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FBI: Counterfeit Cisco routers risk "IT subversion"

By | May 12, 2008, 6:05pm PDT

Summary: An internal Federal Bureau of Investigation presentation states that counterfeit Cisco routers imported from China may cause unexpected failures in American networks. The equipment could also leave secure systems open to attack through hidden backdoors. The scope of the problem is broad and results from a complicated supply chain originating in Shen Zhen.

An internal Federal Bureau of Investigation presentation states that counterfeit Cisco routers imported from China may cause unexpected failures in American networks. The equipment could also leave secure systems open to attack through hidden backdoors. The scope of the problem is broad and results from a complicated supply chain originating in Shen Zhen.

From a narrow project failures perspective, network problems caused by this equipment should be treated as any other hardware malfunction. Of course, the entire concept of third parties using compromised hardware to infiltrate public and private systems in the United States is another matter entirely.

Faulty networking hardware can be a nightmare to troubleshoot and fix. For example, the U.S. Customs and Border Protection (CBP) location at Los Angeles Airport (LAX) suffered a failed router last year; the problem delayed 20,000 passengers before technicians successfully isolated and repaired the issue.

The following slides, pulled from the larger presentation, indicate how seriously the FBI is taking this threat to national security.

Counterfeit Cisco routers risk “IT subversion” and failure 1

Counterfeit Cisco routers risk “IT subversion” and failure 2

Counterfeit Cisco routers risk “IT subversion” and failure 3

Counterfeit Cisco routers risk “IT subversion” and failure 4

Counterfeit Cisco routers risk “IT subversion” and failure 5

Counterfeit Cisco routers risk “IT subversion” and failure 6

Counterfeit Cisco routers risk “IT subversion” and failure 7

Counterfeit Cisco routers risk “IT subversion” and failure 8

Counterfeit Cisco routers risk “IT subversion” and failure 9

Counterfeit Cisco routers risk “IT subversion” and failure 10

Counterfeit Cisco routers risk “IT subversion” and failure 11

Counterfeit Cisco routers risk “IT subversion” and failure 12

Counterfeit Cisco routers risk “IT subversion” and failure 13

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Michael Krigsman is a recognized authority on the causes and prevention of IT failures.

Disclosure

Michael Krigsman

Michael Krigsman writes and speaks about technology in a manner that most observers consider to be fair and balanced. Michael believes that writing about IT failures, which often have complex causes, creates a unique obligation to be reasonable and accurate in both reporting and analysis.

Michael maintains active personal and professional relationships with enterprise technology buyers, vendors, analyst firms (or individual analysts), consultants, and system integrators. As CEO of Asuret, Michael sells and delivers paid services to members of these same groups.

Vendors regularly reimburse Michael's out-of-pocket travel expenses to attend industry conferences and events. Conference organizers frequently waive entry fees when Michael attends industry events. Michael often speaks at industry conferences and events.

He is a member of the Enterprise Irregulars, a loose association of consultants, investors, industry representatives, analysts, and users of enterprise software.

For daily updates on Michael's activities, follow him on Twitter.

Biography

Michael Krigsman

Michael Krigsman is CEO of Asuret, Inc., a consulting company dedicated to reducing technology implementation failures. Asuret's suite of software tools improve the success rate of enterprise software deployments by quantifying and measuring governance issues that cause most project failures. Michael led the research effort underlying Asuret's model of collective intelligence and its practical application to reducing IT failures in consulting environments. He is a recognized authority on the causes and prevention of IT failures and is frequently quoted in the press on IT project and related CIO issues. He is considered an enterprise software industry "influencer" and provides advice to technology buyers, vendors, and services firms.

Previously, Michael served as CEO of Cambridge Publications, which develops tools and processes for software implementations and related business practice automation projects. Michael has been involved with hundreds of software development projects, for companies ranging from small startups to Fortune 500 organizations. Michael graduated with an M.B.A. from Boston University and a B.A. from Bard College. He is a Board member of the America's Cup Hall of Fame and the Herreshoff Marine Museum in Bristol, RI.

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RE: FBI: Counterfeit Cisco routers risk
NWEQJohn 27th Apr 2009
Companies looking for a safe environment for purchasing used networking equipment should make sure they are dealing with a member of the United Network Equipment Dealer Association (www.uneda.com). More than 300 members worldwide work together to promote and uphold the highest standards and best practices when it comes to buying and selling legitimate pre-owned gear from all the leading OEMs. Together, UNEDA members sell more than $2 billion in pre-owned gear annually to over 10,000 customers, fueled by an increased supply of and demand for pre-owned network routers, switches, access servers, security products and VoIP phones/telephony products at savings of up to 90 percent off OEM list prices.
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Possible red flag...
MGP2 12th May 2008
Counterfeit Router: $234
Genuine Router: $1375
Govenment officials not realizing there MIGHT be something wrong with an 80% discount?

