update The government has reportedly banned Chinese-owned Huawei from tendering for National Broadband Network (NBN) contracts, with the office of Attorney-General Nicola Roxon issuing a statement saying the government needed to protect the integrity of Australia's information infrastructure.
The Australian Financial Review has quoted sources saying that Huawei had been told late last year not to bother tendering for any NBN supply contracts because the company wouldn't succeed.
When queried on the ban, the attorney-general's office issued a statement to ZDNet Australia that provided justification for such action:
The National Broadband Network (NBN) is the largest nation-building project in Australian history, and it will become the backbone of Australia's information infrastructure.
As such, and as a strategic and significant government investment, we have a responsibility to do our utmost to protect its integrity and that of the information carried on it.
This is consistent with the government's practice for ensuring the security and resilience of Australia's critical infrastructure more broadly.
NBN Co pointed out that it runs procurement processes for its requirements and then announces the outcomes, but couldn't comment further on the issue because it didn't discuss the details of tenders.
Huawei has long been under media scrutiny because of its Chinese heritage. It has been accused of links to the People's Liberation Army (PLA) because its chief executive Ren Zhengfei served in it, raising fears that backdoors might lurk in the vendor's kit.
Huawei's Australian CEO Guo Fulin responded to these accusations in 2009 with a fiery letter.
"The articles falsely accuse Huawei of engaging in espionage activities and offer no proof to support this charge ... your readers should know that Huawei is 100 per cent employee-owned and no governments or government agencies have any involvement or ownership in our operations," he said, adding Huawei had a policy of employee localisation in Australia.
In the hopes of clearing the air over the allegations of links with the PLA, Huawei said it approached the Australian Security Intelligence Organisation (ASIO) in 2009 to lay its cards on the table.
On Monday, the Australian Financial Review reported that the government banned Huawei for the NBN on the basis of ASIO advice, although NBN Co itself had reportedly approved Huawei to be a bidder for NBN tenders.
Huawei's local director of corporate and public affairs, Jeremy Mitchell, also went on the record in 2010 to point out that the company boasted 45 of the top 50 global telco operators as partners.
"It's upsetting and disappointing that these sort of faceless accusations get made, but we know that those in the telecom industry know us, they know our reputation and, as I said, you know, you don't get to the position that we get — number one in fixed networks across the globe — unless you deliver," he said.
However, Huawei's Mitchell was understanding of the government's stance in an interview with Sky News this weekend, a transcript of which Huawei provided to ZDNet Australia as comment on the matter.
"We understand that this is a very sensitive area for governments all around the world. What we say is: governments around the world don't have the answers by themselves, we ourselves don't have the answers by ourselves, we need to work together. This is one of the biggest threats governments are facing as more and more important information come on these networks, and we've got to work together," he 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."
The ban was a set back and the company was disappointed, but it was looking to put measures into place that would help the government see it as a partner for the NBN, he concluded.
Huawei holds contracts with multiple telecommunications providers in Australia. It has been conducting long-term evolution trials with Telstra, it has just signed a long-term evolution contract with Optus for the Newcastle region, adding that to a contract it has for the telco's regional network, and Huawei also has scored a massive network revamp deal with Vodafone.
China as a nation has historically been accused of being the origin of many cyber attacks; for example, in 2010, Google revealed that it and other companies had been hit by attacks that originated in China, with some targeting Gmail users who were human rights activists. As a result, the search giant said it would stop censoring its web results in China and could end up exiting that market altogether.
In a report to US Congress last year, titled "Foreign Spies Stealing US Economic Secrets in Cyberspace", the US Office of the National Counterintelligence Executive (ONCIX) also pointed the finger at Chinese actors as being "the world's most active and persistent perpetrators of economic espionage".
"We judge that the governments of China and Russia will remain aggressive and capable collectors of sensitive US economic information and technologies, particularly in cyberspace," the report said.
Updated at 7.32am, 26 March 2012: added comment from Huawei and NBN Co, and information about ASIO