Aussies ban Huawei from throwing 5G on the barbie

In what could be described as an incredibly passive aggressive move, the Australian government has effectively banned Huawei from joining the Australian 5G bonanza.

In a joint statement released by Mitch Fifield, Minister for Communications and the Arts, and Scott Morrison, Acting Minister for Home Affairs, the Australian government has not specifically named Huawei, simply mentioning dodgy governments. A Huawei tweet confirms it is on the wrong side of the line and will not be able to supply Australian vendors with its 5G equipment.

“The Government considers that the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law, may risk failure by the carrier to adequately protect a 5G network from unauthorised access or interference,” the statement reads.

The rules, which will come into place on September 18 2018, set new legal obligations on security for telcos and are based on the idea 5G networks will have a fundamentally different architecture to the networks of today. With the core and edge merging closer together, and more sensitive processes and applications moving closer to the end-user on the edge, the Australian government is yet to be convinced there are any solutions or approaches which mitigate this security risk. The belief the edge is less secure than the core is a justified one.

The new landscape will provide the Australian government much more influence over the deployment and management of telecommunications networks throughout the country. Not only will the telcos have to offer the government considerably more access to the inner on-goings of operations, the rules essentially give the government the power of veto when it comes to selecting vendors. Huawei has stated it has been barred from the 5G euphoria, and while ZTE is yet to comment, it would be a fair assumption this ban extends to all Chinese companies.

Reading between the lines, the Aussies seem to be saying they don’t trust the Chinese government, or Chinese companies. There is little, if any, concrete proof Huawei is a government puppet, but this seems to be a blanket policy covering all Chinese companies and a message to President Xi Jinping; if you want to play in the global markets, you have to adhere to the same rules as the rest of us, irrelevant of the size of your economy, you can’t have it both ways.

Of course, such actions have been bubbling below the surface for some time. Several countries around the world, with the US being the most vocal, have been airing their suspicions of eavesdropping from the Chinese government, though this is one of the first cases which is seemingly directed at China as a whole. The US did temporarily ban ZTE of course, while it and Huawei are barred from government contracts. There does seem to be an unofficial policy to screw China as hard as possible, though little has translated into hardcore, sector-wide legislation keeping the pair from getting involved with 5G networks on every front.

The UK is another which has its own concerns over Chinese companies, there is a division in GCHQ which is specifically tasked with making sure Huawei doesn’t do anything suspect, though a full ban doesn’t seem like a realistic possibility right now. The Aussies making the first move worldwide is an interesting development however.

China is Australia’s biggest trading partner, accounting for 29% of exports and 17.7% of total imports across 2016-17, creating a tricky diplomacy situation. Banning one of China’s most successful players on the international trade scene is hardly going to make for comfortable discussions in the future. It’s a bold move from the Aussies.

Perhaps this is an indication the Australian government sees profit in cosying up to the Trump administration. President Trump has been incredibly combative in dealing with the Chinese government, or governments in general, and such action might get Australia in the good books of the US authorities. The US would certainly be a successful trading partner should the Australia be able to gain favourable terms, and a ban on the US’ biggest rival on the global stage could be viewed as Trump stroking.

While losing one market is not ideal for Huawei, and presumably ZTE, it is not the end of the world. What will be a worry is the domino effect. Governments around the world, especially those who would consider themselves ‘western’, have a tendency to lean on each for guidance in creating legislation. Precedent and trends are dangerous terms for Huawei here. With the 5G bonanza set to create fortunes, it will be interesting to see how many follow the Australian trail.

Theories and predictions over the potential implications will be plentiful, but one thing you can almost guarantee is Ericsson CEO Börje Ekholm and Nokia CEO Rajeev Suri will both be smiling quite contently over the news, even if neither is prepared to take their joy public.