UK government reverses course on Huawei’s involvement in 5G networks

Conservative members of the United Kingdom’s government have pushed Prime Minister Boris Johnson to draw up plans to remove telecom equipment made by the Chinese manufacturer Huawei from the nation’s 5G networks by 2023, according to multiple reports.

The decision by Johnson, who wanted Huawei’s market share in the nation’s telecommunications infrastructure capped at 35 percent, brings the UK back into alignment with the position Australia and the United States have taken on Huawei’s involvement in national communications networks, according to both The Guardian and The Telegraph.

The debate over Huawei’s role in international networking stems from the company’s close ties to the Chinese government and the attendant fears that relying on Huawei telecom equipment could expose the allied nations to potential cybersecurity threats and weaken national security.

Originally, the UK had intended to allow Huawei to maintain a foothold in the nation’s telecom infrastructure in a plan that had received the approval of Britain’s intelligence agencies in January.

“This is very good news and I hope and believe it will be the start of a complete and thorough review of our dangerous dependency on China,” conservative leader Sir Iain Duncan Smith told The Guardian when informed of the Prime Minister’s reversal.

As TechCrunch had previously reported, the Australian government and the U.S. both have significant concerns about Huawei’s ability to act independently of the interests of the Chinese national government.

“The fundamental issue is one of trust between nations in cyberspace,” wrote Simeon Gilding, until recently the head of the Australian Signals Directorate’s signals intelligence and offensive cyber missions. “It’s simply not reasonable to expect that Huawei would refuse a direction from the Chinese Communist Party.”

Given the current tensions between the U.S. and China, allies like the UK and Australia would be better served not exposing themselves to any risks from having the foreign telecommunications company’s technology in their networks, some security policy analysts have warned.

“It’s not hard to imagine a time when the U.S. and China end up in some sort of conflict,” Tom Uren of the Australian Strategic Policy Institute (ASPI) told TechCrunch. “If there was a shooting war, it is almost inevitable that the U.S. would ask Australia for assistance and then we’d be in this uncomfortable situation if we had Huawei in our networks that our critical telecommunications networks would literally be run by an adversary we were at war with.”

U.S. officials are bound to be delighted with the decision. They’ve been putting pressure on European countries for months to limit Huawei’s presence in their telecom networks.

“If countries choose to go the Huawei route it could well jeopardize all the information sharing and intelligence sharing we have been talking about, and that could undermine the alliance, or at least our relationship with that country,” U.S. Secretary of Defense Mark Esper told reporters on the sidelines of the Munich Security Conference, according to a report in The New York Times.

In recent months the U.S. government has stepped up its assault against the technology giant on multiple fronts. Earlier in May, the U.S. issued new restrictions on the use of American software and hardware in certain strategic semiconductor processes. The rules would affect all foundries using U.S. technologies, including those located abroad, some of which are Huawei’s key suppliers.

At a conference earlier this week, Huawei’s rotating chairman Guo Ping admitted that while the firm is able to design some semiconductor parts such as integrated circuits (IC), it remains “incapable of doing a lot of other things.”

“Survival is the keyword for us at present,” he said.

Huawei has challenged the ban, saying that it would damage the international technology ecosystem that has developed to manufacture the hardware that powers the entire industry.

“In the long run, [the U.S. ban] will damage the trust and collaboration within the global semiconductor industry which many industries depend on, increasing conflict and loss within these industries.”

Vista Partners founder calls for a fintech revolution to help pandemic-hit, minority-owned small businesses

The head of what is arguably private equity’s most successful technology investment firm — Vista Equity Partners — made a rare appearance on Meet The Press to discuss the steps that the country needs to take to help minority-owned businesses recover from the economic collapse caused by the COVID-19 epidemic.

Robert F. Smith is one of the worlds wealthiest private equity investors, a noted philanthropist, and the richest African American in the U.S.  Days after announcing a $1.5 billion investment into the Indian telecommunications technology developer Jio Platforms, Smith turned his attention to the U.S. and the growing economic crisis that’s devastating minority businesses and financial institutions even as the COVID-19 epidemic ravages the health of minority communities.

