A little-known company working to open the U.S. market to telecommunications gear made by China's Huawei Technologies Co. has added a pair of dignitaries to its board in an attempt to address the security concerns around Huawei.
The firm, Amerilink Telecom Corp., in recent months has recruited former congressional leader Richard Gephardt and former World Bank President James Wolfensohn as directors. It hopes the appointments will help overcome U.S. officials' skepticism about Huawei, which has hired Amerilink as a consultant and distribution partner.
Huawei is one of the world's top suppliers of telecom gear, but alleged ties to the Chinese military have stymied its ambitions in the U.S. market. It is currently trying to win part of a multibillion-dollar network upgrade at Sprint Nextel Corp.
Sprint says the bidding is entering the final stages and six vendors are submitting proposals. It declined to comment on Huawei or Amerilink, which have made a joint bid.
Adding directors such as Messrs. Gephardt and Wolfensohn is "very important in terms of the trust factor," said Amerilink founder and Chairman William Owens. Mr. Owens was vice chairman of the Joint Chiefs of Staff under President Clinton and a former CEO of Nortel Networks Corp.
The appointments are part of Amerilink's strategy to work with third parties to scrub, deliver and manage telecom equipment made by overseas suppliers such as Huawei to make sure it can't be used by spies or to launch a cyberattack on U.S. infrastructure.
Overcoming those concerns won't be easy. Huawei has long denied links to China's military, but security concerns persist. Following news reports Huawei was hoping to sell gear to Sprint, eight Republican senators wrote the heads of federal agencies warning of the security implications.
In an Aug. 25 meeting between Sprint and Senate staff, the company was warned its U.S. government contracts could come under pressure if a deal with Huawei went through, according to one Republican Senate aide who was at the meeting. Sprint declined to comment.
"We need to get a better sense of the fundamental security implications raised by allowing Huawei access" to the U.S. telecom market, said Sen. Susan Collins (R., Maine), who signed the letter but wasn't aware of Amerilink's efforts.
To win over U.S. officials, Amerilink has launched an extensive lobbying campaign. Over the past few months, Mr. Owens and Amerilink executives have met with officials from Congress and the Obama administration, including members of the National Security Council, to detail its security plans, said people familiar with the matter.
"I predict that there will be a real fight over this," said Stewart Baker, former assistant secretary for policy at the Department of Homeland Security and a partner at law firm Steptoe & Johnson LLP. "Huawei's ties to the Chinese government can't be independently measured. The company's not listed on a stock exchange, so their books are a mystery. And there's real worry about those ties on the part of the U.S. and other governments."
Motorola Inc. sued Huawei in July alleging it set up a front organization staffed by former Motorola engineers to steal the company's technology. Huawei has said the allegations are completely without merit.
Some analysts say Huawei's entrance into the U.S. market is inevitable. It is already a mainstream supplier in Europe and Asia, and its gear is comparable to European equipment on technical grounds but less expensive. On Monday, India's Bharti Airtel Ltd. selected Huawei as one of its suppliers for a third-generation wireless network.
Executives at telecom carriers question whether it's fair to keep the company out on security grounds. They say Huawei hasn't been caught in a security breach and point out that equipment giants like Cisco Systems Inc. manufacture gear in China anyway. "There are things we can do to ensure we're protected," AT&T Inc. Chief Executive Randall Stephenson said in an interview in June.
Huawei spokeswoman Jannie Luong Nguyen said the company will submit its products for third-party testing and verification. "Huawei takes the concerns that have been raised very seriously," Ms. Nguyen said. "We believe that by being open and transparent, we will be able to dispel these mischaracterizations about our company and our offerings."
Amerilink was founded in June 2009 with Huawei as its first customer. It has hired a number of former Sprint executives, including Kevin Packingham, who left Sprint last month to become Amerilink's CEO.
Mr. Owens, who said he started and financed Amerilink with his own money, said he takes security concerns seriously. "This is the kind of thing we need to be cautious about," Mr. Owens said.
To help ensure the telecom gear doesn't contain any security vulnerabilities, Amerilink has hired Electronic Warfare Associates Inc., a Herndon, Va., security consultant that works for the U.S. government and military. EWA declined to comment.
Amerilink will spot-audit hardware before it is installed, and only Amerilink-authorized personnel will be allowed to access it once it's in place. Software updates will be evaluated by the company before they are distributed over the Internet.
The process "will go far beyond any mechanism in the industry," Mr. Gephardt said in an interview.
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