The CIA isn’t waiting while the White House, Congress, the Justice Department and the Pentagon squabble over the best approach to combating Huawei’s domination of the future 5G wireless network.
The agency has been funneling taxpayer dollars to venture capitalists investing in a private company set up to compete with and hopefully defeat Huawei.
Huawei has gained an advantage in the battle for global control over the fifth generation of wireless technology. In-Q-Tel, the CIA-contracted venture capital fund, is urging Congress to spend more to thwart Huawei’s dominance.
Christopher Darby, the president and CEO of In-Q-Tel, told the House Permanent Select Committee on Intelligence last month that the venture capital fund began investing in 5G technology seven years ago. He said in a hearing that his fund has identified Parallel Wireless, a telecommunications service provider based in New Hampshire, as part of a government solution to concerns about Huawei’s threats to national security.
Parallel Wireless uses a software-centered approach for building radio access network (RAN) capability that would “eliminate the need to spend millions of dollars on new equipment and infrastructure upgrades,” according to a document on the company’s website. Parallel Wireless says its “Open RAN,” which requires minimum maintenance, is ready for deployment immediately.
Steve Papa, co-founder, chairman and CEO, said Parallel Wireless is fortunate that In-Q-Tel is proactively fighting Chinese domination of telecommunications.
“Parallel Wireless is committed to destroying the threat Huawei poses to the free world,” Mr. Papa said in an email. “We are actively working to ensure America and the world are free from the constraints of Huawei. Parallel works with many companies, many governments and many government agencies including In-Q-Tel.”
Mr. Darby told the intelligence committee that Parallel Wireless will not resolve cybersecurity vulnerabilities overnight, but the government should pursue its technology anyway because the 5G fight will be a long one.
“I think we’ve got time to play the game the way we play it best, which is disrupt,” Mr. Darby said. “Titans can fall, and Huawei is a titan right now, and we can take them down if we want to double down on our investments.”
In-Q-Tel is organized as a nonprofit that does not disclose its full list of investments, though it relies on government funds to promote Silicon Valley solutions to the intelligence community’s problems. In-Q-Tel received nearly $490 million in taxpayer funding during a five-year period ending in 2017, representing more than 98% of its revenue, according to paperwork filed with the IRS.
Not everyone in government shares In-Q-Tel’s vision. At the Justice Department’s China Initiative Conference last month, Attorney General William Barr said the only two companies capable of competing with Huawei are Nokia and Ericsson. Mr. Barr, a former Verizon executive, attributed an Open RAN approach to a “pie in the sky” mentality that “would take many years to get off the ground and would not be ready for prime time for a decade, if ever.”
The immediate need is a “concerted national 5G policy,” said former Rep. Mike Rogers, who now leads the advocacy group 5G Action Now. He said a “piecemeal” or “uncoordinated” approach to fighting Huawei will not work.
“The intelligence community is best placed to spot, identify and interdict threats to our communications networks — threats like those posed by Huawei, ZTE and China. A part of this effort is making smart investments in emerging technologies, providing seed capital through In-Q-Tel, IARPA and others,” said Mr. Rogers, who served on the House intelligence committee. “But that isn’t their primary mission and nor should it be. What they can do, and are doing, is informing policymakers about the threats and challenges our country faces, enabling smarter decisions and, where appropriate, help spur private-sector innovation.” IARPA is the Intelligence Advanced Research Projects Activity, an organization within the Office of the Director of National Intelligence.
In-Q-Tel is in the fight for the long haul. The venture capital fund formed in 1999 as an investment vehicle for the intelligence community that might never work but now has about 500 portfolio companies and offices in Arlington, Virginia; Silicon Valley; Boston; London; and Sydney.
Mr. Darby told Congress that 78% of In-Q-Tel’s portfolio companies have successfully piloted technology tried by the intelligence community and 57% have been adopted.
The company did not respond to requests for comment.
In-Q-Tel has faced criticism for profiting from investments made with taxpayer dollars. The company’s top-earning employees have annual salaries of more than $500,000, and IRS filings show Mr. Darby making more than $1.6 million in 2017. A portion of In-Q-Tel’s proceeds appear to go to charity. The fund has granted $1 million to the CIA Officers Memorial Foundation, which helps families of fallen CIA officers.
The fund points to Google Earth and Palantir as examples of technology projects made possible by its bets. It funded Keyhole Corp., which was later acquired by Google and made commercially available as Google Earth. Palantir is a data analysis company for the national security industry that has a $20 billion private valuation, according to CNBC.