Week on the communicators. Mr. Purdy, what do you do for huawei as chief Security Officer . Guest my primary role is interval although ive been doing more extra things in the last six to 12 months but my responsibilities have to do with sharing a committee of the 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 we can make sure we protect huawei, protect our customers and continue to do business and manage cybersecurity privacy risk. Host what is huaweis legal and commercial status in the u. S. Right now . Guest its kind of the moving target. We have National Defense authorization act. We have pending rulemaking pursuant to an executive order. Right now we cant sell to the u. S. Government. We cant sell to use contractors, and theres pressure for our small carrier customers, wireless and wireline customers, to rip out huawei gear. So theres legislation pending that would provide funds, not adequate or providing sufficient time, that would give them money to rip out huawei equipment. Its a difficult situation, and although not official the government is basically block the american carriers from selling our mobile devices. Host why do you think that is . Guest its a complicated matter. Weve got a geopolitical context of u. S. And china and the trade talks have exasperated things, and we also have a situation that i think affects many of us in our everyday lives what people dont want to hear or read anything that doesnt agree with their position. We have a lot of false information, some of the expressed by u. S. Government officials and some provided by the u. S. Government to the media, but we cant meet with u. S. Government. We dont have the opportunity to provide the facts so its a challenge situation. Host to help us deal with some of those issues that huawei and the u. S. Government are facing, john hendel of politico is a guest reporter. Thanks for having me peter. Andy, i want to start with the implications for huaweis operations in the u. S. You said in the past theres about 1500 employees for huawei but given all these changes and given the heat the company is got and whether the Trump Administration, the fcc, congress, are those numbers going to change in the course of 2020 . And your role, too. You mentioned that his change. How is that going to shift as the government does move to block out the company a little bit . Guest we have been forced to downsize in the United States. You may recall we laid off about 600 working in our r d capabilities. Primarily in Silicon Valley in california, and weve cut down our staffs for kerry abysses, Enterprise Business and our device business. But, frankly, when you look at our overall global revenue and 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 love to have the chance to talk with u. S. Government about how we can do business here. Would you expect further cuts in 2020 . Is in any sense of how that might change . Guest i dont know. Its probably more likely than not there would be some additional cuts. The legislation pending that would provide funding to allow our 60 smaller customers to rip and replace huawei gear, that would mean we wouldnt be able to provide the updates come Software Hardware updates to technology so that would cause a decrease in revenue, a decrease in the workforce necessary to maintain the business. The headwinds are definitely measurable for us. You mentioned the ongoing trade war and how much thats been some overhang that will influence us whats going on. We are now in 2020 inches a u. S. President ial 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 found myself looking at the trade war and thats a signature issue of President Trumps. He seeking a second term but with things potentially be different under president biden, a president warned . How much of this ties specifically to a Trump Administration and President Trump in particular . Guest its important to understand the geopolitical context, and that context exists regardless of which administration is in power. The u. S. Is concerned about china and the rise of china economically and militarily. And theres concern simply china wants to take over the world. And so theres concern about what is the american role with our allies, with u. S. Allies in creating and maintaining that kind of capability necessary to keep a safe . If china were to turn to become an actual kinetic warfare adversary, so as with think of cyberspace we are building the space command, the implications of a growing dependency by our country and others on the digitized economies and 5g and internet of things and so forth, these are going to be increasingly dependent as a country and as as a world on te kinds of technologies. That which really didnt matter so much since i left the white house staff over 15 years ago are going to really matter. The question of how do we manage the risk to the United States regardless of who the suppliers are, is something that is top of mind whether youre a democrat or a republican. One of the frustrating things to me is the fact government will not meet with us, is there are a lot of information being communicated that are not based on facts. If the government is giving various publications or speaking publicly about things that are while, i can only imagine what theyre saying to both the democratic and republican leaders. Its important whether its in our personal lives are covered or geopolitics to base things on facts and data and the object is so extend the risks and we can take the steps necessary to address risk. Host every time without a member of congress or in member of the administration on, democrat or republican, we have asked them what you own a huawei phone, and answer across the board has been no, they dont trust it. They have information that says there is a backdoor, there is way for china to access that information. Guest you begin your comment with but. Your comment is agreeing with what i was just saying, that there is a democrats and republicans are worried about china, and many have said state Department Officials and others that its not about huawei. Its about the china government and what the china government interview could force huawei to do. And so we believe, for example, some Government