Connect and Conquer: Telcos, Smart Cities, and Espionage

Chinese tech giant Huawei has invested heavily in smart city development projects in recent years. This trend closely follows the mandates orchestrated by the Chinese government, which has already invested in the development of hundreds of smart cities (of various population sizes) to be built in the coming years. Huawei is actively involved in network LED and street lightning, smart waste management, smart parking, smart buildings, and smart water applications among others. Unfortunately, tensions regarding cyber-espionage and cyberwarfare have been mounting between the United States and China. With upcoming tech bans and sanctions against Chinese vendors enforced by the U.S. government due to hacking and cyber-espionage allegations (Huawei and ZTE being in the midst of the storm), it would seem that Chinese vendors might have a difficult road ahead of them in the United States.

According to the United States’ National Defense Authorization Act (NDAA), passed in 2018, U.S. agencies have been restricted from conducting certain types of business transactions with telecom firms Huawei and ZTE. More recently, President Trump lifted the ban for ZTE, but a great deal of tension with Chinese telcos still exists in various other fronts (e.g., the extradition of the daughter of Huawei’s CEO from the United States). This will undoubtedly affect the Chinese tech presence in North America and limit Huawei and ZTE from providing connectivity, infrastructure, cloud services, Artificial Intelligence (AI), and Internet of Things (IoT) intelligence solutions to U.S. agencies and smart cities. For connectivity services specifically, Huawei has a strong presence in cellular, Wi-Fi, and Bluetooth in addition to smart city and IoT-focused protocols like Narrowband-IoT (NB-IoT), MQTT, and ZigBee.

Huawei’s current ban in the United States has also caused ripples across Europe, where major E.U. chipmakers like Infineon, STMicroelectronics, and AMS will feel the impact since they might be forced to cut certain ties with Huawei in order to adapt to the Huawei ban for their North America-based clients. This is not to suggest that U.S. or E.U. companies will be left in the deep when it comes to smart city projects—far from it. From multi-vertical and cloud service powerhouses like Microsoft AI and intelligence firms like IBM, secure chipset manufacturers with a true IoT vision, like Intel and ARM, and key digital security companies, like Rambus and Entrust Datacard, smart city projects are not expected to slow down anytime soon. It remains to be seen, however, how the tension between the United States and China will affect smart city deployments.

Quite ironically, Huawei has been boasting cybersecurity investments in physical, network, host, virtualization, data, and applications while concurrently being accused of cyber-espionage and manipulating data traffic originating from the United States. But why is cybersecurity important for connected assets in future urban development projects? As examined in ABI Research’s recent Smart City Cyber Security (AN-2583) Technology Analysis Report, smart cities are composed of not only smart meters or connected environmental sensors but also a highly complex, interdependent network of devices, systems, platforms, and users. This network spans a multitude of industries, from smart retail, smart utilities, e-government, telemedicine, and intelligent transportation all the way to law enforcement and surveillance, emergency services, critical infrastructure, and industrial control systems, each with its own set of implementation challenges and technological dependencies.

Unfortunately, in a trend that closely follows other IoT implementations, connectivity is given the first priority, followed by intelligence gathering, monitoring processes, and, finally making an appearance at the very bottom of the budget priorities list, digital security. What this means in practical terms is that governments, vendors, and organizations will find that smart city infrastructure becomes increasingly vulnerable to cyber-attackers. Cyberattacks targeting smart lighting systems, connected parking, water, waste, and utilities are only the tip of the iceberg. Consumer privacy, theft of citizen Personally Identifiable Information (PII), cyberwarfare targeting Industrial Control Systems (IDC) or critical infrastructure, increased ransomware threats, and the siphoning of surveillance and intelligence data as part of cyber-espionage instigated by nation states are just some of the threats that implementers will be called to face, gravely hindering smart city development projects in the near future.