everyday lives, were people don't want to hear or read anything that doesn't agree with their position. so we have a lot of false information out there, some of it expressed by u.s. government officials and some provided by the u.s. government to the media, but we can't meet with the u.s. government. we don't have the opportunity to provide the facts, so it is a challenging situation. peter: to help us deal with some issues that huawei and the u.s. government are facing, john hindle of "politico" is our guest reporter. john: thanks for having me, peter. and andy, i want to talk about the implications of huawei operations within the u.s. i think there are about 1500 employees for huawei here, but given the changes and the heat the company has gotten from the trump administration, fcc, congress, are those numbers going to change into in 2020? and your role, how is that going to shift as the government moves to block out the company? andy: we have been forced to downsize in the united states. you may recall we laid off about 600 people working in our r and d capabilities, primarily in silicon valley in california. and we cut down our staffs for our carrier business, enterprise business and our device business. but frankly, when you look at our global revenues and global growth, the united states from an income perspective is really not a very important factor for huawei, although it is the largest market in the world and we would love to have the chance to talk with the u.s. government about how we do business here. john: will you expect further cuts in 2020, do you have a sense of how that might change? andy: i don't know. it is more likely than not that there will be some additional cuts. the legislation that is pending that would provide funds to allow our 60 smaller customers to rip and replace huawei gear, that would mean we wouldn't be able to provide the updates, software and hardware updates to the technology and that would cause a decrease in revenue, a decrease in the workforce necessary to maintain the business. so they headwinds are definitely measurable for us. john: you mentioned the trade war and how much that has some overhang that influences what is going on here. we are now in 2020, which is a presidential election year. -- a u.s. presidential election year. has there been much discussion about whether a new administration might provide any sort of reset or opening to discuss these issues in a different way? i have found myself looking at the trade war and it is a signature issue of president trump's. he is seeking a second term, but would things potentially be different under a president biden, a president warren? how much is this tied specifically to the trump administration and president trump, in particular, do you think? andy: i think it is important to understand the geopolitical context. and that context exists regardless of which administration is in power. the u.s. is quite concerned about china and the rise of china economically and militarily and is concerned there is some belief china wants to take over the world. so there is concern about, what is the american role with our u.s. allies in creating and maintaining the type of capability necessary to keep us safe if china were to turn and become an actual kinetic warfare adversary? as we think of cyberspace, we command,ing the space as we think of cyberspace, the implications of a growing dependency by our country and others on the digitized economy and the 5g internet things and so forth, means we are going to be increasingly dependent as a country and a world on those kinds of technologies. -- and the world on those kinds of technologies. so that which really didn't matter so much since i left the white house over 15 years ago, are really going to matter. so the question is, how do we manage the risk to the united states regardless of who the suppliers are? it is something that is top of mind whether you are a democrat or a republican. one of the frustrating things to me as i alluded to is the fact that the government won't meet with us. there is a lot of information being communicated that is not based on facts. if the government is giving various publications or speaking publicly about things that are wrong, i can only imagine what they are saying to democratic and republican leaders. i think it is important, whether in our personal lives are government or geopolitics, to base things on facts and on data and to be objective so we understand the risks and we can take steps necessary to address risk. peter: but andy purdy, every time we have had a member of congress or member of the administration on, democrat or republican, we asked if they would own a huawei phone, and the answer across the board has been no, they don't trust it, they have information that there is a backdoor and a way for china to access that information. andy: you began your comment with a "but," your comment is agreeing with what i am saying, that democrats and republicans are worried about china. and many have said, state department officials and others that it is really not about huawei, it is about the china government and what the china government in their view could force huawei to do. and so, we believe that -- for example, some government people recently talked to some of our customers. the government officials thought that huawei was giving away equipment free to customers. there are some recent comments by a government official and an attorney publicly basically comparing our founder's offer to license our 5g technology, which means the u.s. government could seek all the hardware and all the software. he likened it to elon musk's tweet that got him in deep trouble with the fcc, calling his offer to license the 5g technology to america basically the equivalent of criminal fraud, which is objectively, by any measure, false. -- completely false. finally, another example of what has been said publicly is that we update our equipment with software updates from china. a government official said that. that is demonstrably false. so the bottom line is -- and of course, government officials don't hear this, because they hear one side of the story. they are not willing to listen to us or other major experts who are sort of saying no, there are real cybersecurity risks in the