People recently talked to some of our customers. The Government Officials thought that why was giving away our equipment free to the customers. Theres recent comments by Government Officials and an attorney publicly basically comparing our founder 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 tweet they got it in deep trouble with the fcc calling his offer to license the 5g technology to america basically the equivalent of a criminal fraud, which is objectively by any measure completely false. Finally, another example of what spins it publicly is that we update our equipment with Software Updates update from c. A Government Official said that. That is demonstrably false, and so the bottom line is, and, of course, Government Officials dont hear this because they are hearing one side of the story. They are not willing to listen to us or other major experts who say no, the real cyberSecurity Risk in the world. All the equipment, the carriers, the equipment providers have to be subject to strict scrutiny and testing of products and conformance of measure because the bad guys can hack into everybodys products, particularly with the Global Supply chain deeply embedded in china. Those are the things that are necessary to make sure america is safe Going Forward and thats where the discussion needs to get to the next level. Host when you talk about the Chinese Government, in the wall street journal recently was this report that a wall street journal review of huaweis tax breaks and other forms of Financial Assistance details for the first time how huawei have access to as much as 75 billion in state support as it grew from a littleknown vendor of phone switches to the World Largest telecom company. Guest and in the article he said comparing 75 billion the 45 billion cisco is getting. So lets put things in perspective. Thats example of u. S. Government provided dramatically inflated information to the wall street journal for that story, way above the 75 billion figure here the fact is and hopefully somebody could she was information so we could have a chance to say thats right or thats wrong. The biggest item is over 45 billion, and if you take that out we are both the 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, is that the amount of money that customers borrowed, you know, basically alleging it is artificially low rates giving unfair advantage to huawei because our customers would have lowercost financing. But the fact is very few customers use the lines of credit. I cant tell from the article whether the 45 billion is just theoretical lines of credit, but we know only four or 5 billion over a a major period of time, only four or 5 billion of the 45 billion, this gets technical, only for a 5 billion issues by customers to buy our products. When youre looking at 150 billion in revenue, four or 5 billion in one support is nothing. Lets make sure we can talk about the facts, but when there is a discussion and people are not willing to think about or talk about the facts, i would suggest as we said in the previous interview, block huawei if you must but lets do the things necessary to make america and our allies safer. We are not doing those enough and thats the kind of thing with recommending. You talked about some of the issues with the administration not being so open to speaking with huawei. What does lobby look like jelly for the company . I wonder whether that resistance extends to members of congress. To what degree is huaweis lobbying operation likely into 2020 if the number seven going up, so what are those conversations, what are those efforts looking like . Guest youre more of an expert about 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 dont make such Campaign Contributions, that can have an impact on the discussion. But there are some people on capitol hill that are willing to talk with us about some of the issues, and were going to redouble our efforts to reach out to them to try to some of these discussions about what the facts and what the evidence are and, frankly, from my perspective my focus a Security Risk is whats necessary to make america safer with transparency. How much are you talked with some of the smaller Wireless Companies that you do work with . You mentioned about 60 or so right now. What did they been saying recently, theyve the administration and others have moved to push out huaweis influence, talk about whipping and replacing the equipment. What is the message you hearing from them . Guest they provided substantial input to the federal Communications Commission both last year and this year. I believe they provided some input to the commerce department, rulemaking and response to the executive order from last year. They told us some other discussions with the government where its quite clear as a kid example some of the folks in the cupboard 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 its from huawei equipment or no cure for those discussions are very helpful. They said to the government, rip and replace which is pending legislation coming up soon this year, that the amount of monies that event discussed are not nearly enough in the timeframe, it will take a lot more time and its likely going to put some of them out of business. Host when you talk about rip and replace, how much equipment, while we equipment, is being used in the states right now . Guest im not sure i can give a number huawei equipment. Of the 60s or supplies, about 40 of the tier three, the smallest carries for internet and wireless service. About 40 of those are Rural America really underserved america. Its the smaller communities with the schools and colleges and companies depend on our technology and the service to these carriers to do business, but its really a relatively small amount of income but were committed to help try to continue to support those rural customers if we are allowed to do that. Host host huawei had a record year when it comes revenue last year. Guest we announced the figures on december 31 about 122 billion, up 18 but its important, people are misunderstanding the data. We definitely took a significant hit from the pressure from the United States government blocking the nearly 300 American Companies that