PRICELESS!

So, none of that raised a red flag for anyone? Things that make ya go "hmmmmm".
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Contributr
Excellent catch
mkrigsman@... 12th May 2008
What do they say about something being too good to be true?
Sometimes government agencies get very special deals, even directly from the manufacturer for equipment. Yes, even 80% differences are not uncommon. Extreme price differences can swing both ways though, so it's not hard to believe this problem can happen very easily and go uncaught.
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I'm with Scott. Not only are 80% discounts common but, when it reaches accounts payable there may not be enough information on the purchase order, and they may buy multiple routers simultaneously, so they wouldn't necessarily see that something is out of whack.
That's why it's up to IT to recognize the fake from the real routers.

Orpheuse
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Is this not a terrible own goal?
fr0thy2 15th May 2008
You've got to hope that the security agencies have got this right, perhaps by perusing the code, and can justify this.

Otherwise, isn't it likely to kick off a backlash against US products, the biggest target being my *favourite* company?
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Of course they do realize that...
LucasKorso 13th May 2008
and they write $1375 on the budget, they buy the damn thing for $234 and they put the difference in some hidden account somewhere in the cayman islands...

why should they raise a red flaga if they are profiting from it? do you still believe in santa claus?
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Well....
MGP2 13th May 2008
If they're gonna carry out this:

http://government.zdnet.com/?p=3807

They're gonna need some quality hardware to deliver the DDoS.
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Probably never knew
bigsibling 13th May 2008
My guess would be the supplier bought the crap routers, yet charged the government the full retail price for the good routers. They government should eliminate the middle-man, and deal directly with Cisco (or any other manufacturer for that matter) for sensitive, system critical equipment.
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Outsourcing IT
Red_Beard 13th May 2008
Easier to eliminate the middle-man when the people running the IT departments aren't actually Northrop-Grumman employees, or subcontractors for them who are doing the purchasing.

We have, in the name of small government, made government a tangled web of complexity and almost nothing but middle-men.
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have your cake and eat it too
bruce_mcculley@... 14th May 2008
we want o restrict government growth so folks oppose big government, that means outsourcing. we want to restrict government spending so we require bidding and lowest bidder wins. You get the government you deserve. If you're bashing the government for this you're looking in the wrong place, try the mirror.

btw PLA (Peoples Liberation Army) is reportedly running a botnet of their own, rumored to be the one called "storm". If they can start using all our routers as part of it, where will that leave us?
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China is an enemy
High Plains 13th May 2008
China is a communist government whose goal is world domination. We had better worry about any electronics, counterfiet or not, that are going to be installed in network infrastructure.
China knows we cannt be defeated militarly but if they can wreck the military and country's data networking we can easily be defeated.
Cheap goods carry a high price.
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Military Dominance
Red_Beard 13th May 2008
Our Military dominance, accurately identified, relies heavily on technology. If that technology is suspect, we have a serious problem.

In a ground war against China, we would lose. This is not a debatable point. If we _can_ rely on advanced technology, we would stand a chance, but only just.

Our military is not a mighty behemoth, but a professional military that is currently spread very thin.

Now that I have stated the obvious, what may not be obvious is whether or not China needs us to stay stable. While we are stable, we supply them with cash. When we falter and the value of the dollar drops, they lose their value in their holdings (American debt). They would be wise to both diversify, and help America become strong. If you look closely, they are trying to do both.

China is both a friend and foe. All countries, by their nature are bi-polar.
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Closer to reality...
JCitizen 13th May 2008
China couldn't take the economic hit that a destabilized US would do to them. If they thought the cultural revolution was radical, they won't know the half of it when the capitalist revolution hits after a debacle like that!
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Re: Military Dominance
mejohnsn 25th May 2008
>China is both a friend and foe. All countries, by their >nature are bi-polar.

And few countries are as comfortable with that "bi-polar" position as China is;)
to a paranoid whose goal is world domination.
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World Dominance?
pwoon@... 20th May 2008
What country has China ever attacked? Iraq, Afghanistan, Vietnam, Korea? American always want to say that China is out to take over the world, but history and intent will always prove them wrong. Hey, Cisco equipment is made in China anyway, so of course you're gonna get fake ones.
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World Dominance
richard.d.rusek@... 21st May 2008
China was involved in both Korea and VietNam - also in the SinoJapanese war and many other conflicts. Time to brush up on your history.
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World Dominance?
sdwilliams2009 5th Jun 2008
Most every nation throughout history has wanted world dominance, so what!