world, and all the equipment, the carriers and the equipment providers, have to be subject to strict scrutiny and testing of products and conformance of measures, because bad guys can hack into everybody's products, particularly with a global supply chain deeply embedded in china. those are the kinds of things that are necessary to make sure america is safe going forward -- and that is where the discussion needs to get to the next level. peter: when you talk about the chinese government, in "the wall street journal" recently, was this report, that a wall street journal review of credit facilities, tax breaks and other financial assistance details for the first time how huawei had access to as much as $75 billion in state support as it grew from a little-known vendor of phones which is to the world's largest -- of phone switches to the world's largest telecom company. andy: and in that article, it said comparing $75 billion to $45 billion cisco is getting, so let's put this in perspective, and that is an instance where the u.s. government provided dramatically inflated information to the wall street journal about the story. -- for that story. way above $75 billion figure, and the fact is, and hopefully somebody good -- somebody could show us the information so we could have a chance to say what is right or what is wrong. the biggest item in there is over $45 billion, and that is lower than what cisco is getting around the world from china and others, is the idea of chinese government-backed banks providing loans to customers, lines of credit. so the question is, is that 45 of the 75, is that the amount of money that customers borrowed, they are alleging it is artificially low rates giving unfair advantage to huawei, because our customers would have lower-cost financing. but the fact is, very few customers use the lines of credit, so i can't tell from the article whether the $45 billion is just theoretical lines of credit, but we know that only $4 billion or $5 billion over a $45r period of time of the billion -- i know this gets technical -- was actually used by customers to buy our products. and when you are looking at $150 billion in revenue, $4 billion to $5 billion in support is nothing. so let's make sure we can talk about the facts, but when there isn't discussion and people are not even willing to think about or talk about the facts, i would suggest as we may have said in the previous interview that we do the things necessary to make -- block huawei if you must, but let's do the things necessary to make america and our allies safer, and we are not doing that enough, and that is the kind of thing we are recommending. john: you talked about issues with the administration not being open to speaking with huawei. what does lobbying look like generally for the company at this point? i have wondered if that resistance also extends to member of congress. to what degree is huawei's lobbying operation looking like going into 2020? because the numbers have been going up over the last year, so what are those conversations, what are those efforts looking like? andy: you are more of an expert on what it takes to lobby and affect public policy. certainly, some of our competitors who make significant campaign contributions to members of congress, and we don't make such contributions, -- such campaign contributions, that can have an impact on the discussion. there are some people on capitol hill that are willing to talk with us about some of the issues, and we are going to redouble our efforts to reach out to them to try to have some of these discussions about what the facts and what the evidence are, and frankly, from my perspective, my focus is security and risk, what is necessary to make america safer with transparency? >> how much are you talking with some of the smaller wireless companies you work with? you mentioned you are working with 50 or 60 right now. what have they been saying recently given the administration and others have kind of moved to push out huawei's influence, talking about even ripping and replacing the equipment, even. what is the message you are hearing from them? andy: they provided some very substantial input to the federal communications commission both last year and last year. i believe they provided input to the commerce department, in rulemaking and in response to the executive order from last year. they've told us some of their discussions with the government where it is quite clear that some of the folks in the government think we give away our equipment free, and some of our customers are telling the government they have particular measures they can use to help manage the risk, whether it is from huawei equipment, or nokia, or ericsson. so those kinds of discussions, i think, are very helpful. they said to the government that the efforts to do what they call rip and replace, which is the pending legislation coming up soon this year, that the amount of money's that have been money that has been discussed are not nearly enough, and it is going to take a lot more time and likely put some out of business. peter: andy purdy, when you talk about rip and replace, how much huawei equipment is being used in the states right now? andy: i am not sure i can give a number. we have -- of the 60 smaller suppliers, about 40 at tier three, the smallest carriers for internet and wireless service. about 40 of those are in rural america, really underserved america, so it is smaller communities where schools and colleges and companies depend on our technology and the service through these carriers to do business, but it is a relatively small amount of income. continuemmitted to to help to support those rural customers if we are allowed to do that. >> we should note that huawei had a record year last year when it comes to revenues. >> the figures on december 31 of $122 billion, up about 18%. but it is important that people are misunderstanding the data. we definitely took a significant hit from the pressure from the u.s. government blocking nearly 300 american companies that we spent over $11 billion on last year, over 45,000 american jobs depend on it. but despite that, at the third quarter mark, we were up 24%, and at year-end we were only up 18%. for a large company, that is a lot. we have very substantial headwinds going