The enemy is everywhere
Huawei's BT 21CN contract award in 2005 effectively shut down British rival Marconi. The multi-billion-pound deal was approved by then-Trade Secretary Patricia Hewitt, who is now a non-executive director of BT.
Huawei now competes globally against Silicon Valley-based Cisco and Juniper Networks on similar massive IP networking upgrades.
The firm also lists Orange, Vodafone, T-Mobile and O2's Spanish parent company Telefonica as major customers. Its main competitors in the mobile market are Alcatel-Lucent, Ericsson, Nokia-Siemens and Nortel.
The source added that BT had conducted an extensive and "industry leading" security investigation of the equipment, but said this had not satisfied intelligence officials.
Asked how the the security of its products compared to rivals, Huawei said: "Our customers, including top operators, audit Huawei in all aspects on an ongoing basis. We are confident about the safety of our equipment and the many long term partnerships formed with our customers is the best proof."
Dr Richard Clayton, a security researcher at the University of Cambridge, said that no programme of testing could guarantee security from a remote attack based on covert vulnerabilities. "It's no win for Huawei," he said. "Proving the absence of a backdoor is essentially impossible."
Asked if it would allow intelligence agencies to inspect its source code, the firm said: "Huawei is confident that its solutions meet the requirements of its customers and is open and willing to engage with relevant authorities to address their security concerns."
While industry and academic opinion suggests intelligence agencies' concerns over Huawei are moot, history shows they cannot be dismissed as paranoia. Foreign governments have been exposed as co-opting IT manufacturers to provide remote access to equipment before, although the culprits were not Chinese.
In the 1990s stories emerged that the US National Security Agency had for decades allegedly rigged the products of Swiss encryption firm Crypto AG. It was reportedly able to effortlessly decode secret diplomatic and military messages as a result. Similarly, the Israeli government - which probably has closer ties to its commercial technology sector than Beijing does - was accused in 2000 of spying via backdoors in wiretapping equipment supplied to US law enforcement by Comverse Infosys.
Both those firms have continued to thrive despite their alleged sidelines in espionage. For Huawei, the stain of an alleged association with the Chinese military is not likely to vanish. Yet with rapidly growing sales of more than $23bn last year, and increasing global market share, past experience suggests that perhaps it need not care.
For UK intelligence officials, meanwhile, the issue cannot be so easily dismissed. The equipment is already out there, relaying billions of our trivial and our important communications every day. If a backdoor is out there too, they are unlikely to discover it - until, perhaps, it's already too late. ®