Now to address your point on America's involvement in wars... America has ALWAYS joined a conflict in order to stop aggression at some point. There are 'bi-polar' individuals asking the US to intercede in Darfur, Tibet and elsewhere. Then when and if we do, we will be crucified for our actions.

Which is it to be? I agree that China should not be trusted at any cost, but we have removed control from our people. We have no choice but to buy from China and other 'friendly foes' because we want CHEAP.

Think about this:

Why are we finding so much lead in our kids' toys? Because it is so much easier to conquer old men and women when you've killed off the next generation.
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The price for security?
Gradius2 13th May 2008
LOL! This is exactly what I would comment, it's IMPOSSIBLE to not see that HUGE difference on price, EVEN if the product was refurbished, it wouldn't be THAT damn cheap!

Is clear they did that for just one reason, PROFIT.

Gradius
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Things that make you go "Yes!"...
jlafitte 13th May 2008
I'd be looking at the personal cash flow of the people in US Government right now.

As a former mid-to-low level writer of bid requests and sole-source requisitions for state government agencies, I had NO incentive to choose one vendor over another in theory.

However, a vendor with enough at stake could theoretically CREATE considerable incentive to purchase his wares over another's.

In the state where I worked, the US Attorney was constantly investigating such cases (none on my watch; purchases at significant levels of profitability were always made much farther up the food chain).
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Pocket the difference
gcoppedge@... 16th May 2008
Correct above pricing
Standard vendor (genuine router) $1375
Discount vendor (counterfeit router) $1200
"Sales Commission shared by purchasing agent & vendor" ($1200-$234=) $966

So, the purchasing agent looks good for getting a $175 router discount AND puts almost $500 in his own pocket at the same time.
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Makes up for
Mahegan 16th May 2008
The $500 toilet cleaner that the military used to buy...
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Shouldn't produce Government items in
Comnenus 13th May 2008
another country! Especially China who has already "accidentally" put Ecstacy in Children's toys, poisoned the pet food, and placed lead in paint.

They are seeing how much control they have over us, and how easy it would be without even using their military.
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Play with fire, get burned
ejhonda 13th May 2008
Take note of the flag on the left of each supply chain slide. No more needs to be said.
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RE: FBI: Counterfeit Cisco routers risk
angarone@... 13th May 2008
Undermining our own country! Why would the government of the US buy ANYTHING from other countries? Shouldn't they show faith and set and example by buying only domestically?
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fake!
bugginmiami@... 13th May 2008
Im sure our govt would pay full pop (list +++) and get the fakie and the vendor would make the markup.. With the govt not knowing until later, if ever... Like the slideshow said, the sub-sub-subcontractor..
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Cisco and Counterfeit
dclinks@... 13th May 2008
Cisco tends to lie when it comes to counterfeit equipment. They are the ones who gave these people in China the design plans for everything that they produce. The reason? One billion plus people in china = lots of sales of Cisco. This is Cisco's fault
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RE: FBI: Counterfeit Cisco routers risk
angarone@... 13th May 2008
Undermining our own country! Shouldn't the US show faith in and set and an example by buying only domestically produced items?
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Devil's advocate
i8thecat 13th May 2008
Just to play Devil's advocate for a moment...

I challenge anyone to find computer equipment made in the US.... There are only two companies in the entire world that make capacitors and those go into every electronic device we own... Neither company is in the US. Currently it is impossible to find anything electronic made in the US with US parts. Back in the early 90's the US government had criteria where 80% of a computer had to be made in the US and it was almost impossible for them to meet that. Now days they can't. We no longer make them in the US.

So what are the choices... a US company cannot compete with China, Taiwan, and Japan when it comes to consumer electronics. It would require government subsidizing and taxpayers are not going to pay to subsidize a US computer company just so the government can have US made computers... We have children starving and homeless in the US, and thousands of corrupt politicians who don't give a damn about any of them. The US democracy is far more fragile than most of the ignorant masses can comprehend.
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Re: Devil's advocate
stilwebm 13th May 2008
I'm not sure where you heard that there are only two manufacturers of capacitors, but that is not true.

In any case, do you think our country is full of homelessness and starvation because we don't have as many low-paid manual labor jobs as we did decades ago? We have higher wages and less starvation and homelessness because he have more high-paying service and skilled labor jobs than the economies of those nations with larger portions of manual labor.

The security risk in this article comes from bad supply chain management and poor quality control. Some basic precautions and governance along with "is this price too good to be true" skepticism could dramatically limit this type of security problem.
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Common sense....
i8thecat 13th May 2008
The security risk is in the potential of a hidden flaw/bug/virus/backdoor in the electronics we purchase.

