Huawei: Australia needs us for 5G competition

Following anti-Huawei national security advice from the US, Huawei is looking into how the cost of 5G network rollouts would blow out if it were to be banned from providing equipment to Australia's telcos.
Written by Corinne Reichert, Contributor

Banning Huawei from providing 5G equipment to Australia's telcos will threaten the nation's ability to stay "ahead of the game" in its mobile networks due to restricting competition, the Chinese networking giant has argued.

"Australians are now enjoying some of the best 4G broadband in the world because of the competition and because players like Huawei," Huawei Australia chair John Lord told ABC's RN Breakfast on Monday morning.

"There's only about two other players in the Australian market."

According to Lord, Huawei is currently commissioning a paper on how much more expensive 5G network build-outs would be if Huawei is barred from taking part, adding that the company is talking to the Australian government "regularly".

"This is a very critical point, but from the experience of past projects ... if Huawei does not participate, there'll only be one provider, because Huawei is the only company globally that goes from end to end in the ICT infrastructure," he argued.

"Our competitors are expert in certain areas, and they compete against us, but not across the whole spectrum."

In Australia, Optus trialled 5G with Huawei back in 2016, although the telco has yet to choose its 5G partner. It is also helping Vodafone upgrade its 4G network.

Lord denied any national security concerns based on Chinese involvement in the running of its telco equipment in Australia.

"We provide those vendors -- Optus, Vodafone, TPG, and perhaps the Telstras -- with equipment. They operate the equipment. Now, we may do maintenance, but that maintenance is done by the over 700 employees -- who are Australians -- for Huawei, or we subcontract it. We don't have Chinese nationals doing the maintenance on the equipment we provide to the major telcos," he explained.

"We believe that all telcos should be open, and equipment should be checked. We build equipment on the supposition that nations or companies or rogues will try and crack your equipment. So to have the best cybersecurity is the best business."

Huawei had unveiled its end-to-end 5G product suite during Mobile World Congress (MWC) in Barcelona in February, with Lord conceding that it would be of "huge significance" if Huawei Australia was barred from 5G -- providing mobile broadband equipment accounts for around 70 percent of its local business.

"At the moment, most of our business is 4G, and we're providing over 55 percent of Australia's 4G requirements across the whole nation," Lord said.

In response to questions over whether Australian Prime Minister Malcolm Turnbull could bar Huawei from taking part in 5G on the advice of the United States, Lord pointed to the 5G trials the company is undertaking in fellow Five Eyes nations with Canadian telco Telus and British telco EE.

"There's a lot going on in the US at the moment with trade wars and deals and things, so there's many reasons why the US may give advice like that," he said.

According to Lord, Huawei doesn't get involved in political debates, but believes that as it is privately owned by its employees, it should be examined by any governments looking to ban it based on assumptions that it has Chinese government oversight.

"We should be looked at and put into a competitive tendering. We're happy to have our equipment tested, we're happy to have it analysed, and in fact in countries like the UK and Canada it is, and we're happy to do that," Lord said.

"Huawei obeys the law in every country we're in. We're in over 170 countries worldwide, we're providing 45 of the 50 big telcos with their equipment. If we do one thing wrong, our business is dead.

"Huawei obeys all UN charters and sanctions, we actually obey all US charters and sanctions, and the reason is because anything that's done in the US will probably become a UN charter. So if there's a UN ruling or a US ruling, we will obey that. We will not play politics."

Alleged US government documents leaked in January said the Trump Administration is considering setting standards for a nationwide 5G mobile network to prevent Chinese dominance in the industry.

According to the documents, Huawei became a leader in 5G technology due to support from the Chinese government -- with China itself "the dominant malicious actor in the information domain".

"Huawei has used market-distorting pricing and preferential financing to dominate the global market for telecommunications infrastructure. China sets aside up to 70 percent of its mobile infrastructure market for Huawei and ZTE, only allowing Western vendors to compete for the remainder," the alleged government memo said.

"The magnitude of the Chinese market reserved to Huawei and ZTE allows the companies to effectively fund their R&D with domestic sales while insulating the companies against global infrastructure spending downturns. The government has also extended an estimated $100 billion line of credit to Huawei to finance deals abroad. Combined with aggressive pricing, diplomatic support, and suspected payments to local officials, Huawei has quickly taken market share in the radio infrastructure market as well as optical and routing, leaving them poised to take market leadership of 5G."

Huawei has thus surpassed Western companies Ericsson and Nokia in radio infrastructure, and US networking giant Cisco in routing, the alleged memo contended.

The US government has subsequently been cracking down on tech and software from China, last month introducing legislation to the Senate barring the sale of national security-sensitive technology to China and blocking government or contractors from buying telecommunications equipment and services from Chinese tech giants ZTE and Huawei.

Read more: Paranoia will destroy us: Why Chinese tech isn't spying on Americans

"How America responds to the growing threats posed by China is the single most important geopolitical issue of our time, and will define the 21st century," Republican Marco Rubio said at the time.

The heads of the CIA, FBI, NSA, and the director of national intelligence to the Senate Intelligence Committee had also recommended in February that Americans not use products from Huawei and ZTE.

The US last month also reportedly said it is considering legislation that would force US tech companies to divulge whether they permit China to examine the source code of software they sell to the US military.

US President Donald Trump started his trade war with China in March, imposing higher tariffs after saying an investigation by Trade Representative Robert Lighthizer had found that China is using foreign ownership restrictions to require tech transfers from US to Chinese companies, as well as conducting espionage to acquire intellectual property.

The Presidential Memorandum also claimed that China "directs and facilitates" the investment in and acquisition of US companies for technology transfer purposes according to the Chinese government's plans.

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