Snowden leaks and NSA spying causes Brazil to avoid US materials as well as territory for its under sea cable

Snowden leaks and NSA spying causes Brazil to avoid US materials as well as territory for its under sea cable

The snooping scandal orchestrated by the National Security Agency of the US  and leaked in June 2013 by Edward Snowden, has started having its first telling implications on US companies. Foreign governments are thinking twice before using US made technology and Brazil just took it a step further.

Fortaleza Cable

Brazil is planning an optical fiber cable that will connect from Fortaleza up to Portugal thereby eradicating any need of the US. The project is expected to cost $185 million and the Brazilian government is firm on not using any US tech. The cable is being overseen by state-owned telecommunications company Telecomunicacoes Brasileiras SA better known as Telebras.   Telebras President Francisco Ziober Filho said “The issue of data integrity and vulnerability is always a concern for any telecom company.”

The revelations made a year ago by Edward Snowden resulted in Telebras making an audit of all foreign-made technology the country used. And the main goal of this cable line is to bypass routing internet traffic to Europe going through the US as is currently the case. Dilma Rousseff, the country’s newly elected president had expressed her views while campaining stating that internet cables are on of the major resources used for spying and making Brazil self reliant in technology would help a great deal in avoiding such spying activity in the future. The fact that she won with an astounding majority may just indicate how serious the Brazilians are about the privacy online.

New Allies

Telebras has said that it will persevere to connect directly to Asian and European countries, bypassing US. In that regard, it has already taken steps to partner with local companies as much as possible and choosing non-US companies whereever there can, even going to the extent of loosing the revenue they might have acquired had they kept an auction for contracts and involve US companies in the process.

In January, Ziober said at a press conference that Telebras will work with Madrid-based Islalink Submarine Cables SL and an as-yet-undetermined Brazilian associate to construct the technology pipe. Ziober added that a project this complex could have multiple vendors, to be chosen from proposals presented after the third associate is finalized. Construction is slated to start in the first half of 2015, with the cable to be operational 18 months later, he said at an Oct. 15 event. Lots of other smaller companies have also benefitted from this anti-NSA sentiment.

Damages

While these losses appear small in comparison to the billions the likes of US corporations Microsoft and Cisco make every year, we aren’t taking in to consideration the future losses these firms may suffer. In the short term, no major US company has registered losses. And as far as technology projects go, experts say there are very few projects that can be implemented without any US tech. USA seems to have a grip on the global market as of now. But what happens if say 5 years later, Asian companies start coming out with alternate solutions to American products. We need to look no further than the multi billion dollar lawsuits between Apple and Samsung. Asian companies have already managed to eat out what was once primarily a US playground in the consumer electronics market. What happens when this scenario repeats itself elsewhere ?

With modern data networks being built worldwide — especially in emerging markets where information-technology spending is estimated to rise 9 percent this year to more than $670 billion, according to market researcher IDC — that’s where there’s opportunity to look increasingly towards non-U.S. technology providers.

U.S. companies could forgo as much as $35 billion in revenue through 2016 because of doubts about the security of their systems, according to the Washington-based Information Technology & Innovation Foundation, a policy research group. Brazil’s new cable is the “perfect project to go non-U.S.,” said Bill Choi, an analyst at Janney Montgomery Scott, given that laying cables is a labor-intensive process dominated by non-U.S. companies such as French firm Alcatel-Lucent.

Brazil’s Countermeasures

Brazil is and has been a key playground for US companies. Being one of the BRIC nations that isn’t as averse to US like China. When Snowden leaked the scandal, one of the first steps the government did was to terminate a contract with Microsoft for the use of Outlook. Brazil President Rousseff tweeted at the time that the change will help “prevent possible espionage.”

The government turned to Expresso to handle all of their e-mail activities. The confidence to trust expresso came as it is owned by state-owned Servico Federal de Processamento de Dados, known as Serpro. The services are currently used by 13 of Brazil’s ministries.

Jack Evans, a spokesman for Microsoft, said the company continues to hear from customers that “where their content is stored and how it is used and secured matters.” He said Microsoft is committed to “increasing choice and transparency about how we store our customers’ content.”

Last November, Rousseff also signed a decree requiring government ministries and agencies to use only technology services provided by public or partially state-owned companies, without competing for contracts in auctions. The transition “for the preservation of national security” should be monitored by the ministries of defense, communications and planning and budget, the decree said.

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