About 5 years ago, one of those two companies that produce capacitors released a bad batch around the globe. Those same capacitors ended up on mother boards and logic boards from Dell, Apple, ASUS, MSI, Etc, etc... Almost every manufacturer of motherboards/logic boards. Those capacitors failed and were seen buldging and vented within a couple years. This caused weird intermittant glitches, reboots, video glitches, failed TV's, stereos, etc. etc. There may be several resellers, but there are only two manufacturers. The vast majority of consumers are clueless about it and most companies are extremely quiet about it. But if you had to replace over 200 motherboards like I had to, you might be familiar with the issue.

The homeless starving children we have has nothing to do with jobs, neither high end nor low paid, because we have plenty of both. It is a direct reflection of US society which has a rotten core due to corrupt politicians who don't give a damn about those children. The root cause may have been horrible parents, or perhaps a tragic accident, or just bad luck... Regardless... The corrupt politicians don't do anything worth doing... They choose to care about themselves and thier 6 figure salaries and lining thier pockets with bribes from big tobacco and oil instead of making programs and policies that actually work.
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was the only chip maker left in the US because they still make their DLP chip here. I thought that was incredible because as you say, there are only a few left in the world.

Of course, if you included CPUs there might be a few more.
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The US democracy is far more fragile
Mahegan 16th May 2008
"The US democracy is far more fragile than most of the ignorant masses can comprehend."

On the contrary, the US democracy has never been stronger. Idiots have been persuaded not to vote, only the wealthy can run for high office, top politicians can install into office their selected advisers, the military controls news and reporters in war zones and the masses are content to change channel if they don't like the message.

What's wrong with you? Didn't people vote for all of this in the name of national security and "anti-terrorist measures"?

As for cheap routers, you get what you paid for, a cheap "democracy".
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it's not so simple
bruce_mcculley@... 14th May 2008
1. Cisco is a US company. As has been pointed out most US tech companies actually manufacture overseas. So the government is sourcing a US brand, with as much domestic content as possible.

2. It's not just the government. I worked at one of the top thirty US banks, and all we used was Cisco networking gear. Would you feel better if the government was secure and your bank wasn't?

3. It's not just national security (see item 2). I'm less worried about the government networks than I am about the financial networks.

Real problem is, it costs to do QA. One reason to buy Cisco or another name brand is the support and the vendor quality. If counterfeits undermine that, instead of one vendor doing QA you have every user having to do it. That's a drain on the economy, and it's why counterfeiting products is illegal.

4. Finally, even if the physical quality of the knock-offs is poor now, as they practice they'll get better, ergo harder to recognize as fakes. However the faulty capacitors, power supplies, etc. will still cause smoke and flame more frequently than the real brand products, and the question about hidden back doors into the networks will remain. That's why this is a big deal now, we need to get a handle on it before it becomes even harder to control. Bashing the government does nothing to help solve the problem! Any constructive ideas, anyone?
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Constructive ideas for gov't purchasing
gcoppedge@... 16th May 2008
1. Spot check contents of gov't contracted supplies by operations and security staff to ensure accuracy of amounts, product quality, and that they are genuine items.
2. Require all gov't contractors supplying potentially sensitive equipment to register all their employees and subcontractors in a national crime database.
3. Red flag and disbar any contractors and all their executive management from future gov't contracts if they are found to have committed fraud.
4. Provide an anonymous web forum for contractor employees to report fraudulent activities.
5. Require all vendors to eliminate all back doors. Test to ensure compliance. Disbar contractors which do not comply.
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Sounds like the plan to me...
JCitizen 16th May 2008
Just providing a fraud waste and abuse hotline that is answerable from the top(OMB) down would improve things..

The Army supply system works in a similar way; that is why they got to the mideast with all the beans, bullets, and bandages.
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If not jailed. If there are any sort of security exploits discovered, they should be tried for treason.
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RE: FBI: Counterfeit Cisco routers risk
sandipkharde 13th May 2008
Chinies material should be stop using or banned....
providing such duplicate materials hacking Government secret.....
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RE: FBI: Counterfeit Cisco routers risk
sandipkharde 13th May 2008
Chinies material should be stop using or banned....
providing such duplicate materials n hacking Government secret.....
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Odds are, the Cisco routers are made in China anyway. All the Chinese have to do is build in a back door on the real hardware instead of the cheap counterfeit units and we're screwed.
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RE: FBI: Counterfeit Cisco routers risk
drbeilk@... 13th May 2008
Didn't the coverment block the sale of 3Com to a company out of China because it was a considered risky for the US if China started adding listening devices into their products?
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RE: FBI: Counterfeit Cisco routers risk
bazilfarid@... 13th May 2008
This issue is unavoidable.

