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DND to reconsider AFP deal with China-backed telco after Senate review

JC Gotinga
DND to reconsider AFP deal with China-backed telco after Senate review
Defense Secretary Delfin Lorenzana says they will 'think thrice, even 4 times,' after senators raised serious security concerns over Dito Telecommunity's plan to build cell sites within military properties

MANILA, Philippines – The Department of National Defense (DND) will reconsider its position on the co-location agreement between the Armed Forces of the Philippines (AFP) and China-backed telco Dito Telecommunity, after senators flagged serious cybersecurity concerns they found when they reviewed the deal’s documents.

At the Senate plenary hearing on the DND’s 2020 budget on Wednesday, November 13, senators Francis Pangilinan and Ralph Recto called attention to serious spying and data privacy threats posed by the fact that Dito, formerly Mislatel, is 40% owned by China Telecom, which is in turn owned and controlled by the Chinese government.

Pangilinan, who earlier asked Defense Secretary Delfin Lorenzana to hold off signing his approval of the deal until after a Senate review, said that the AFP’s own risk analysis acknowledged these threats.

“The risk analysis states that the AFP fixed communication system, which links together with the military camps and bases nationwide, is susceptible to electronic eavesdropping and interception. The risk analysis further mentions that the equipment to intercept signals are readily and cheaply available. In other words, you can really intercept,” Pangilinan said during the session attended by Lorenzana and the AFP’s top brass, including Chief of Staff General Noel Clement.

Pangilinan then enumerated provisions in China’s Counter-Espionage Law of 2014 (CEL) and Chinese National Intelligence Law of 2017 (CNIL) that mandate companies like China Telecom to spy for its government:

  • Article 7 of the CNIL requires “any organization or citizen to support, assist, and cooperate with state intelligence work.”
  • Article 14 of the CNIL authorizes the State Intelligence Work Organization to “require relevant organs, organizations, and citizens to provide necessary support, assistance, and cooperation.”
  • Article 22 of the CEL states that “when state security organs investigate to learn of espionage conduct or gather relevant evidence, relevant organizations and individuals shall truthfully provide and must not refuse.”

Although the AFP said it would “adopt physical access security and network security measures” to mitigate the risks, Pangilinan said he is still “very concerned” about the deal’s security risks.

The opposition senator also pointed out how several developed countries have banned Chinese technology providers such as Huawei and ZTE from their communication systems to protect against espionage and data breaches.

Recto agreed with Pangilinan. He said the deal with Dito exacerbates the information and power security risk already present because the Chinese government-owned State Grid Corporation of China owns 40% of the National Grid Corporation of the Philippines.

“Right now, ang buong kuryente ng Pilipinas, ang nagpapatakbo, the State Grid [Corporation] of China. All the equipment, written in Chinese. ‘Di naiintindihan ‘yan ng mga tao natin. They can turn it off remotely,” Recto said.

(Right now, the Philippines’ electricity is run by the State Grid [Corporation] of China. All the equipment, written in Chinese. Our people do not understand that. They can turn it off remotely.)

“Ang giyera naman na darating, gano’n na (Any war that would come would be like that). Not necessarily missiles. Cyber war. And what is that? Telecommunications, ‘di ba (right)?” Recto warned.

Not just thinking twice

Senator Panfilo Lacson, head of the Senate committee on national defense and security, and sponsor of the DND’s proposed 2020 budget of P191 billion, said Lorenzana and the generals present were taking note of the senators’ concerns.

On the sidelines of the hearing, reporters asked Lorenzana, who earlier said he was inclined to approve the deal, whether he would reconsider his position.

“We’re not thinking twice. We’re thinking thrice, 4 times, gano’n (like that),” the defense chief replied.

“Hintayin ko muna ‘yung concerns nila. Kailangan ma-address natin ‘yung concerns nila (I will wait to hear their concerns. We need to address their concerns),” he added.

Lorenzana was abroad on official business when the AFP and Dito signed the co-location agreement on September 11.

The deal allows Dito to build cell sites within military properties. The memorandum of agreement states that the telco will “co-locate some of their Microwave Relay and Base Transceiver Stations for mobile communications services and equipment with that of the AFP” for “economic, technical and security reasons.”

The arrangement largely follows existing agreements between the military and the two established telcos, Globe Telecom and Smart Communications.

News of the deal sparked controversy and drew strong criticism of the AFP and the DND. Lawmakers, including Pangilinan and Recto, pointed out its information security risks.

China’s spurious claim of ownership of the West Philippine Sea, disrespect of Philippine sovereignty by sending vessels to its territorial waters and exclusive economic zone, and posturing to dominate the region’s economy present an obvious conflict of interest with the Philippines, which should make the AFP think twice about letting a Chinese government-backed telco into its properties, experts and lawmakers said.

Err on the side of caution

Short of asking to scrap the deal, Pangilinan said it is up to the AFP to make sure they can guard against spying or any breach in information security.

“Sabi nila mayroon silang capacity. So we will take their word for it. Pero palagay ko, we really need to double up sa pagtiyak na ‘yung capacity nila ay ma-beef up para mabantayan itong mga sistema na ito at hindi mauwi sa espionage,” Pangilinan told reporters after his interpellation.

(They say they have the capacity. So we will take their word for it. But in my view, we really need to double up in ensuring their capacity is beefed up to guard these systems and prevent espionage.)

“Mas gusto ko na sana we err on the side of caution, no? But at the same time, we recognize na may problema ang ating mga telco dahil sa mabagal na serbisyo. So kinakailangan nating balansehin parehas,” he added.

(I would rather we err on the side of caution, no? But at the same time, we recognize that our telcos have a problem because of slow service. So we need to balance both.)

Although the question might ultimately boil down to Dito having been granted a congressional franchise to operate, Pangilinan said it is “too early” to think about revisiting the 3rd telco’s franchise.

What’s next is a review of the defense officials’ responses to the senators’ questions about the deal, and consultations with information technology experts, “to see how we will move forward,” he added. –

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JC Gotinga

JC Gotinga often reports about the West Philippine Sea, the communist insurgency, and terrorism as he covers national defense and security for Rappler. He enjoys telling stories about his hometown, Pasig City. JC has worked with Al Jazeera, CNN Philippines, News5, and CBN Asia.