Was the govt's Huawei decision right?

The weekend's news that Huawei was blocked by the government from bidding for National Broadband Network (NBN) contracts will have one question sitting in the forefront of most of our minds. Did the government make the right decision?

This is a murky area that can only ever be seen in shades of grey. It's the type of decision that I see made by Jack Nicholson's character in A Few Good Men.

In my mind, I really want the government's decision to be incorrect. We are moving towards the Asian Century. There's a massive power shift happening, with Australia juggling its alliance with the US and Europe, and developing friendships with its Asian neighbours.

As western power wanes, we need to accept and partner with Asia to be able to survive the era to come. Given this, it's so natural to want to overcome our differences and make alliances while we still have something to bargain with.

Indeed, Huawei said in a submission to the government's "Australia in the Asian Century" whitepaper (PDF) that a country of Australia's size needed outside investment and could not count on it coming from traditional sources.

"Australia is a nation which occupies an island continent with an area of some 7.8 million square kilometres and a total population of just under 23 million people — approximately the same population as China's Shanghai Municipality," it said.

"Huawei Australia believes Australia's policy settings are inadequate to embrace and fully capitalise on the exciting opportunities offered by the emerging and growing nations to our north. With funds from traditional investors dwindling, Australia must engage with Asia like never before. But this engagement must go beyond energy and resources. Australia must harness Chinese and Asian advances in technology, construction, urban design, manufacturing, education, health and security."

Huawei expressed its concern that the opportunity was going to pass us by.

"Policy settings based on historical bias or outdated perceptions will see Australia miss out on important economic benefits."

It almost sounds like a threat doesn't it?

I wonder, how much are we willing to give up for this economic prosperity? Many would say we give up nothing, and that may well be true.

But if there's a grain of truth in the allegations about the People's Liberation Army and we could be staring down the gun of surveillance and intellectual property theft via the NBN in the future, given that there are other viable options for the network available in the form of alternate vendors, I can understand why the government wants to play it safe.

After all, this network is going to last us a long time, and we don't know what the future holds. It will not only transfer information for you and me, but for companies and the government itself.

Then we have to consider the fact that in banning Huawei from NBN work, Australia is simply following the US, which has also been cautious of the company. Last year, the US Department of Commerce told the company it had been excluded from bidding to help construct the US national wireless network for emergency responders, also because of security concerns. In February, the US Committee of Foreign Investment blocked Huawei's attempt to take over server company 3Leaf Systems. Huawei has now asked the US Government to investigate it to clear its name of any strange activity.

Yet, there is such a thing as being too cautious. Huawei is known as a cheaper option than alternatives, although Wikileaks cables from Africa said this benefit was undone in bad support. Cheaper kit could make our broadband network more affordable. Many could also argue that other vendors don't have a sterling record either. For example, the two vendors that have received work on the NBN, Alcatel-Lucent and Nokia Siemens Networks, have both been involved in bribery scandals, the latter scandal even delayed the integration of Nokia's and Siemens' network divisions to create Nokia Siemens Networks.

However, at least these companies are listed, which gives a promise of transparency, if not the actuality of it. Huawei, on the other hand, is an unlisted company owned by employees — not all employees, just Chinese employees, according to this report.

In response to the government ban, local director of corporate and public affairs Jeremy Mitchell said:

"This is a whole new area for [Australia] as we look at the Asian Century, we're not used to privately owned Chinese companies, we're not used to companies coming from China that are leading in technology and also global — 70 per cent of our work is outside of China."

If the company truly is global as he says, why allow shares to only be allocated to Chinese employees? I'm sure the hundreds of employees in the Australian office would be very grateful if they were rewarded with some shares. It would also make Huawei's requests in its submission to the government whitepaper that Australia "must clear the non-tariff trade barriers currently limiting Asian companies investing in Australia" a little more palatable.