weve spent over 11 balloon dollars unless to come over 35 million american jobs depend on it. But despite that we were at the Third Quarter mark up 24 . At the urine with all of 80 . For a Large Company thats a lot. We have a substantial headwinds going into the next year. The Global Economic environment is a challenge although its quite positive and the United States, and the challenge of the competitive nature of the world and the change that is taking place make the next year or two going to be very, very challenging for huawei. Host in the year in a message your rotating chairman writes that the external environment is becoming more complicated than ever, and downward pressure on the Global Economy is intensified. The longterm u. S. Government will continue to suppress the development of leading technology, a challenge environment or huawei to survive and thrive. Guest thats right. The environment is also very different around the world. We are in 170 countries. Every country has its own apartment. Every country has carriers and mobile operators that kind figure out what to spend money on, the business case. As we talk about digit addition, 5g, cloud, Artificial Intelligence blockchain, these are the things that make life better and create millions and millions of jobs around the world. But the companies have to see the business case. There are a lot of decisionmaking of individual countries around the world that will affect what they do and went and it will affect our opportunities to grow our revenue and serve our customers. In that youre in message peter just referred to, he also said that survival will be our first priority. What would threaten the survival of huawei . Are there specific things you are worried about that could become bigger . The u. S. Market place is a smaller share but that was a line that really did jump out at me. How existential is this right now for huawei . Guest i think the challenge of how much were going to grow in win is a real challenge. The situation with digitization around the world, the challenge of when youre in a very competitive market, people think we know all the cheap stuff, people buy our stuff because its cheap. Thats really not true. We lose contracts every day. We lose them around the world. We even lose them in china because china allows erickson and no cure to compete against us. We have to meet our customer requirements. We have to improve our capabilities as individuals and as companies and we have to optimize the efficiency of your company that went to try to get rid of deadwood, were told the frontline more accountable. We got to drive harder. We are like in Major Company trying to meet the challenges of the world. Its impacted by the fact these American Companies within buy from us, no question. And its impacted by the fact we cant buy from google. Comic up with a Huawei MobileService Alternative to google is a major priority of the company and its difficult. It takes time. Not just to create the technology but as you know yet to test it, test it and somethings would take time. Its like you can have nine women make a baby in one month. Things take time and so thats going to have an impact on our growth. Some of her growth in 2019 was based on momentum from the past. The momentum is gone so we will get the growth in early 2020 that we had in early 2019. Is her timetable for an alternative to what google provided at this point . I know huawei has talked up some of its own effort along those lines but where is it internally now . You talk about testing but when it comes to what google specifically offered, where is that . Guest i honestly dont know what the timeframe is. I will be going to china for annual meetings next week. I do know theres a lot of work with the App Developers who would provide apps for the platform. Because thats a critical part of replacing for our mobile devices, and we sold about 240 billion last year, of creating the platform for the app. So youre not just creating 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. I dont know what the date is. Its clearly a major commitment and its very difficult. I wanted to turn to the recent fcc vote, the fcc unanimously voted to bar u. S. Telecom providers the receipts have busy providers that receive subsidies. What led you guys to decide to go to court and what is your feeling in terms of prospects, next steps . They had a bit of a regulatory challenge is that, saying huawei couldnt challenge the determination that are a threat. But why go to court and what do you see happening there next . Guest let me say as a former longtime attorney and former federal prosecutor i have some sense of a sensitive a federal judge is to making, trump indicates a somewhat be a little careful about what i say. But, frankly, we had to respond, because as in our filing, and its part of a broader problem in our life. If it were not for double standards there would be no standards at all. The fact is people want to read and listen to what they believe in. They dont care about having evidence. It was the other side of evidence. I would use example of how President Trump looks at the democrats and the impeachment. He sees been ignoring evidence. He sees them violating the constitution, not probably due process, not have the persistent. He looks at them as having the end justifies the means. We had to say, fcc, what you have done is be on the pale. It conflicts with the constitutional requirements of due process. A conflict with the statute on which your authority is based in conflicts with administered procedures act youre supposed to fall and the conflicts with their own precedent. Thats wrong. They are basically using the kind of approach like theres supposed the independent agents, its like in all of government approach, we will carpet bomb huawei out of existence and the United States and we look at how we do it and we dont need evidence to justify, and thats wrong. Do you think they havent been acting independently . It sounds like you think they have absorbed the administrations stance, edit attorney general bill barr did write the long letter that was critical of huawei. He name checked several different items from the record and said like yes, the sec