China rides to the rescue?

New Zealand's much vaunted $1.5 billion broadband program could be going "off the rails", if the country's Labour opposition is to be believed, but Prime Minister John Key could have an unlikely saviour — the Chinese!

Key is in Asia drumming up trade opportunities and last weekend dropped an unlikely bombshell. He raised the prospect of Huawei coming on board for the national broadband scheme. This has surprised many as Huawei does not deploy fibre, though it did build the mobile phone network for New Zealand's relatively new third provider, 2degrees.

Already we have seen some uncertainty creep into the New Zealand equivalent of Australia's National Broadband Network. ICT Minister Steven Joyce recently widened the scope for tenders for the network, delaying the process for a month. Telecom New Zealand is also changing its business structure to become eligible to gain work adds to other complications causing delay.

Meanwhile, Vodafone and other telcos have stated that the government may have to boost its budget to deliver its broadband electoral commitment.

No wonder the Labour Party is wondering if the wheels are coming off the government's broadband initiative — a major plank in the 2008 election.

To date, the government has ruled increasing the budget for the network, but Key could deliver anyhow if Huawei rides to the rescue with a cut price offer that comes within budget.

Huawei is an established player in both Australia and New Zealand and is reportedly keen on a government deal.

Of course, the tenders won't be settled for some months yet, so at the moment it's just bids and counter-bids. But by raising the Huawei option, canny Key has encouraged the other operators to sharpen their pencils a little further.

Either way, it does raise the prospect of an increasingly powerful Chinese dragon in the regional and technical economy. While there might be economic benefits, I have concerns about such a totalitarian regime having so much influence over our strategic assets.