However, the sophistication of these kind of products actually makes it easy to avoid the threat of counterfeiting.

Cisco should come up with some authentication mechanism that will be a combination of hardware and software magic to have a way for the customer to VERIFY whether something was REAL or FAKE.

I think it is prudent that Cisco should take a LEAD in this regard and safeguard its customers.

- Bazil Farid
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RE: FBI: Counterfeit Cisco routers risk
Auntie Spam 13th May 2008
The "criminals" here are the US Corporate Management who cannot see past the end of their balance sheets. If you outsource your technology manufacture to the lowest bidder for the sake of short term profit, you WILL reap the long term consequences... loss of security of supply, loss of technology leadership, loss of indigenous skills and knowhow, ...basically loss of control.

Didn't they see this coming?! Or are they all sufficiently close to the gold watch and cashing in the stock options that they don't care?

There seems to be a lot of anti-Chinese sentiment here, but, frankly that's a "red" herring and possibly unwarranted paranoia.

The fact is China have the U.S. electronics industry by the balls, and it was U.S. business management that gave them that advantage, whether they squeeze hard or not remains to be seen... if the situation was reversed, I suspect the U.S. would be squeezing with both hands.
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You hit it on the head my friend.I've worked countless companies and all the brass at the top of every one is worried about the dreaded class action lawsuit or sales falling off.
And I aggree with you on China,It's impossible to take them out of the equation at this moment in time we went with them because the japanese are getting too expensive.
Also no-one has mentioned the fact that we now OWE CHINA over a trillion dollars they have given us for the war in Iraq.China is the major donor of money for our war as the Bush adm. waits to exit and the next pres. will have to pay the bill.
How's that for democracy.
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Cisco is Smart
fmartinezb@... 13th May 2008
Getting the FBI to work on their Behalf is cool.

The infiltration into US networks spin is brilliant...
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Cut the sarcasm
croberts 13th May 2008
Sure Cisco has a vested interest in protecting their brand, but at the end of the day it really isn't their problem if American networks are compromised because of fake Chinese products.

And while the FBI should be lauded for investigating, it isn't a law enforcement matter. It's a trade matter.

If the American government had the guts to slap a 40, 50 percent tariff on some Chinese goods, I'm sure the Chinese government would crack down and put the fraudsters out of business.

Trouble is, China's government works to strengthen China while America's government is for sale to the best-funded lobbyist.
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FBI jurisdiction
bruce_mcculley@... 14th May 2008
First, there are laws against counterfeiting products. Also, FBI has jurisdiction over foreign governments spying on US government. That would certainly include counterfeit network equipment with potential backdoors being sold for use in government networks. It *is* both a law enforcement and a national security matter.
ZYXEL ROUTERS AND SWITCHES WILL MAKE FBI GET ENOUGH SLEEP
ZYXEL ROUTERS AND SWITCHES WILL MAKE FBI GET ENOUGH SLEEP

Could someone compare reliability, functionality and resilience to future growth of ZyXEL and Cisco family of routersand switches and prove me wrong.

ZyXEL products despite being manufactured in Taiwan, China republic is quite original and reliable. Try it and see for yourself.

Simon Mutisya is an IT consultant based in Nairobi, Kenya.
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a whole lot of dumb comments; some good
jiagebusen 13th May 2008
who gave the world W.C. Fields? "Never give a sucker an even break". jeez, chinese crooks are no more, no less evil than those in the U.S.

just ask ENRON !!! and where are all the supposed and much vaunted US IT gurus out there? no wonder the States are outsourcing...

give up '50s-era McCarthy china bashing and say something that's relevant: it's called quality control, dudes and dudettes. hasn't the US got anyone that can do this anymore? does it really take the FBI to do this, or can't your IT guy do it? or is it the boss cutting corners.

from what i've seen, there's no plot for the chinese to conquer the world (what movie did that come from); but from the looks of it, maybe the US is....
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Companies looking for a safe environment for purchasing used networking equipment should make sure they are dealing with a member of the United Network Equipment Dealer Association (www.uneda.com). More than 300 members worldwide work together to promote and uphold the highest standards and best practices when it comes to buying and selling legitimate pre-owned gear from all the leading OEMs. Together, UNEDA members sell more than $2 billion in pre-owned gear annually to over 10,000 customers, fueled by an increased supply of and demand for pre-owned network routers, switches, access servers, security products and VoIP phones/telephony products at savings of up to 90 percent off OEM list prices.

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