A recently issued U.S. congressional report has cast a shadow on Chinese telecom equipment makers Huawei and ZTE. Because neither company answered congressional queries to the satisfaction of U.S. lawmakers, the report concludes that the two companies, as a result of ties to the Chinese government, cannot be trusted to supply telecommunications equipment to U.S. government agencies or U.S. companies.

Both companies vigorously argued against the report's conclusions. Huawei condemned the report as an attempt "to impede competition and obstruct Chinese [telecom] companies from entering the U.S. market." ZTE insisted its equipment is safe and that congressional concerns implicate "every company making equipment in China, including Western vendors."

U.S. lawmakers worry that Chinese-made telecom equipment could contain a hidden backdoor that could be used to eavesdrop on sensitive communications or to disrupt network infrastructure. The version of the report released to the public (a separate classified annex was withheld) contains no evidence that Huawei or ZTE have compromised their products at the behest of Chinese officials. But lack of transparency into the workings of the two companies and lack of answers to lawmakers' queries, in conjunction with ongoing reports about cyber attacks traced to China, have made it difficult for U.S. authorities to trust either company.

[ Learn more about the issue. Read Why Huawei Has Congress Worried. ]

The U.S. is not alone in such concerns. In March, Australia blocked Huawei as a potential vendor for its new national fiber network based on worries about national security. A U.K. government intelligence and security committee is investigating Huawei's longstanding provision of equipment to BT, according to The Guardian, which also reports that Canadian authorities may exclude Huawei from government communications initiatives as a security precaution. India banned the purchase of Chinese telecom equipment on national security grounds in April 2010, relented four months later, and is said to be considering whether to reinstate the ban.

Stewart A. Baker, a partner in the Washington office of Steptoe & Johnson, LLP, and former assistant secretary for policy at the Department of Homeland Security, said in a phone interview that telecom switches are particularly important for reasonably secure communication.

Anyone in the compromise business going after edge devices will find access difficult to maintain, he said. "People will do updates, they'll discard apps and phones," he said. "If you have switch access, you've got it forever, for all communications."

Baker acknowledges that the congressional report presents no specific evidence of espionage, but he believes the report's conclusions are reasonable. "You'd have to be an idiot not to realize that our security problems are bad and getting worse," he said. "I know there are people who will say about any national security claim that you're just looking for funding. But that's not a fair criticism of this report."

"We do face a serious challenge and one that could dramatically undermine our security from all the flaws we have in our IT security infrastructure," said Baker.

Publicly disclosed examples of deliberately compromised telecom equipment are few and far between--accidental vulnerabilities are more common and represent lower hanging fruit for attackers and security researchers. In May 2012, a draft of a research paper detailing a backdoor in an Actel/Microsemi ProASIC3 chip used in military applications was posted in advance of its intended September 2012 presentation date, leading to inaccurate reports that the backdoor had been installed by a Chinese manufacturer.

The paper's authors, University of Cambridge computer security researcher Sergei Skorobogatov and Christopher Woods, a computer security researcher with Quo Vadis Labs, subsequently denied having linked the backdoor to Chinese manufacturers and issued a letter to clarify their findings.

The chipmaker, U.S.-based Actel/Microsemi, claimed that the backdoor is a testing interface. "The alarmist press reports that some third party may have inserted any sort of hidden 'back door' into Microsemi devices are false," the company said.

Woods in an email acknowledged that compromised hardware is not common but suggested other unreported examples are likely to exist. "The only real-life example so far of a backdoor is in Actel's range of flash-based chips," he said. "No one else has found a real-life backdoor or Trojan in a real-world chip yet [and has] actually gone public with the results. But we very much doubt that this backdoor is an isolated case. ... This backdoor inserted into Actel's line of flash-based FPGA was deliberately inserted. Only its 'purpose' is under consideration."