Rethink: Ericsson pushes back against Indian security rules

Caroline Gabriel, Rethink Wireless
11 Aug 2010
00:00
 
Non-public vendors, notably Huawei, may have to open up their corporate structures in order to be eligible for contracts, something the Chinese supplier - which denies allegations of close ties to Chinese military and intelligence agencies - has indicated it is ready to do.
 
The most controversial clause in the new guidelines is a demand that vendors should lodge source code in an escrow account, which could be accessed by the government for reasons of national security or emergency.
 
Ericsson said suppliers should not have to share their hardware “source code” as this was proprietary information. “Source code is a vendor's proprietary information and most valuable asset of the company,” the company said. “We believe that the escrowing of source code requirement [should] be exempted/deleted from the agreement.”
 
The firm added that, once products have been certified by an “agency of repute,” the need to meet other demands made by the Indian authorities should be removed. A number of international trade bodies are also reported to have made official submissions, calling for a compromise.
 
By indicating that they would accept even the most onerous rules, ZTE and possibly Huawei would be positioning themselves to snap up quick deals while their rivals remain clouded in uncertainty. This is a reversal of the position earlier in the year when the western suppliers appeared to be a safer bet in terms of regulatory clearance.
 
Huawei and ZTE are estimated to have an order backlog of $750m between them from Indian companies. Nokia Siemens and Alcatel-Lucent both cited delays in Indian infrastructure orders as a negative factor in their recent Q2 results and Cisco is also understood to be affected to a significant degree.

This article originally appeared in Rethink Wireless

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