into the next year. the global economic environment is a challenge, although it is quite positive in the united states, and the challenge of the competitive nature of the world and the change that is taking place will make the next year or two very very challenging for huawei. peter: and in fact in the year-end message, your rotating chairman writes that the external environment is more -- is becoming more complicated than ever and downward pressure on the global economy has intensified. in the long term, the u.s. government will continue to suppress the development of leading technology, a challenging environment for huawei to survive and thrive. andy: that's right, and the environment is very different around the world. we are in 170 countries. every country has its own environment. every country has carriers and mobile operators trying to figure out what to spend their money on. what is the business case. so as we talk about digitization, 5g, cloud, artificial intelligence, block chain, these things are going to make life better and create millions of jobs around the world, but the companies that are going to invest have to see the business case. there are -- there is a lot of decision-making in individual countries around the world that is going to affect our opportunities to grow our revenue and serve our customers. john: in the year-end message peter referred to, it was said that survival would be our first priority. what would threaten the survival of huawei? are there specific things that you guys are worried about that could become bigger? that was a line that really did jump out at me. how existential is this right now for huawei? andy: well, i think the challenge of how much we are going to grow and when is a real challenge. the situation with digitization around the world, the challenge of when you are in a competitive market, people think, people buy our stuff because it is cheap. that is really not true. we lose contracts every day, we lose them around the world and even lose them in china because china allows ericsson and nokia to compete against us. so we have to be competitive. we have to meet our customer requirements, we have to sustain our growth, we have to increase -- we have to improve our capabilities and optimize our the -- ourand efficiency in the company. we have to get rid of dead wood, hold the front line more accountable and we are like any major company trying to meet the challenges of the world. it is impacted by the fact these american companies, most of them can't buy from us, no question, and it is impacted by the fact we can't buy from google. so coming up with a huawei mobile service alternative to google is a major priority for the company, and it is difficult. it takes time not just to create the technology, but you have got to test it, and some things really take time. it's like you can't have nine women make a baby in one month. things take time, and that is going to have an impact on our growth. some of our growth in 2019 was based on momentum from the past. well the momentum is gone and we are not going to get the kind of growth in early 2020 that we had in early 2019. john: is there a timetable for an alternative of what google provided at this point? i know huawei has talked up its own efforts along those lines, but where is that internally right now? you talked about testing, but when it comes to what google specifically kind of offered, where is that? andy: i honestly don't know the what the timeframe is. i will be going to china for annual meetings next week. i do know there is a lot of work with the app developers who would provide apps for the platform, because that is a critical part of replacing, for our mobile devices, we sold like 240 million last year, of creating a platform for the app. so you are not just creating the infrastructure, but you have to try to motivate the developers, give them what they need so they can start, so they can be working in parallel. but i don't know what the date is. it is clearly a major commitment, and it is very difficult. john: i wanted to turn a little bit to the recent fcc vote, the fcc unanimously voted to bar u.s. telecom providers that receive subsidies from working with huawei and zte, and since then, huawei has sued the fcc over that vote in november. what led you guys to decide to go to court and what are your feelings about the prospects there and next steps? because obviously, they had a bit of a regulatory challenge through that, saying huawei could just challenge the determination that they are a threat. why go to court, and what do you see happening next? andy: let me say as a former longtime attorney and former federal prosecutor, i have some sense of how sensitive federal judges are to making comment on pending cases. so i want to be a little careful about what i say. but frankly, we had to respond, because, as in our filing. i think it is part of a broader problem in our life. if it weren't for double standards, there wouldn't be no standards at all. the fact is, people want to read and listen to what they believe in. they don't care about evidence because they want the other side to have evidence. i would use the example of how president trump looks at the democrats and impeachment. he sees them ignoring evidence, he sees them violating the constitution, not following due process, not having a fair system. he looks at them as having the end justifies the means, so we had to say, fcc, what you have done is beyond the pale, it conflicts with constitutional requirements of due process, the statutes on which your committee is based, the procedures act you are supposed to follow, and conflicts with your own precedent, and that is wrong. they are basically using the kind of approach -- they are supposed to be an independent agency. they are saying they are going to carpet bomb huawei out of existence in the u.s., and that we don't care how we do it and we don't need evidence to prove it. that is wrong. -- do youounds like think they haven't been acting independently? do you think they have absorbed the administration stance on that? attorney general bill barr did write a long letter critical of huawei, name checked several different items from the record, the fcc yes, the -- should proceed with this vote. do you think their