Calling the COVID-19 “a pandemic on top of a series of epidemics”, Smith said that the next round of stimulus needs to support the small businesses that still remain underserved by traditional financial institutions — and that new financial technology software and services can help.

“We need to continue to rally as Americans to come with real, lasting, scalable solutions to enable the communities that are getting hit first, hardest, and probably will take the longest to recover with solutions that will help these communities thrive again,” Smith told NBC’s Chuck Todd.

Smith called for an infusion of cash into community development financial institutions and for a new wave of technology tools to support transparency and facilitate operations among these urban rural communities that aren’t served by large banking institutions. 

In all, the first round of the Congressional stimulus package poured $6 trillion into the U.S. economy through authorizations for the Treasury to issue $4 trillion in credit and $2 billion in cash payouts to various industries. The average size of those initial loans was just under $240,000, according to a post-mortem assessment of the Payroll Protection Program written by Lendio chief executive Brock Blake for Forbes

Blake’s assessment of the shortcomings of the PPP echoes Smith’s own criticism of the program. “Many of these small communities — urban, rural — aren’t being banked by the large institutions,” Smith said. Instead they’re working with community development financial institutions that in many instances weren’t approved lenders under the Small Business Administration and so were not able to distribute PPP money and make loans to their customers.

“We have to take this opportunity to reinvest in our business infrastructure in these small to medium businesses. In our banking infrastructure so that we can actually emerge out of this even stronger,” Smith said. “We have to invest in technology and software so that these ‘capillary banking systems’ are more efficient and they have more access to capital so they can engage with these businesses that are underbanked.”

In many instances this would amount to the construction of an entirely new financial infrastructure to support the small businesses that were only just beginning to emerge in minority communities after the 2008 recession.

“We need to get this average loan size to $25,000 and $15,000,” said Smith. To do that, community banks and development finance institutions are going to need to be able to access new fintech solutions that accelerate their ability to assess the creditworthiness of their customers and think differently about how to allocate capital and make loans. 

In some ways, Smith is echoing the call that fintech executives have been making since the PPP stimulus first started making its way through the financial system and banks began issuing loans.

“We would be remiss if we didn’t take a significant portion of capital to reinvest in the infrastructure of delivering capital back into those businesses and frankly reinvest in those businesses and give them technology and capability so there’s more transparency and visibility so there’s an opportunity to grow [and] scale,” said Smith. “I don’t want to see us go back to the same position where we were so we have these banking deserts.”

The head of Vista Equity Partners has even tasked his own portfolio companies to come up with solutions. As Barron’s reported last week, Smith told the Vista Equity portfolio company Finastra to develop technology that could help small lenders process Paycheck Protection Program loans for small businesses in underserved communities.

“In the process, it became apparent how unbanked these most vulnerable communities are, and we felt it was imperative to help build out permanent infrastructure in those banks so that they can build long-term relationships with the U.S. Small Business Administration beyond PPP,” Smith told Barrons.

As of last week, 800 lenders had processed 75,000 loans using the software that London-based Finastra developed for U.S. small lenders. Those loans generated $2.2 million in processing fees for the fintech company, proving that there’s money to be made in the small ticket lending market. And even as Finastra is reaping the rewards of its push into small business lending services, Vista Equity and Smith are donating the same amount to local food banks, according to a spokeswoman for the private equity firm, Barron’s reported.


The Air Force wants you to hack its satellite in orbit. Yes, really

When the Air Force asked hackers to break into a F-15 fighter jet at last year’s Def Con security conference, the results were both eye-opening and eye-watering.

It was the first time hackers were allowed to work on the system to look for bugs. In just two hours, a team of seven hackers found a devastating flaw, which if exploited in the real world could have crippled a critical aircraft data system, causing untold and potentially catastrophic damage.

It was also proof that the Air Force desperately needed help.

“I left that event thinking there is a huge national asset in this level of cyber expertise that we are lacking in full in our Air Force,” said Will Roper, assistant secretary of the Air Force for acquisition, technology, and logistics, in a call. As the acquisitions chief, all of the satellites that the Air Force builds fall under his purview. But the Air Force historically held the security of its systems and technology in absolute secrecy, fearing espionage or sabotage by the enemy. Roper said this was like being “stuck in Cold War business practices.”

