India Proposes Partial Ban on China Telecom Vendors - BusinessWeek
The government's move to tightly regulate overseas suppliers of telecom gear, especially the Chinese, due to security concerns has met with stiff opposition from Indian mobile phone firms, which fear such stringent measures will add substantially to their costs.
The department of telecom (DoT) has scaled down its demand that telcos operate and maintain networks on their own, and instead allowed foreign equipment providers to do so provided they are strictly monitored by security agencies.
Two officials who attended Friday's meeting between senior executives of telecom firms and the government said as a compromise, it was decided that equipment suppliers must register with DoT, agree to monitoring by security agencies, and obtain clearance to operate from the home ministry.
Insistence on phone firms operating and maintaining their own networks would have affected all mobile service providers, which have outsourced such work to overseas companies.
Furthermore, the government wants Chinese gearmakers to be barred from all but eight states-Delhi, Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Goa, Madhya Pradesh & Chhattisgarh. This is being vehemently opposed by mobile firms benefitting from cut-rate Chinese products.
"We have agreed that security norms for the sector need to be tighter. After consultations with the industry, the government will issue fresh security-related guidelines. There is no fixed time frame, but we are looking at a four-week schedule," telecom secretary Siddhartha Behura told ET.
The government and the telecom industry have agreed to sort out the issue of Chinese vendors' participation after more consultations among the agencies involved in national security.
The networks of India's largest phone firms-Bharti Airtel, Reliance Communications, Vodafone, Tata Tele and Idea-are being managed by either Sweden's Ericsson, Finland-based Nokia Siemens or Paris-headquartered Alcatel-Lucent. Reliance has outsourced its GSM network management to China's Huawei while Loop Telecom has tied up with another Chinese firm, ZTE, for its GSM rollout across India.
All operators also agreed to carry out extensive security testing of all new equipment and submit self-certifications.
Fears of infiltration of networks
The move comes as the home ministry fears that some vendors may infiltrate telecom networks through remote login facilities and Trojan horses to attack them from overseas.
A government panel, which included representatives from the Intelligence Bureau and the defence ministry, recently allowed state-owned BSNL to place orders with Huawei for only the southern states. The telecom department has told BSNL that networks provided by Huawei could go live only after all security audits are done.
A senior executive at one of the Chinese companies said on the condition of anonymity that Western rivals are responsible for raising the security scare as they are unable to compete on price.
A telecom industry official said the government could not push for a ban on Chinese gear in 20 states as many telcos pointed out that buying equipment from Western suppliers could make their businesses unviable.
"A section of the industry also pointed out that security concerns regarding Chinese vendors were being hyped up by Western equipment companies as they find it difficult to compete on price," said an executive who attended the meeting.
The government also asked mobile service providers to consider if SIM cards can be made locally and to avoid using just a single equipment supplier. Moreover, DoT is against providing remote access for interception or monitoring to equipment suppliers.
In a related development, the Intelligence Bureau has asked the telecom department to be extremely careful while providing remote access to service providers even in exceptional cases.
"Telecom Enforcement Resource & Monitoring cells of the department of telecom should undertake surprise checks, particularly in locations for which remote access permissions have been granted from the facilities of Huawei or ZTE located in China," IB has written to DoT.
The Cabinet, after debating the issue of remote access for several months, cleared this facility in March 2007 adding a slew of riders.
A proposal that has been put on hold after Friday's meeting is one requiring transfer of technology for all equipment orders. This comes as all private operators pointed out that they do not manufacture equipment and, therefore, a transfer-of-technology clause would be of no use.
DoT also wants operators to have a network and disaster recovery management plan and capability that should be approved by the government.
"All operators have accepted this demand and will submit their disaster recovery management plan and capability every six months," said a company executive who attended the meeting.
Instead of altering licence conditions to incorporate security clauses, the government will issue fresh security guidelines to address this issue, the executive added.