independence has been threatened in the context of huawei? andy: that is a very loaded word, although an appropriate question. i think how i characterize what our filing said about what they did, i think that answers your question. there are certain things they are supposed to do, certain processes they are supposed to follow, and they clearly did not do that in our view. john: commissioner jeffrey starks, a democrat on the commission, has been the point person on supply chain issues, he has held a workshop, written a report on these issues, and tried to step up in a certain way. has there been any direct contact between huawei and commissioner starks on these issues, or has that door also been closed? andy: not in the last year or so. john: no? andy: not since the campaign against huawei ramped up in earnest. peter: andy purdy, when you hear that huawei has a backdoor and that information will be shared or the internet will be turned off, what is your response? andy: really two things, and this gets to the issue of what is necessary to make america safer and what i hope members of congress on the executive branch will consider the facts are. five nations in the world have the ability to let hidden function in hardware and software. the u.s. government says that cannot be found. well, if you don't look, it can't be found. when people talk about china and huawei, they are concerned about backdoors and they are concerned our employees, outside the u.s. or in the u.s., would improperly use our access to access customer data and steal data. the backdoors, the former principal deputy to the director of national intelligence says you can test for backdoors. so, if you can test for backdoors, that means you can put in place mechanisms, and we would do this -- and i've suggested we can do this, that we can prove that there are no backdoors in the product. and if you can prove there are no backdoors in the products, then regardless of what theoretical power the chinese government has over huawei, you have addressed that issue. the second issue, access to customer networks and customer data. a lot of talks about a chinese law or whatever. the fact is, the u.s. government does not believe any law matters in china. they believe china can force us to do bad things. in terms of access to data, they don't recognize -- and it's critically important to make america safer -- what is the -- -- what is the role of the carriers and the mobile operators in managing the networks? in controlling whatever is going to serve as a recruitment? -- in terms of access to data, they don't recognize the role of the carriers and mobile operators in managing the networks and controlling whoever is going to service their equipment, whether it is huawei or a third party? so mechanisms are necessary, and the u.s. government should require it for everybody accessing america's communication networks. we provide assurance and transparency. we don't access customers' networks, we only use specially-configured laptop using a third-party and only after written permission from each customer, each of the 60 customers before we touch anything, then we access. every keystroke of those laptops is recorded, provided by the customers, and they know when, what, and how we access to. it is part of the radio access to the network. it is not part of the core network. so just like in backdoors, we can prove our people in the u.s. have not been subject to the undue influence of the china government relative to the second major national security issue, that we will get a hold of and sent to china sensitive data. peter: john, we have two minutes left. john: one big part of this is 5g -- has been the onset of 5g and what that will mean for the u.s. and china and the world going forward. how competitive do you see the 5g marketplace in the u.s. right now, and how does that factor into some of these discussions, too? i mean, the race to 5g is a phrase that has been thrown around a lot. it is usually referring to the u.s. and china trying to roll out these advanced networks. is the u.s. as competitive as it should be, and how is that a piece of this? andy: it is very much a moving target, given the rulemaking in place. homeland security officials have said the rulemaking is putting in place a mechanism that won't adequately promote competition. because competition is critical. we have a tendency, in the united states, the companies, we want to be competitive and we want to advertise. some people put on their phone 5g so they can claim it is the latest and the best. the fact is, there is not enough competition in telecom operators around the world, there is not enough investment. we invest far more r&d than nokia and ericsson. i'm worried. they need to invest more. because competition is critical for innovation, risk, and resiliency, maintaining the capabilities to support our communications systems that we are going to come increasingly reliant on in the future. john: one other piece you talked about is to test for backdoors and things like that. the trump administration has been saying that is not possible. they have been putting out documents in the last month, i believe, saying the code is changing all the time, there is no way to look at that. is that just more of what you would see as incorrect information they are spreading? andy: it is part of the mischaracterization about the way 5g will work and the way 5g standards are going to work. we are going to update our equipment the same way you update a phone. it will be through the operators and be tested before it is updated. so they are incorrect about it. we can manage the risk as a nation much more effective at -- effectively than that. peter: andy purdy is the chief security officer for huawei usa -- while we technologies usa, and john hendel covers tech for politico. gentlemen, thank you for being on "the communicators." this ♪ >> c-span, your unfiltered view of government. crated by cable in 1979, and brought to you today by your television provider. announcer: jim lehrer the cofounder and longtime anchor of vs news has died. according to a statement from pbs he died , peacefully in his sleep at home in washington, d.c.. he was 85 years old. in 2011, he appeared on c-span's 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