“But in today’s world that’s not the best security posture. Just because you’re not telling the world about your vulnerabilities doesn’t mean you’re secure to go to war,” he said.

Riding the waves of last year’s success, Roper planned to bring in security researchers again at this year’s Def Con in Las Vegas — this time hack into a real orbiting satellite, hovering miles above the earth’s surface.

Space was once only for the brave and the well-funded. For decades, only a handful of governments had the resources to blast a satellite into space. But as private businesses fire tons of their own technology into orbit, space is more crowded than ever. Now, space isn’t just a level playing field for private enterprise, it’s also a potential future battleground for adversaries.

“Our plan was to use a satellite that had a camera and to see if the team would be able to turn the camera to face the moon.”
Will Roper, Air Force acquisition chief

Miles above the earth, satellites may seem far from harm’s way, but Roper said the risks they face are real. “I could launch a direct ascent anti-satellite weapon that will go hit a satellite and disable it,” he said. “I could use directed energy weapons to try to blind a satellite or destroy components that allow it to collect critical information from the earth. I could jam satellite links so that you can’t communicate whatever information needs to be relayed to other important decision makers,” he said. And it’s not just the satellites in orbit. The ground stations and the communication links between the earth and the skies could be as vulnerable as the satellites themselves, Roper said.

“We don’t know the ghosts that are in our systems that come from the supply chain and the companies that assemble those and the fighters and satellites don’t either, because they don’t know to ask for them,” he said. The goal isn’t to just fix the existing bugs but also to shore up its supply chain to prevent introducing new bugs.

“We absolutely need help,” said Roper.

Working with the Defense Digital Service, which its director Brett Goldstein refers to as a “SWAT team of nerds that operates in the Pentagon,” they came up with Hack-a-Sat, a space security program that invites hackers and security researchers in to find the same bugs and flaws that the enemy wants to exploit.

It’s a massive shift from building closed and locked down systems that the Air Force is accustomed to. By switching to semi-open systems, it can open up its satellite technology to the wider community, while reserving the most classified technology to its in-house highly vetted experts and engineers.

Surprisingly, Goldstein, who reports directly to the Secretary of Defense, said convincing the folks upstairs to allow a bunch of hackers to take on a working military satellite wasn’t as difficult as it might sound. “There was enormous support for doing it and enormous support to partner with the Air Force on it,” he said. Roper agreed: “Isn’t it better to know about it prior to conflict than to naively keep our head in the sand and take that vulnerability into war at the risk of the operators who will have to use it?”

Roper and Goldstein say they want the cream of the crop to take on the satellite. In order to find the best hackers, the Air Force today launched its qualification round for the next month. The Air Force will let researchers hack a “flat-sat,” essentially a test satellite kit, which will help to weed out the right technical chops and skills needed to hack the orbiting satellite at Def Con.

Those who qualify for the next and final round get to take on the satellite as it orbits the earth.

“Our plan was to use a satellite that had a camera and to see if the team would be able to turn the camera to face the moon,” said Roper. “It would be a literal moonshot.”

What comes out at the other end is anybody’s guess. Both Roper and Goldstein said they want to be able to reveal the hackers’ eventual findings. But given that any findings may contain real-world security bugs of a working satellite, the Air Force may need to hold onto the key details to avoid a mid-orbit catastrophe.

At the time of writing, Black Hat and Def Con, the two largest security conferences that run back-to-back in Las Vegas every August, say it’s business as usual. But as the coronavirus pandemic continues with no end date in sight, the Air Force team is planning for a range of contingencies. Roper and Goldstein said they are determined to plow ahead, with an eye on virtualizing the event.

Whether or not the event is held on stage or remotely from people’s homes, the duo say the show will go on. The beauty of hacking is that often it can be done from anywhere with an internet connection.

As much as they hope that the hackers succeed in hacking the satellite, Roper said the event was as much about finding and fixing vulnerabilities as it was about “shocking our system” so that the Air Force changes how it thinks about security.

“I suspect there will be a generation of airmen and space professionals that will think about working with the hacker community differently, so when they’re designing a satellite they’re not thinking,” said Roper. “If that generation comes to be, we will be in a much better cyber posture in the future to the better readiness of our forces.”