should proceed with this vote. Do you think their independence has been threatened in the context of huawei . Guest thats a very loaded word, although an appropriate question. I think i characterize what our filing said about what they did, i think that answers your question. There are certain things theyre supposed to do, certain processes they are supposed to follow, and then argue they clearly did not do that. Commissioner jeffrey starts a democrat on the commission has been a point person on some of the supply chain issues. Hes all the workshop, written 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 close . Guest not in the last year or so. Since the campaign against huawei really ramped up in earnest. Host 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 . Guest that are really two things and this gets to the issue of whats necessary to make america safer and what help members of congress and the executive branch will consider what the facts are. There are five nations in the world that have the ability to virtual implant hidden functional in hardware and software. U. S. Government says that cannot be found. If you dont look, it certainly cannot be found. The question when people talk about the Chinese Government and huawei, theyre concerned about two things. They are concerned about backdoors and concern our employees outside the u. S. Or in the u. S. Would improperly use our access to customers data to steal data. The backdoors, the former Principal Deputy to the director of National Intelligence said you can test for backdoors. If you can test for backdoors that and you can put in place mechanisms, and i suggested we do this, that we can prove there are no backdoors into products. If you can prove there are no backdoors, then regardless of what theoretical power of the Chinese Government has over huawei you have addressed that issue. The second issue access to Customer Networks and customer data, a lot of talk about chinese and whatever the fact is the u. S. Government does not leave any law matters in china. They believe china could force us to do bad things. In terms of access to data, they dont recognize and its critically important to make america safer whats the role of the carriers and the mobile operators in managing the networks, and controlling whoever is going to serve as their equipment whether its huawei or somebody else or thirdparty supplier. Mechanisms are necessary and possible. The u. S. Government should require it for everybody accessing americas communication network. That kind of thing we do, im not suggesting is perfect but it provides assurance and transparency. We dont access the Customer Network from china. We dont access it from the Huawei Network from the huawei. We only use a specially configured laptop using a thirdparty and only after written permission from each of the 60 customers before we touch anything, then we access every keystroke of those laptops is logged and recorded provided by the customers. They know whether, when and at what weve access and its only part of part of network, not part of the core network. Judges like an backdoors we can prove that our people and the United States have not been subject to the undue influence of the china government relative to the second Major National security issue. That will get hold of an improv axis and send a china sensitive data. Host we have two minutes left. One big part of all this has been the onset of 5g and what that will mean for the u. S. And china and the whole world Going Forward. How competitive do you see the 5g marketplace in the u. S. Right now, and how does attack into some of these discussions . The race the 5g has been thrown around a lot, referring to u. S. And china tried to roll of these events networks. Is abuse as competitive as it should be and how is that a piece of this . Guest its very much a moving target given that will make and thats in place. The former head of Public Safety and Homeland Security for the federal Communications Commission said it will make his putting in place the mechanisms that will not adequately promote competition. Because competition is critical. We have a tendency in the United States, we want to be competitive. Some people put on the phones 5g so they can claim its the latest and the best. The fact is that not enough competition in Telecom Operators around the world. Theres not enough investment. We invest far more and rg. They need to invest more because competition is absolutely critical. For innovation, risk and resiliency, maintaining the capabilities to support our Communication Systems that we will be coming increasing reliant on in the future. And one of the patient talked about, building a test for backdoors and things like that. The Trump Administration has been repeatedly saying thats not possible. Theyve been putting up document the last month saying that the code is changing all the time, theres no way to look at that pic is that just more of what you would see as what is very Incorrect Information that theyre spreading . Guest thats part of the mischaracterization the way 5g will work in the fight standards are going to work. There will not update our equipment the same we update the phone. Its going to go through the operators and be tested before its updated so theyre just incorrect about the reality of it. Fortunately we commend the risk of submission much more effectively than that. Host andy purdy is a chief stickered officer for Huawei Technologies usa, and john hendel covers tech for politico. Thank you for being on the communicators. This communicators and all other episodes are available as podcasts. For 40 years cspan has been fighting america unfiltered coverage of congress, the white house the Supreme Court in Public Policy events from washington, d. C. And around the country so you can make up your own mind. Created by cable in 1979, cspan is brought to you by your local cable or satellite provider. Cspan, youre and filtered view government. Impeachment of President Trump this week the house will vote on impeachment managers cindy two articles of impeachment to the senate to follow the process live on cspan, ondemand and cspan. 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